Divorce and finance – a brief guide
6th January, 2017
With many people looking on the New Year as the chance to make a new start, the Family team at Ward Hadaway look at financial issues surrounding marriage and divorce.
Starting a new year can mean a fresh start – and this often applies to people’s personal lives.
With latest statistics showing that almost 50% of all marriages end in divorce with an average UK marriage lasting just 11 years, anyone contemplating a change in their relationship will not be alone.
In such an event, working out what happens to finance and property is a key consideration.
Equality has become the guiding principle for settlement, even more so where there are significant assets involved.
So how does this work out in practice?
Property assets tend to form the majority of a couple’s greatest capital. Most property assets tend to be acquired jointly and comprise the matrimonial home so an equal split of any equity may be the norm unless one party’s needs dictate there should be an unequal split.
Just as some people may be deciding on breaking up, others may be deciding to get together.
If you are embarking on marriage for the first or even second time and have either inherited or been gifted property from family members or simply have acquired your own property portfolio before meeting your spouse, it makes sense to consider what you wish to happen if you later divorced.
Whilst these types of property would be classed as non-matrimonial assets, this does not give the owner complete protection from attack within divorce.
Such assets are not automatically ring-fenced so what can you do in such circumstance?
The only way of affording yourself the greatest protection is to enter into a pre-nuptial agreement. This is a contract entered into by a couple prior to marriage which sets out how they intend to regulate their financial positions in the event of a divorce.
Whilst it may not seem like the most romantic gesture, a pre-nuptial agreement has a number of key advantages.
It will give both partners in the marriage certainty and is a sensible form of wealth protection.
It will also reduce legal fees as the issues for the court will be clearer and narrower in the event of a divorce. The average cost of ending a marriage through the courts is £13,100 and that tends to be the small asset cases.
Although not automatically binding on the court, provided it is entered into fairly, that both parties have had the opportunity to consult a lawyer before signing and that there is no injustice if the pre-nuptial agreement is followed, the Supreme Court has ruled that pre-nuptial agreements should be upheld and only departed from in limited circumstances.
Pre-nuptial agreements benefit anyone with assets that need to be divided after a divorce. Of course, there are cases where one or both parties are in business and this can bring additional complexities to the case or their affairs may be tied up with a Trust or farm, but all couples can benefit from a pre-nuptial agreement.
Couples do end up in court on some of the most uncomplicated cases where they may just be arguing over the split of equity in a house.
They still have to fund the costs of the court proceedings and the stresses of litigation are exactly the same no matter how simple or complex their assets.
* For more information on the issues raised by this article, please contact one of our specialist divorce solicitors.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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