Dispelling Common Myths About Finances and Divorce
Divorce is undoubtedly one of the most unsettling events a person can face in their life. On the Holmes and Rahe Stress Scale, divorce rank second as the most stressful life event, preceded only by the death of a spouse.
When a couple divorce, two concerns usually dominate, namely:
- What will happen to our children, and
- How will we divide our finances?
When it comes to separating finances if you choose to divorce, several prominent myths prevail. This article dispels these, allowing you to approach your financial settlement negotiations armed with the facts.
Myth 1 – “What’s mine is mine and what’s yours is yours”
There are two common myths that prevail around the issue of separating property and money upon divorce. The first is the “what’s mine is mine and what’s yours is yours” misconception. Many people believe that if they owned a property or a pension prior to getting married, it remains theirs and will not have to be shared with their spouse if they divorce. However, unless you entered into a Pre or Post-Nuptial agreement, property you owned separately, prior to your wedding day can be difficult to ring-fence from the financial settlement. For example, if you received an inheritance but used the money to make improvements to the family home, it may be difficult to argue the money is non-matrimonial property. And even if the property is identified as non-matrimonial, the court may still decide it must be included if the other party will be financially disadvantaged by allowing the assets to remain separate.
Myth 2 – Everything will be shared 50/50
The starting point for dividing finances when a couple decide to divorce is to divide property and assets 50/50. However, the court can deviate from a 50/50 division of assets if it is fair and reasonable to do so.
When deciding how to apportion property and assets, the court will have regard to a checklist contained in section 25 of the Matrimonial Causes Act 1973. Considerations under section 25 include:
- The financial needs of any children under the age of 18 years. For example, if one party will have children living with them predominantly, they may be granted more of the capital to buy a bigger house.
- The income, earning capacity, property and other financial resources that each of the parties to the marriage has or is likely to have in the foreseeable future. For example, if one spouse gave up their career to care for children or elderly relatives, they are likely to need greater financial support initially so that they can become independent.
- The standard of living the couple enjoyed during the marriage.
- Any physical or mental disabilities that may be applicable to one of the parties being able to earn an income.
- The age of each party and how long the marriage lasted.
Included in section 25 considerations is the conduct of the parties. However, it must be emphasised that conduct can only be a factor if it was such that the court would consider it inequitable to disregard it. The current leading case on conduct and financial settlements is Miller v Miller; McFarlane v McFarlane [2006] 1 FLR 1186, [2006] 3 All ER. This case makes it clear that the conduct of the parties will only be considered in exceptional circumstances, and it must be ‘obvious and gross’. For example, conduct was considered in the case of Jones v Jones [1975] 2 All ER 12. In this case, following the decree absolute, the husband attacked his former wife with a knife, severing the tendons of her right hand, and leaving her virtually unemployable.
Myth 3 – You must go to court to have a financial settlement agreed
Very few divorce cases end up in court. The entire ethos of the English family law system is designed to assist couples to work out matters regarding finances and arrangements for their children between themselves, with the help of a solicitor and/or mediator.
Organisations such as Resolution and the Collaborative Law process (both of which Hart Reade belong to and practice in), are designed to support families using alternative dispute resolution methods, such as round-table negotiation and mediation, to resolve differences and work out how to divide matrimonial assets.
In summary
There are many myths surrounding the divorce process and reaching a financial settlement. To make the best decisions, the best move you can make is to talk to an experienced family law solicitor at the beginning of the process. They can support and guide you through the process, ensuring the best interests of you and your children are protected.
At Hart Reade, each of our family law solicitors are members of Resolution. In addition, many of our team are Collaborative Lawyers. Both organisations advocate for using non-confrontational methods for resolving family law disputes.
We can provide you with a wealth of information, advice and support regarding children’s law matters.
We offer an initial free half hour appointment.
To talk to any of the family law team, please call us on 01323 727 321.
Please note, this article does not constitute legal advice.
Link https://www.stress.org/holmes-rahe-stress-inventory/