Wells sharing refers to the principle or approach—where the court decides that, instead of dividing an asset immediately, each party will share in the future proceeds when the asset is eventually sold or realised. It’s the concept of deferred sharing, usually applied to illiquid assets.

A Wells order is the actual court order that implements Wells sharing. It sets out the specific terms: the percentage each party will receive, how and when the asset will be sold, and any interim arrangements.

1. Why Wells Sharing Matters in Divorce

Dividing assets in divorce can be challenging, especially when wealth is tied up in a business or property that cannot be sold straight away. Wells sharing offers a practical solution, allowing both parties to benefit fairly from future proceeds without forcing a disruptive sale or undervaluing the asset. It’s designed to balance fairness with practicality, ensuring neither party is disadvantaged by timing or liquidity.

2. When is Wells Sharing Used?

Wells sharing is most suitable when an immediate sale or division of an asset would be impractical or damaging. Common scenarios include:

• Family businesses where a forced sale could harm value.

• Investment properties with tenants or market timing issues.

• Shares in a private company with transfer restrictions.

For example, if a couple owns a rental property with a fixed-term lease, the court may delay the sale and award each party a share of the proceeds when the property is eventually sold. Similarly, if a business is thriving but illiquid, Wells sharing allows both parties to benefit from its future success.

3. How Does Wells Sharing Work in Practice?

Once the court decides on Wells sharing, it will issue a Wells order specifying:

• The percentage share each party will receive from the net proceeds.

• The process for sale or realisation.

• Any interim arrangements, such as maintenance payments until the asset is sold.

Ongoing cooperation is essential—both parties should keep records, agree on sale timing, and communicate about market conditions. If disputes arise, mediation or further court directions may be needed.

4. Figures and Examples

Example 1: Private Equity Firm with Deferred Exit

The parties jointly own a 35% stake in a private equity firm, currently valued at £12 million, but the firm’s partnership agreement restricts any sale or transfer of shares for the next seven years. The court recognises that a forced sale would breach the partnership terms and potentially devalue the business. Instead, a Wells order is made: the wife is awarded 45% of the net proceeds from the eventual sale or buyout of the husband’s interest, whenever that occurs.

The order specifies that, until the exit event, the husband must pay the wife £8,000 per month in interim maintenance, plus 45% of any annual profit distributions. Both parties are required to share information about the firm’s financial performance and any offers to buy the business. The order also addresses tax liabilities, stipulating that these will be deducted before the net proceeds are split.

Example 2: Commercial Property Portfolio with Delayed Realisation

The couple own a portfolio of three commercial properties in London, collectively valued at £9 million, with outstanding mortgages totalling £3.5 million. The properties are let on long-term leases, and early sale would trigger significant penalties and loss of rental income.

The court orders that the properties are to be retained for a minimum of five years, after which they must be sold or refinanced. Upon sale, the wife will receive 55% of the net proceeds (after repayment of mortgages, taxes, and sale costs), reflecting her greater non-financial contributions to the family. In the interim, the husband is responsible for managing the properties, but both parties share net rental income in the same 55:45 ratio. The order includes a mechanism for resolving disputes over property management and requires annual financial reporting to both parties.

Example 3: Tech Start-Up with Uncertain Future Value

The husband is a co-founder of a tech start-up, currently valued at £20 million based on the latest funding round, but the company is not yet profitable and cannot be sold or floated for at least five years. The wife played a key role in supporting the business during its early years. The court makes a Wells order: the wife is entitled to 35% of the net proceeds if and when the husband’s shares are sold, transferred, or realised through an IPO.

The order is complex, requiring the husband to notify the wife of any liquidity events, and to provide annual updates on company performance and any offers received. The order also addresses the risk that the company’s value could fall or rise dramatically, specifying that the wife’s share is based on actual net proceeds, not a fixed valuation. In the meantime, the wife receives £5,000 per month in spousal maintenance, reviewable if the company becomes profitable or if the husband receives significant dividends.

Types of Businesses Most Suited to Wells Sharing:

• Private companies with share transfer restrictions (e.g., family businesses, professional partnerships, private equity firms)
  
  

• Businesses with long-term growth prospects but no immediate market for sale (e.g., tech start-ups, medical practices, law firms)
  
  

• Commercial property portfolios with fixed-term leases or market timing considerations
  
  

• Assets where forced sale would cause significant loss of value or breach contractual obligations
  
  Case Law Reference:
  In Standish v Standish [2024] UKSC 0089, the Supreme Court confirmed that Wells sharing is a fair solution when assets are illiquid, and emphasised the need for clear, enforceable orders to avoid future disputes.
  
  

5. Legal and Practical Challenges

• Disputes over timing, method of sale, or asset management.

• Enforcement issues if one party delays or obstructs.

• Tax implications and division of costs.

• Need for clear drafting and ongoing communication.
  
  

6. Wells Sharing vs. Clean Break

A clean break means immediate division and no ongoing financial ties. Wells sharing, by contrast, creates an ongoing link until the asset is sold. This can be less desirable for those seeking finality, but may be necessary to achieve fairness.

7. Pitfalls and Top Tips

Pitfalls:

• Poorly drafted orders.

• Lack of enforcement mechanism.

• Ignoring tax or market risks.

Top tips:

• Get clear, detailed terms in the Wells order. Caira can help explore or draft terms in seconds.

• Agree on sale process and record-keeping.

• Consider mediation for future disputes.

• Keep records of asset management and communications.
  
  
  

Disclaimer: This article is for general information only and does not constitute legal, financial, or tax advice.