Avoid a DIY Divorce; It Could Cost You a Fortune.
Family Law Solicitors – Newcastle and Sunderland
A recent report from the Association of Business Recovery Professionals*– which reported on the major causes of insolvency in men and women – identified that while the leading cause of insolvency in men is the failure of their business, family-related costs and the breakdown of a relationship are the far more likely causes of insolvency in women.
The leading cause of Bankruptcy in women, based on data from 2014, was found to be “relationship breakdown”, followed closely by “loss/significant reduction of household income” (i.e. through loss of a partner’s income). From a Family Law perspective, the significance of these events as causes for insolvency highlights the extreme importance of negotiating the right financial settlement on the breakdown of a marriage.
The starting point in many financial settlements is a 50/50 division of assets – or, to use fancy, judicial language, there is a ‘yardstick of equality of division’. The Family Courts are very clear, however, that this is only a starting point, and in certain classes of case, it is deemed necessary to give more than 50% of the assets to one spouse in order to achieve a fairer settlement in the longer term.
In what is termed a ‘needs case’, for example, experienced Family Court judges will take into account a wide range of factors which would not necessarily be at the forefront of separating couples’ minds. A typical example involves what might seem like a somewhat outdated, or stereotypical arrangement of ‘Breadwinner’ vs ‘Homemaker’, but statistically this remains a highly significant dynamic in the UK; in 2014 for example, 91% of single-parent families were headed by women.
Consider the following situation: When Brad (the ‘Breadwinner’) and Holly (the ‘Homemaker’) married in 1990, they were both working in the Public Sector. During the course of the marriage, they had 3 children together, and Holly has long since given up her job to look after them. This enabled Brad to pursue his new career, and he is now a company Director.
If Brad and Holly were to divorce, a simple 50/50 division of assets would not do justice to Holly, who would find herself in a position whereby – if she were to re-enter the employment market – her earning potential was significantly reduced, due to her long absence from the market. What’s more, she wouldn’t have the benefit of having accrued Pension Entitlements over the years – i.e. the entitlements she would have accrued if she’d continued working.
If Holly was given 50% of the matrimonial assets, it is not hard to see how quickly her share might be eaten up by the costs of living. Brad’s superior earning potential would allow him to quickly make up for any capital losses; whereas Holly would find it difficult to maintain a property and meet the family’s outgoings, particularly if she were expected to continue the primary care of their 3 children.
Hopefully, this example shows that whilst 50% of the capital assets might seem like a reasonable proposition at first, there are many other factors to consider when looking to achieve a fair settlement. The Law Commission identifies that the goal of financial orders is to enable a transition to independence in the longer term; and the law is, therefore, at least on paper, committed to ensuring neither party finds themselves on the back-foot.
There are many tools which would allow the Family Court to achieve fairness for Holly, including:
- Pension Sharing Orders – which would enable Holly to obtain a percentage share of the total value of Brad’s pension;
- Property Adjustment Orders – which would enable the transfer of any real property, such as the matrimonial home, from Brad to Holly; and
- Periodical Payments Orders – which would require Brad to pay Holly regular sums (e.g. monthly) by way of maintenance.
But if this is the case, why are women disproportionately finding themselves disadvantaged by the breakdown of relationships?
One potential explanation is that couples are coming to agreements without having sought legal advice. One pitfall of such arrangements is that these types of legal protection are not built in – as, without the benefit of Specialist Advice, parties might unwittingly agree to something which does not adequately meet their needs, and which does not provide them with security.
If you are separating, bear in mind that your financial settlement needs to be bespoke, to ensure that it is right for your particular circumstances – otherwise, you may find yourself in financial difficulty in the longer term. There are clearly a lot of factors to consider in negotiating such a settlement, and it would be wise to seek Specialist Advice before settling; as the above statistics show, this is vital for your financial security in the longer term.
A Specialist Family Law Solicitor will seek full financial disclosure from your spouse, with a view to establishing exactly what the matrimonial assets are. From this point, and taking into account your specific needs and circumstances, they will be able to advise you as to what might be an appropriate settlement for you, and help you to achieve it.
*(Closing the Gap: Gender and the Changing Demographics of Insolvency)
Contact us for to arrange a ‘Next Steps’ Divorce Advice Session.
Book your ‘Next Steps’ Divorce Advice Session at our Newcastle office: 0191 284 6989
Book your ‘Next Steps’ Divorce Advice Session at our Sunderland office: 0191 567 6667
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