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24th July 2018

Legal mythbusting – Financial misconceptions on divorce

24th July 2018

Legal mythbusting – Financial misconceptions on divorce

Danielle Taylor

Posted: 24th July 2018

T: 01962 679 706

E: Email Me

Divorce is a difficult time for most people. However, it can be made all the more frustrating by the uncertainty posed by legal myths surrounding financial matters. Many people hear of a “friend of a friend” who has almost the identical circumstances to you who either made an absolute killing off their spouse or was left practically destitute. Cases reported in the press can also create optimism or dread dependent upon your perspective.

However, the truth is very different from the stories of success or doom.

Firstly, there is the common belief that being the respondent in divorce proceedings based upon unreasonable behaviour or adultery can affect the finances. The suggestion that having an affair or acting unreasonably during the marriage will lead to a financial punishment is largely untrue. Divorce proceedings and financial remedy proceedings are separate for the most part.

Judges in financial remedy proceedings make decisions with reference to the factors set out in Section 25 of the Matrimonial Causes Act 1973. This is a long list of factors, including the age of the parties, length of marriage, contributions, earning capacity, income, financial needs etc.

One of these factors is conduct of the parties, “if that conduct is such that it would in the opinion of the court be inequitable to disregard”. Generally, there must be litigation misconduct or severe behaviour that has an impact on financial matters in order for conduct to be taken into consideration. The accusations commonly found in the particulars of unreasonable behaviour within a Divorce Petition or the claim that an affair has been had will not usually be “inequitable to disregard”. Conduct is fact-specific and will depend on the particular circumstances.

Second there is the myth that there is an automatic 50:50 split of assets. In cases where the vast majority of the assets have been accrued during a long marriage through the joint efforts of both spouses (whether as breadwinners or homemakers) and adequate resources to meet everyone’s needs, this might be the case. However, whilst the “yardstick of equality” is mentioned in a number of financial remedy cases as a potential starting point in cases, the court must bear in mind all of the Section 25 factors. This can lead to a departure from equality for a number of reasons. The aim of the court is to arrive at a “fair” result, which may indeed be a 50:50 split, or may be something very different…

Some people believe that having the matrimonial home registered in your sole name will impact upon the overall financial settlement – after all, it is owned by that person so it will stay that way, surely? This is a misconception. The name in which a property is registered is unlikely to have any considerable impact on the end result. A number of factors will likely come into play in terms of the family home, but the details of registration are unlikely to be one of them. Property owned by either party is one of the factors taken into account by the court and it will be looked at as an asset within the wider context of the financial remedy proceedings.

In more recent times there has been a focus on arguments about “contributions”. This has lead to some debate about equality of contribution between breadwinners and homemakers. Contributions are one of the factors that the court will consider in the wider context of the individual circumstances and can lead to a departure from equality. The weight of contribution arguments really does depend on what has happened prior to and throughout the course of the marriage, as well as the financial resources available to the parties on divorce.

Whilst there are a myriad of financial myths surrounding divorce, the simple fact is that the fair outcome will depend upon your particular circumstances. Solicitors will urge parties to participate in an exchange of information – usually referred to as full and frank financial disclosure. This information will be key to the advice that you receive as there are no automatic calculations undertaken by the courts in England and Wales. Any lawyer will need to see details of your circumstances before they are able to accurately advise on the fairness of any offers for settlement or likely outcome of proceedings.

In fact, most cases are settled by way of agreement between the parties and will not go to court (or at least not to a contested final hearing). However, lawyers always bear in mind the likely views of the court when advising you in relation to financial matters. This is partially to advise you on prospects of success and the strengths/weaknesses of any claim in order to try and reach a negotiated outcome. It is also because once an agreement is reached between parties, a Consent Order is sent to the court for approval. This is not simply a rubber-stamping exercise and a court will review the Order in light of the Section 25 factors. Courts are able to reject Consent Orders if they appear manifestly unfair.

Financial remedy proceedings can attract a number of fairly complex legal arguments, dependent upon the circumstances. However, it is important to remember that the myths and anecdotes told are never 100% representative of your situation and therefore the outcome may be very different for you.

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Danielle Taylor

Posted: 24th July 2018

T: 01962 679 706

E: Email Me