Editor's note: High-profile divorces can sometimes create headaches when active business interests - and the jobs of people involved in firms - can be affected. In this article, Henry Brookman, of eponymous Brookman Solicitors, with offices in London and Surrey, discusses potential problems. To view the firm's website, click here.

Wealth managers know about the “three D’s” – divorce, destitution and death, and how they throw up all manner of family disputes about possession of assets and division of wealth. This is so especially amongst high net worth individuals where there is everything to play for.

While wealth managers do not get involved at “the cliff face” - attending tense mediation or family court hearings as divorce solicitors do - the ramifications of divorce proceedings and developments in case law in this area certainly have an impact on wealth managers.

Divorces are complicated by complex trust structures or offshore assets, so governance of a family business or more unusually, criminal allegations bought against one spouse, can complicate the picture. So what can be done when commercial and family interests collide during the course of a divorce? How can the situation be resolved if one spouse is discovered to be involved in fraudulent activity or is being made bankrupt - how does that cloud the picture of divorce and what can be done to clarify the situation and protect each spouse’s interests?

In what one may call a typical divorce scenario for HNW individuals, the process can be simple but it still requires a systematic analysis. Issues usually up for consideration in such circumstances are whether the couple entered into any type of pre-nuptial agreement before they married, whether either or both spouses have any trusts and the division of other assets such as property or jewellery. The division of a couple’s assets will also take into account any children of the couple and any orders made for one spouse to pay the other maintenance.

Commercial complications

But these issues are considerably complicated if there are overlapping commercial concerns. These can arise when a divorcing couple run a business together and wish to separate their business assets at the same time. In addition to the business continuity issues the implications for staff or suppliers where the business relationship is held with one of the divorcing spouses (and not necessarily the one that expects to run the business on their own) a divorce can bring with it messy corporate governance issues. For example, one spouse may wish to sever all ties with their partner even before they are divorced and so may endeavour to remove them from a board of directors, or to force them out of the business. Typically, the other spouse will not want to go quietly and in resisting this can bring the business to a standstill.

The law generally opposes family and commercial cases running in parallel. The courts will generally insist that these two very different sets of issues are dealt with sequentially but within the one set of proceedings. The problem then is that the timeline for commercial proceedings and family proceedings can be very different. It can be a tactical move for a spouse who is being removed from the business to institute divorce proceedings and seek to freeze business changes first, thus hopefully securing their place in the business until the divorce is finalised.

Bankruptcy and criminal proceedings have the power to cause chaos in divorces. Where one spouse has been made bankrupt during a divorce and the other spouse loses their claim on the property proceedings are not easy to resolve - especially when HNW couples own joint assets. Another, rarer, situation that can complicate divorce proceedings is where one spouse is alleged to be involved in criminal or fraudulent activity which results in the authorities freezing that person’s assets under the Proceeds of Crime Act. Where the authorities have reason to believe that the individual has utilised their spouse as part of their fraud, his or her assets may be frozen too, leaving the innocent partner in a desperate financial position. In addition, the authorities will move to retrieve all assets which again could leave the innocent spouse without anything despite the fact that they may be entirely innocent of wrongdoing.

It is fair to say that the collision of business and personal matters in the context of divorce settlements can be a messy business. Yet all too often the breakdown of a marriage leads to the tactical severance of corporate ties, with both parties aiming to out-do each other and win the lion’s share.

When divorce proceedings are disrupted by commercial or criminal issues, the individuals involved can be left in a very difficult situation, both emotionally and financially. The wise advisor must be completely and openly impartial.  People are quick to decide that hitherto trusted advisors have become allied to "the other side" and retaining the trust of both parties is easier said than done.