Resolving the financial issues in divorce

Settling the financial issues arising from a marriage in the event of divorce in England  almost always needs legal advice. This whether there are any assets or not. This is very important. Please read the information about the case of Wyatt v Vince to understand just how important this is. You would be very unwise to enter into any agreement about the financial issues without first taking legal advice from a specialist divorce lawyer. This is where a solicitor’s advice adds most value in a divorce, where mistakes are easy to make and where mistakes can be very expensive indeed. Most non-lawyers have ideas about the financial aspects of divorce which are plain wrong. Do take legal advice before entering into any agreement about the financial aspects of divorce. If there is one piece of divorce advice for men they should take on board it is this. Men very often think they can settle financial issues arising from the marriage without any legal advice. This is a big mistake and it is a mistake typically made by men.

The first thing to remember is that the  financial issues in any divorce in the UK can be settled by agreement between the spouses with minimal assistance from lawyers and many couples do this perfectly well. Before coming to an agreement, though, it is  sensible to find out what your rights and options are so that any agreement is based on an informed choice. Where there are any significant assets involved (or, possibly, other intractable problems such as debt) it is normally best to take a solicitor’s advice before making any major decision.

Another thing to beware of is the temptation to approach the problem emotionally rather than rationally. This is a particular problem in cases of adultery where there is a tendency to want revenge. A converse problem which can happen in cases of adultery is that the ‘guilty’ party wishes to compensate the other spouse by being generous in any financial settlement. If you do not approach these problems with a cool head it can cost dear in the long run. This is, of course, easier to say than to do but it is something worth bearing in mind. If you do not then there is a serious risk that only the lawyers will benefit and the marital assets available for distribution between the parties will be eroded by needless legal costs. Impartial advice from a solicitor who looks at the circumstances dispassionately can be very useful for this reason alone.

You should not make the mistake of thinking that all legal costs are a waste of money. In this area of divorce it is usually money very well spent and repays the investment many times over. Mistakes here can be very expensive and you can end up paying for them for the rest of your life with so called ‘joint lives maintenance’ for example. You have to approach the problem rationally. You can usually work out the value added by legal advice. For instance, take the following example:-

A husband and wife with no children, both of whom are working and earning similar salaries, have been married for twenty years and have (a) a jointly owned house worth, say, £100,000 free of mortgage and (b) the husband has £100,000 in savings in his own name. The husband has committed adultery and the wife seeks the house for herself and half the savings. She will not compromise on this because she wants the husband to ‘pay’ for the adultery.

Under circumstances such as these the husband should certainly resist and take the matter to court if he has to.  He will obviously have to pay his lawyer to do this and that may cost him, say, £5,000. (It will also, presumably, cost his wife a similar amount although the figure is quite hypothetical and just for the sake of example).

When the application gets to court a judge will say (probably), “Well, this is a long marriage. The total assets are £200,000. The wife wants to remain in the house and so I will order that it be transferred into her sole name. The husband can keep the savings and so that gives £100,000 to each of them” If (and that is a quite likely outcome in these particular circumstances).

If the husband had not fought this case he would have had to pay £50,000 of his savings to his to his wife in order to settle the case by agreement but as things have actually turned out he has retained the £100,000 by going to court.. Paying out for legal advice was a sensible thing to do in this instance – as was taking the case the whole distance to a final hearing before a judge. He incurred, say, £5,000 in legal costs to recover £50,000 he might otherwise not have had.

This is a straightforward example but this type of situation or some variant upon it recurs all the time in divorce law. It is important to understand that no two cases are alike. Knowing what the courts are likely to award (and this case might well have been different if there had been children or if the value of the property were different or if the wife did not work etc etc) in a given case and choosing the most beneficial approach in the light of the stance adopted by the other side is a matter of skill and judgement. It can save (or lose) a client considerable sums of money depending entirely on how it is handled.

Ultimately litigation like this is a matter of economics. It makes no sense to incur legal costs of £5,000 to recover £6,000 but it makes every sense to incur legal costs of £5,000 to recover £100,000.

Do please continue to find out more about resolving the financial issues arising from a marriage in divorce.

Spouses involved in divorce in England always want to know on what basis the UK divorce law decides financial issues between husband and wife if the Courts have to decide the issue. Indeed, this is what is at the heart of most divorce cases. If there is a dispute it is more likely than not to be about money whether that is about periodical payments for a spouse, dividing the equity in the former matrimonial home or divorce and pensions. In fact, the relevant principles are set out in Section 25 of the Matrimonial Causes Act 1973 which, essentially, reads:-

”It shall be the duty of the court in deciding whether to exercise its powers ….. to have regard to all the circumstances of the cases, first consideration being given to the welfare while a minor of any child of the family who has not attained the age of eighteen.

25 (1) It shall be the duty of the court in deciding whether to exercise its powers …. to have regard to all the circumstances of the case including the following matters, that is to say –

(a) the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future;

(b) the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;

(c) the standard of living enjoyed by the family before the breakdown of the marriage;

(d) the age of each party to the marriage and the duration of the marriage;

(e) any physical or mental disability of either of the parties to the marriage;

(f) the contributions made by each of the parties to the welfare of the family, including any contribution made by looking after the home or caring for the family;

(g) …the value to either of the parties to the marriage of any benefit (for example, a pension) which … (by reason of the divorce) ..that party will lose the chance of acquiring;…”

Copyright © Terry & Co. Terry & Co is not responsible for the content of external sites linked to this site. This firm is regulated by the Solicitors Regulation Authority SRA No 76180

Terms of Use                                                         Privacy Policy