The Practicalities Of Divorce
Published on 27 December, 2021 | Alison Fernandes
I reckon that very few people ever start something by thinking that they won’t finish.
Who, for instance, accepts a job knowing that they won’t enjoy it? How many people would book a holiday that they believe will be a wash-out?
It’s the same with a relationship. When people marry or enter into a civil partnership, they do so because they want to make a commitment to an individual whom they love and care deeply for.
Nevertheless, it’s true that…well…life happens and many couples end up breaking up.
In fact, according to the latest figures published by the Office for National Statistics (ONS), 42 per cent of couples who married in the year 1994 were divorced within 25 years (https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/divorce/bulletins/divorcesinenglandandwales/2019).
Against those odds, it makes good, practical sense to know what you may have to do in the event of your marriage or partnership not lasting.
After all, divorce doesn’t only exact an emotional toll on those involved, their wider family and friends.
It is often referred to as ‘the ripple effect’ and whilst emotional upset generally subsides over time, the financial implications can be so significant that they can affect divorcees and their dependents for the rest of their lives, so understanding even a little of the main considerations can be of immense benefit.
Whether marriages collapse after many years or a relatively short time, it is worth remembering that they resemble something of a jigsaw, from which every piece needs to be taken into account if spouses are to achieve a fair settlement enabling them both to start over.
One of the key components is financial support. Whereas the awarding of lifetime spousal maintenance – or joint lives orders, as they’re known – used to be commonplace, they are now infrequent and only seen in limited circumstances.
The family courts are keen to avoid former spouses being financially dependent on one another, ideally by establishing a ‘clean break’ settlement at the point of divorce.
If that’s not possible, then maintenance can be awarded but it’s usually only for a fixed term. That means ex-husbands, wives or civil partners needing the earning capacity to support themselves – and that may mean individuals who have not worked for some years having to find a job or those had been working part-time needing to increase their hours.
It was an eventuality which was made clear in a 2015 ruling involving the former wife of racehorse surgeon Ian Wright, who was told that she could not rely on indefinite maintenance and needed to work (https://www.dailymail.co.uk/news/article-2965387/Get-job-Judge-backs-ruling-ex-wife-millionaire-racehorse-surgeon-no-right-supported-life.html).
Earning capacity is a prime factor in someone’s ability to obtain a mortgage and – as divorced men and women need a roof over their heads – needs to be prioritised.
Although family homes are generally the largest joint asset for couples, not every property is large enough to be sold and leave a substantial amount for both parties once the proceeds are divided.
Property features in another vital administrative aspect of divorce. Legal terminology means that spouses and civil partners often own the home in which they live as ‘joint tenants’.
This means that on the death of one joint owner, the surviving owner automatically inherits the share owned by the person who is deceased. It doesn’t matter what the individual who dies may have put in their will: their share of the property will pass to the survivor.
Even before a divorce is finalised, it is important to sever that joint tenancy by serving notice and registering that notice of severance with the Land Registry. It then allows both individuals to leave their respective shares of the family home to whoever they like under the terms of their wills.
Wills can – and should – be changed once a decision to separate has been reached and before the decrees of divorce are granted. If not, and one spouse dies, assets will be dealt with under the terms of an outdated will or – if no will is left – under the law of intestacy which might mean assets being inherited by the individual whom you are about to divorce.
Likewise, the details of any financial arrangement on divorce should be finalised and made binding in something known as a consent order. That is essential to avoid former civil partners or spouses making future claims on their exes.
Again, it’s not a theoretical situation. In 2016, Kathleen Wyatt – the former wife of Dale Vince, the founder of the ‘green’ energy company Ecotricity – was awarded £300,000.
Despite divorcing in 1992, the Supreme Court ruled that she could make a claim on his millions (https://www.bbc.co.uk/news/uk-england-gloucestershire-36499818).
The case illustrates all too well the consequences of not putting a ‘financial full-stop’ to a marriage.
Even though Mr Vince had built up the company after their break-up, the court decided that Ms Wyatt was entitled to a share of his wealth out of financial need.
In 2010, Nigel Page, who won a £56 million EuroMillions lottery jackpot was also ordered to hand over £2 million to the wife whom he had divorced a decade before (https://www.dailymail.co.uk/news/article-1331925/Lottery-winner-Nigel-Page-pay-ex-wife-2m-left-10-years-ago.html .
The needs of any children supersedes even those of their parents. In fact, according to the legislation used to determine childcare arrangements (the 1989 Children Act – https://www.legislation.gov.uk/ukpga/1989/41/section/1), “the child’s welfare shall be the court’s paramount consideration” and, when looking at how family finances are divided, the needs of children shall be the “first consideration”.
That presents a number of issues when it comes to a child moving house or school, including school fees and child maintenance following a divorce and, as a result, careful thought needs to be given to the impact of financial separation on divorce.
Although it might not seem particularly seasonal, we should bear in mind that the New Year doesn’t just mark the end of the Christmas holidays but, sadly, the end of a number of marriages.
However, couples who decide to divorce in January must also contend with the potential of a tax liability.
It is possible to transfer assets to your spouse or partner as part of a divorce settlement without having to pay Capital Gains’ Tax as long as it’s done in the same financial year as the divorce took place.
Concluding the financial terms by which a marriage or civil partnership is ended in the first months of the new year, therefore doesn’t leave much time for assets to be handed over if you are to avoid a tax bill.
Nowadays, of course, those contemplating divorce don’t have to engage a specialist family lawyer.
Earlier this year, the Ministry of Justice reported that 100,000 couples had chosen to use an online divorce portal since it was established in 2018 (https://www.gov.uk/guidance/hmcts-services-online-divorce-and-financial-remedy).
However those cases were just dealing with the paper that says you are no longer married.
When it comes to negotiating the division of finances or arrangements for any dependent children, taking legal advice before beginning the process can save a lot of headaches and considerable cost.
Knowing the legal position at the outset will always stand you in good stead and it’s then easier to do things yourself, if you have been guided as to what you need to do.
Not everyone is a trained family lawyer and myself and my colleagues have dealt with countless cases in which unintended errors can lead to the kind of acrimony which results in matters having to be resolved by the courts.
Understanding not only what and where the pieces of the divorce jigsaw are but how they fit together properly means that it’s not necessarily a puzzle and enables you to see a complete picture which provides a clear future for all concerned.