The wealthy wives' escape funds

Paul McCartney and Heather Mills. Photo / AP

Over in the leafier suburbs, where marriages are made of lavender-scented sheets, international holidays and monthly botox top-ups, happily wedded wives are turning to an ancient tradition as an insurance in their future.

They're siphoning off hundreds, sometimes thousands of dollars a year from their normal weekly household spending to form their own secret "escape funds" - quietly stashed piles of cash to see them through if their marriages ever fall apart.

Historically, escape funds were a rite mothers taught their daughters in the secret, whispered codes of wifedom. In the days before the domestic purpose benefit they offered an escape route out of a potentially abusive marriage, when separated wives were left up the creek without an income and often with hungry children in tow.

But these days, in the era of the Property Relationships Act, where a 50/50 split of the assets is law, modern housewives are ferreting away their escape funds for an entirely different reason.

Stories abound of once-wealthy women being made financially and emotionally destitute by years of legal battles over their estate which the big-earning husband can happily keep funding, while the wife - who has often forsaken her career to raise the children - is bled dry.

There's often little sympathy when big-money couples split. Paul McCartney and Heather Mills might claim to have been driven mad by each other's lies and dirty divorce tactics, but who cares when either partner can sell their story to keep funding the feud?

Here, internet and TV diva Annette Presley and her former husband Malcolm Dick didn't speak for months after their break-up, reportedly leaving their personal assistants to make the arrangements concerning their two children. Millionaire businessman Eric Watson and Nicky Watson, a former lingerie model, agreed their divorce in 2003. She has denied reports of a $3m settlement.

Though the law might technically mean each side gets a fair deal, it's not necessarily how it works if the split is bitter and one side doesn't want the other to have their fair share or, worse, has hidden the assets in offshore bank accounts and dodgy trusts.

That's what happened to 40-something Michelle after her marriage to an Auckland businessman broke up several years ago. The man pursued and wooed her with style, promising to look after her forever and shower her with love and affection.

They married and, after a dream honeymoon overseas, led the high life of international travel, expensive cars and a busy social life. But when the bottom fell out of their marriage eight years later, Michelle found her husband had tied up all his assets, hidden his income and suddenly protested to be poor.

"He said 'Honey, you won't have anything. The legal system is on my side and you don't deserve anything," she remembers.

"Because he had nothing under his name he said I had nothing to ask for and I would have to resign myself to going to back to my old life - bye bye, I'd be gone. But life is not like that. You can't go back to your past."

Instead she chose to fight, employing one of Auckland's top legal counsels to battle her husband's top-gun lawyer, paying her lawyer in small instalments, and living off loans from her family and the generosity of friends as her legal bill topped $100,000.

She refused to leave their home but her ex cut off the power, the phone and the gas.

Eventually her legal team employed a forensic accountant who unravelled her husband's financial trail. As time dragged on, and the legal bills mounted, both sides eventually agreed to mediation.

After a gruelling duel and about $4500 in fees for the mediation, Michelle walked away with a package she still remains slightly bitter-sweet about today. Though she is now happy in her own house and has a new relationship, she says that, in a way, she would have preferred a court settlement which might have gone some way to giving her "justice" - some recognition that she'd been so badly done by. But after watching a friend being dragged through the court "for years" she reluctantly agreed to a shorter route.

Many top divorce lawyers refuse to accept legal aid cases, a form of loan for legal expenses that doesn't cover more than $130 an hour. Instead they charge fees in excess of $400 an hour. Lawyers casually accept that protracted cases can stretch into the "hundreds of thousands of dollars".

With the assets sometimes missing, or at least tied up in lawyers' trusts till the battle is over, it's no surprise the spouse with the big weekly income sometimes chooses to exploit this and drag out the fight in the hope their ex will give up.

Top Auckland divorce lawyer Antonia Fisher says there are strategies in which one party can try to delay matters, but the only way to address this is to keep the pressure on by making applications to the court for directions to progress matters.

Fisher has faith in the courts, which she says are on to those people who try delay tactics and will readily award costs against those who fail to comply with orders.

"What you've got to do is keep on top of it. That in itself costs money but you have little option. It's the only weapon you've got. The judges realise that their system falls into disarray if they do not use the powers to address these issues."

She's talking about orders like interim distribution orders, restraining orders and discovery orders. Interim distribution orders can release much-needed funds if they're urgently needed, but these can only be made if there are assets to divvy up in the end.

If the assets are hidden, as in Jane's case, the court can make a "section 38" order which effectively gives authority to a forensic accountant to trawl through everything to find the money trail.

If there aren't that many assets at all, even beginning such a fight is almost pointless. Which, thankfully, is why lawyers say it's rare for the complicated, nasty battles to be fought out over estates worth less than about $700,000.

Not that partners with even those kinds of assets aren't often left temporarily high and dry.

Mother-of-three Lisa walked out on an abusive relationship several years ago, and lived on the benefit for years as she battled her ex over a share of more than $1 million they had tied up in lawyer's trust accounts

"He felt that I had walked out on the marriage so it was my responsibility to take care of the children. He didn't think he should provide child support and when it came down to dividing the assets he took things and he hid them. He had enormous resources, salary-wise and contact-wise.

"Money was where he knew he had control and he could still maintain quite a high standard of living because of the amount of his earnings, while he knew I couldn't because all our money was sitting in a lawyer's trust account."

Though she kept winning court battles - over the custody of the children, and then the division of their marital property - Lisa's husband appealed every step of the way, employing private detectives to spy on her and forcing the battle to run for five years, during which she racked up $80,000 in legal aid bills, which she is now slowly paying back.

"There was just no money. I particularly remember one day my daughter needed $2 for a swimming sports day at school. We are talking about a household that had everything. I mean everything. And I didn't have $2 for her swimming sports."

Eventually Lisa agreed to take less than the judge had awarded her as a way to force an end to the battle.

"The wheels of justice just have got to move faster. Five years is a long time in my kids' lives."

Lawyer Sarah Bush says there are ways of helping out the partner with the least money. For example, she takes on legal aid cases and maintains there are still other good lawyers who also take on those cases. Lawyers can apply for interim spousal maintenance and long-term spousal maintenance.

But she urges the stay-at-home partner to get a grip on the family and business finances while they're still in the relationship.

She has had several clients who have discovered at the end of their marriage that the family home is in fact owned by a trust, or all the debt from the couple's business has been loaded on to it and it's suddenly worth nothing.

"Quite often you hear your client say to you, 'Oh, I remember signing documents'. But they never inquired as to what they were signing. And I suppose that's part of the trust thing isn't it? Your spouse or your partner hands you something to sign and you trust them completely - why wouldn't you?"

Forensic accountant Hugh Sutherland of Sutherland Investigations has uncovered dozens of rip-offs for ex-spouses.

He has found cases in which the person running a family business has been planning to leave the relationship for years and thought they'd cleverly hidden its real value.

He has discovered hidden bank accounts overseas, by trawling through phone records and realising one call was to an offshore bank; found that his client's home had "disappeared" as the mortgage apparently funded the business; and discovered fake "debts" that had supposedly rendered a business worthless to do a client out of their fair share.

People think they're clever, he says. "But in most cases they've left a trail a mile wide."

Most of his clients are women, but both sides can be affected, he says.

Fisher and Bush are increasingly finding women are the big earners in their relationship and that they, like their male counterparts, are not happy parting with their money.

And both sides can be tempted to give up when it gets really drawn out, says Fisher. "I would say there are quite a few people I know who settle for less than what they are entitled to, because they are sick of the fighting - no question. There are a lot of men who pay more than they probably need to and a lot of women who settle for less than they are probably entitled to because they are sick of it."

And increasingly these deals are struck, as Jane's was, in mediation.

After 30 years scrapping in the divorce court, lawyer-turned-mediator Tony Lendrum has an almost religious zeal for the benefits of mediation.

"The weird thing," Lendrum says, "is that both people want the mediator to think they're reasonable. Quite often you are appealing to a higher side of their character. I've had cases where people have come in and one has said, 'You're worth a million or two' and the other person walks out with five, six or seven million dollars. It's an extraordinary process if you get the people working the right way. It's quite humbling."

For about $4000 to $4500, couples get a professional mediator for a day or a day-and-a-half, and usually a fairly luxurious environment, such as a nice conference room, to debate their case and throw around deals, usually with their lawyers' help. Lendrum says it's great for cases where one spouse is not emotionally or financially strong enough to go the distance in a lengthy court battle.

But, as with Jane's experience, Lendrum concedes it's not a process that can leave everyone happy.

"A good deal is one where neither party is completely satisfied. It's a win-win process. Not a lose-lose."

Meanwhile, Jane and Lisa are settling into their new lives. Jane is not sure she will ever remarry, and for Lisa one of the saddest things is that her children have all sworn off ever getting married themselves.

"They're just not that trusting. But we're happy now. I've got my money and my own little house and I was able to get my career back on track because I know I'm not disappearing off to court for a couple of weeks at a time. It just takes so long. I lost good friends because they got sick of it. It's boring. It's all you talk about. It takes over your whole life."