Christmas is meant to be a relaxing time, but for many people it’s also a period of stress, tension, and tribulations — especially for married couples.
The financial burden of the holidays plus the pressure to have a “perfect Christmas” and the familiar strain of dealing with in-laws can lead to squabbles and even full-blown arguments. It should be no wonder then that the first working Monday back after the festive break has been branded “Divorce Day”, as men and women who’ve finally had enough look into legal separation.
In fact, online searches for “I want a divorce” rose by 230 per cent in the first week of January 2020 compared to December 2019, according to Richard Nelson solicitors.
If you are considering filing for a divorce, you need to go into it with a clear head — and armed with knowledge. To help you prepare, City A.M. asked John Oxley, divorce and family law barrister at Vardags, for his expert advice.
What are the basic financial issues people should look into when considering divorce?
Divorce will involve an assessment of your entire finances. You need to have a firm grip on what is available — both income and assets — to each party, and what each are likely to need for a reasonable standard of living afterwards.
In most cases, one spouse will have a much higher earning capacity, and so is likely to leave the marriage with less capital — and perhaps ongoing obligations to the other. It is important to consider things such as mortgage capacity too. Both parties will need to be housed afterwards, and often this can be the hardest need to meet.
People should also be aware of how best to manage a settlement — especially when it comes to the tax impact of dealing with properties or businesses in certain ways. Both parties should leave the marriage with a stable financial future ahead of them, with a real sense of how their new needs are going to be catered for.
It is of course crucial to think about financial maintenance for children. There is a set formula for maintenance where the non-resident parent earns under £150,000 per year, but maintenance beyond that — and issues such as school fees — may have to be resolved separately.
How long does a divorce take, and how much can it cost?
If proceedings aren’t contested and negotiations are straightforward, the whole matter can be wrapped up in around four months. Where matters are more contentious or complex, up to 18 months is about average.
Fees will vary in line with the complexity of the case, and the quality of the lawyers involved. Fees are charged on hourly rates, but a good rule of thumb is to expect to spend around five per cent of the assets involved in fees. Some of the biggest cases can last for up to five years and cost millions in fees — but these are highly specialist cases.
What should high net worth individuals or couples be aware of?
For the very wealthy, the complexities are magnified. Their circumstances are likely to be unique, requiring bespoke advice around valuation and division of assets.
The most important thing is to realise what is at stake. For the wealthy party, this could be about half of the wealth they have built up. For the homemaker, getting it wrong could see them go from a life of luxury to one of penury. If one party tries to hide or undervalue assets, it can be very hard to counter it.
The most important thing is to act quickly and get specialist advice from the outset. Failure to deal with complexities such as jurisdiction straight away can have costly consequences. These sorts of cases are multi-million pound pieces of litigation, so it is vital to see them as such and to engage the experts.
What areas do people tend to overlook when getting divorced?
Pensions are regularly neglected. These can be a massive asset, but it is often a case of “out of sight, out of mind”. Generally, any pension assets built up during the marriage should be shared equally between the spouses. Failure to do this can make a big difference to retirement incomes, especially where one spouse has been out of the workforce. Due to the way that returns are likely to accrue, failure to get your fair share of pension wealth could mean leaving a big portion of the marital pot behind.
Equally, where one party has received deferred compensation from work, such as share options, that should also not be neglected. Leaving these things off the balance sheet can lead to cases being reopened for non-disclosure in the future.
What’s your best advice for keeping things civil?
It is important not to get bogged down in the past, and instead focus on the future that you are trying to build. Some couples use proceedings as a way of raking over everything bad that has ever happened between them. It is a recipe for strife and costs.
Ultimately, try to keep the legal side as separate as possible from the emotional fallout of the divorce. Of course, that can be difficult, but staying rational and focused on life beyond divorce is often the best way through it.
Are divorce laws set to change in the future?
The new parliament is expected to finally push through the move to “no-fault” divorce. This will allow couples to separate without going through the process of apportioning blame, and should make the process quicker and easier.
Also, leaving the EU could have serious consequences for cross-border couples. Currently, it is EU law which decides in which court a cross-border dispute can be heard, while also providing for easier recognition and enforcement of judgments across countries. This will no longer apply to the UK, but it remains unclear what may end up in its place. This could be a real headache for couples with lives spread across multiple jurisdictions.
Any final advice for couples considering separation this month?
There is no doubt that divorce is a complex and demanding process. It is emotionally intense, and brings with it the complexities of litigation and making financial decisions.
Those who fare best after divorce are the ones who consider the future. The process is about laying the foundation for the rest of your life and securing your financial future. It should not be about recriminations for the past.
Most of all, remember that the person on the other side of the divorce is someone whom you cherished and with whom you built a family. Whatever has led to the end of the marriage, remaining civil and focused on the relationship you might rebuild afterwards — especially if children are involved — is a good way of moving through the process.
Main image credit: Getty