Divorce Financial Settlements
At IBB we have an accredited and highly respected team of divorce lawyers to advise on complex issues arising on divorce finances.
Under English law, the initial presumption is for a 50:50 division of assets on divorce. However, there are so many different scenarios that this presumption is very often displaced. In many divorces, dealing with assets will also involve looking at short, medium and long term scenarios, especially where there are young children or where there may be insufficient assets to retain the lifestyle as regards home ownership and lifestyles generally.
Other factors will also need to be taken into account – especially where either or both parties are at an age where they may remarry. If that does happen, a party paying maintenance may not be in a financial position to continue payments if he or she has a new family and other children. Where a party in receipt of spousal maintenance remarries, his or her entitlement to maintenance will cease from that point; civil support will continue.
The family home
In most divorces the family home is the main asset. There are many different methods of determining how to deal with the family home, which can include:-
- One partner can buy the other out
- selling and dividing the proceeds in agreed proportion
- deferred sale agreement whereby one party stays in the property until their children reach a certain age and then the property is sold. Complications with this can
- include whether to negotiate to include certain variables in such an agreement as many things may change in a significant intervening period
All assets and debt to be taken into account
A common problem inflaming divorce finance disputes relates to disclosure. In some marriages, whether in anticipation of divorce or otherwise, one or both parties may have deliberately kept secret certain assets or debts or perhaps transferred assets into other legal entities so as to attempt to stop those assets being included in the divorce pot.
There is a duty on both parties to make full disclosure of assets to each other but, in reality, this does not always happen. Where the wife or husband suspect that there are hidden or dissipated assets, expert advice and investigation may be required. A number of high profile cases including the well reported case of Prest v Petrodel indicate just how bitter these scenarios can become. In that case the husband was prepared to go to prison for contempt of court rather than make full disclosure of his assets.
Types of assets where negotiation may be useful because it may not be the best time for the assets to be sold can include additional properties such as buy-to-let properties or quoted shares. Particular difficulties and issues can apply to ownership of a business by one or both spouses.
Where husband or wife owns a business
Dealing with a privately owned small business presents particular difficulties. If the husband owns a small business or is a shareholder in a small business, the scenario where the wife suddenly becomes part or full owner can change the dynamics and possibly damage the business at a time when the income generated may be vital for paying maintenance going forward. There may be provision for a shareholder agreement (or partnership agreement if applicable) with third party shareholders or in a company’s articles of association whereby a transfer of shares is not permitted.
Valuing a privately owned business is also far from straightforward. There are many different valuation methods and the typical scenario is that the owning spouse effectively is the business. If he or she is removed, or that share in the business watered down or that response is demotivated going forward, the business may not be nearly as valuable or could even fail.
There are several different ways that a pension can be divided on divorce. This is a complex area and expert advice from an actuary will be required in most cases with any significant pension.
Clean break – full or partial possibility?
It is not unusual for either or both parties to prefer a final financial resolution. It can certainly assist with both being able to move on and start a new life. However, where there are children, there is often no immediate clean break and both parties will have liberty to apply to the court if circumstances change so that different income provision is needed until the children attain adulthood.
The Court actually has a duty to consider a Clean Break where possible. Often this is not possible but is of course dependent upon the parties financial positions and circumstances. You can have a clean break on capital and pensions but whether or not there is a clean break on income will depend upon your individual circumstances.
Contact our divorce and family law experts today
If you would like to discuss any aspect of divorce and family law, divorce and pensions or want to draw up a pre or post-nuptial agreement or cohabitation agreement, call our mediation, divorce and family dispute resolution solicitors in absolute confidence on 03456 381381. Alternatively, email us at firstname.lastname@example.org.