Jerry Hall has officially filed for divorce from Rupert Murdoch, six years after the pair married, after receiving an email from her husband communicating the relationship was over. Attwood Marshall Lawyers Family Law Senior Associate Carlu Booth discusses the complexities of a high net worth divorce, the intricacies involved in a property settlement, and whether the Murdoch divorce will impact the succession of his $26 billion empire.
Background
Jerry Hall filed a petition for divorce in the Superior Court of California last week, citing “irreconcilable differences”.
In her petition, she sought unspecified spousal support from 91-year-old Murdoch and also wants him to pay her legal fees.
This will be Mr Murdoch’s fourth divorce. He was previously married to entrepreneur Wendi Deng, his third wife, who he divorced in 2014 after 14 years of marriage. They have two daughters together, Grace and Chloe.
Mr Murdoch split from his second wife, Anna Murdoch Mann, a Scottish journalist, in 1999. They have three children together, James, Lachlan, and Elisabeth.
His first wife, Patricia Booker, a former flight attendant and model with whom he had one daughter, Prudence, divorced Mr Murdoch in 1967 after their 11-year marriage.
Jerry Hall was previously the partner of Rolling Stones’ Mick Jagger, with whom she has four children. The pair met around 1976 when both parties were otherwise involved — Jagger with then-wife Bianca and Hall with then-fiancé Bryan Ferry. Ironically, Hall starred in the music video of Ferry’s biggest solo hit in the UK, his incarnation of “Let’s Stick Together”.
This case is the epitome of a blended family, which raises issues around dividing property after separation, spousal maintenance, estate planning, and succession.
Succession issues – the Murdoch empire
Forbes states Mr Murdoch and his family are worth $US17.9 billion (AUS $26 billion).
It is unknown whether Mr Murdoch and Ms Hall had a prenuptial agreement. However, it is likely they do, considering Mr Murdoch’s large divorce settlements from previous marriages.
Details of the settlement will be subject to negotiation; however, it is not likely that this will have any impact on Mr Murdoch’s media empire.
Today only Lachlan works alongside his father, running Fox Corporation. The remaining heirs do not have an active role in the running of the family business.
The thing that binds Murdoch’s children together is not the empire; it’s the family trust.
Financial benefits go to all of Rupert Murdoch’s six children. However, the trust is controlled by the CEO, who has four votes, and his four oldest children, who have one vote apiece: Prudence, Elisabeth, James, and Lachlan. The four older siblings will also get to decide who will control Rupert’s votes after he dies.
Wendi Deng, Mr Murdoch’s third wife, wanted their two daughters, Grace and Chloe, to have a vote in the Family Trust, but Mr Murdoch refused to force the issue due to the objections of his other children.
While Ms Hall may not be entitled to a trust share of Murdoch’s wealth, the couple’s properties since their marriage in 2016 may be contested in the divorce.
In 2019, the couple bought a $13.8 million Georgian property in Oxfordshire, England, and a year later, they bought the Great Tew Manor in the same English county. Last December, they splashed more than $279 million on a 340,000-acre cattle ranch near Yellowstone Park in the USA. They also own a number of other assets including a Los Angeles winery, a Californian ranch, and an Australian sheep and cattle farm.
Dividing property when a couple splits
Property division is typically the most contentious stage of a family law proceeding. The USA may handle property settlement differently to Australia, but on home soil, the legislative provisions for how to divide assets are relatively straightforward, involving a five-step process that applies regardless of the size of the marital asset pool. Although the division rules are the same regardless of the pool size, when the couple has a high net worth, there are often convoluted business interests and uncommon asset classes, which can complicate the process considerably.
The Approach Taken by the Court
Under section 79 of the Family Law Act 1975, the Federal Circuit and Family Court of Australia (FCFCOA) has jurisdiction to alter the property interests of the parties so as to effect a property settlement.
The Court has a very broad discretion under section 79 to make ‘such order as it considers appropriate’. While the power is broad, it is not without restrictions and the legislation and case law provides a broad framework for the court to adopt in determining a party’s range of entitlement.
Traditionally, there has been a “four-step process” the court adopts when determining a party’s range of entitlement. The initial step in this process is identifying every asset and liability of the couple. Identification includes all property, savings, loans and mortgages. Assets may include investments, businesses, stocks, collections, and intellectual property.
The second step evaluates each spouse’s contribution to the marriage’s total asset pool, including financial contributions, non-financial contributions, and homemaker/parent contributions.
In high-net-worth cases, one party will often claim that they are entitled to most of the assets because their unique abilities increased the couple’s fortunes, however, the court is often reluctant to consider the special skills argument.
The third step is to evaluate the future needs of each spouse, depending on their respective earning capacity, in combination with other factors such as the health of the spouse, their age and whether they hold primary custody of any children. Unsurprisingly, people with significant wealth usually expect to continue to live the same high standard of living after their divorce. However, in a high net worth divorce, more complex financial resources will be considered, such as trust funds, royalties, and executive compensation packages.
The fourth step is for the court to determine whether the proposed distribution of assets is fair and equitable given the distinct circumstances.
In 2013, the High Court of Stanford introduced a possible fifth step to this process. In our experience, since that decision was made, most of the Judges of the FCFCOA have adopted the same process.
The fifth step is now inserted after the first step. It requires the court to, at that stage, consider whether it is just and equitable to interfere with the property interests of the parties and even make Court Orders at all.
The case law indicates that there would be very few circumstances where it is appropriate that no Orders be made at all.
Property settlement in high net worth divorce
Real property is the major asset in most divorce settlements. In high net worth divorces, couples commonly own multiple homes in Australia and around the world. Therefore, a fair valuation of each property must be conducted, determined by market value at the time, which may be complicated by fluctuating currency exchange rates in the case of international property.
Business Holdings in high net worth divorce
In high-net-worth family law proceedings, it is more likely that the parties will have at least part ownership of business interests. For example, if a couple owns shares in a business, the court must designate a value to each party’s shares.
In cases where the couple shares joint ownership of the company, one spouse will often raise funds to buy out the other share. Another option is selling the business and dividing the proceeds, but the courts are reluctant to force the sale or closure of a business as it is not in the best interests of either spouse.
Confidentiality
High net worth divorce cases in the USA are often publicised, particularly those of celebrities. However, in Australia, Section 121 of the Act prohibits the publication of divorce proceedings where the parties are identifiable. The legislation covers journalistic writings and broadcasts, social media posts, and other methods of disseminating information.
It is advisable in high-profile cases for the parties to sign a mutual confidentiality agreement.
The importance of estate planning when divorcing later in life
There are many common misapprehensions surrounding the topic of estate planning. For example, many believe estate planning means simply having a Will. Others think estate planning is only a concern for retirees or those over age 55. Unfortunately, these misunderstandings can be incredibly harmful to your loved ones and your estate – no matter what your age or family circumstance.
The truth is that individuals at every stage of life can benefit from having an estate plan, and estate planning is integral when going through a divorce or separation.
The key is understanding what elements to include in an estate plan and what you need based on your current age and unique financial needs and goals.
We recommend that you review your Will and an Enduring Power of Attorney (EPOA) or Appointment of Enduring Guardian (AOEG) documents that you have in place immediately after separation. It is common for a party to name their estranged spouse as a beneficiary or executor in their Will. A person may also have an Enduring Power of Attorney appointing their estranged spouse as their attorney and guardian. Such appointment gives them the power to make all essential financial, health care, and personal decisions in their life if a person loses the mental capacity to make those types of decisions for themselves.
Upon separation, it is expected that couples to a separation would no longer want their former partner to benefit under their Will or act for them under an Enduring Power of Attorney.
Separation is a key time to review all your estate planning documents and update them immediately to ensure that they reflect the current situation and your revised wishes.
Attwood Marshall Lawyers – helping families resolve disputes and reduce conflict
Our dedicated family law team specialise in all aspects of family law, including guiding clients through the process of separation, divorce, property settlements, binding financial agreements, parenting disputes, child custody and child support, spousal maintenance, and estate planning.
We help our clients recognise their rights and obligations during divorce proceedings and guide them through what is no doubt one of the most challenging times in their life. We aim to help our clients resolve their matters quickly so that they can move on and reduce conflict within the family unit.
For advice or to discuss our family law services, contact Family Law Department Manager Donna Tolley, by calling 07 5506 8241, email dtolley@attwoodmarshall.com.au or free call our 24/7 phone line on 1800 621 071.
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