Divorce: The Big Financial Questions Answered

With all the goodwill in the world, sometimes a marriage just breaks down. Throw a global lockdown into the mix and it’s no surprise divorce rates are set to rocket. But splitting up can be an expensive thing. To help you make sense of the financial consequences, we got answers to some important questions.

Is there any way to know how much a divorce might cost right up front?

“The court fees for issuing a divorce petition is £550. But the ‘expensive’ part of separation and divorce comes to down to resolving how assets are going to be divided and/or what arrangements there will be for any children. Generally, the more complicated the issues or the more contentious the disagreements, the greater the cost. The court has an objective to try and ensure that parties resolve any disputes in a proportionate manner and we certainly always advise our clients to think sensibly before pursuing a point – including considering the potential cost consequences.” – Carly Kinch & Ellie Hampson-Jones, family and divorce law specialist from Stewarts Law.

“Every relationship and case is different, and it is impossible to know at the outset how much it will cost you to get divorced. Most firms will give you a bracket of estimated likely costs and should keep you updated as to the costs incurred. It depends on how matters are resolved – obviously amicably negotiating a financial settlement will cost less than having to go through financial court proceedings.

However, it is possible for the divorcing couple to arrange their divorce online, without involving any lawyers. Fees associated with this are minimal, but you would still have to resolve other financial matters and issues around the children.” – Shona Alexander, partner & family law specialist at Charles Russell Speechlys

How do you know if you can actually afford to get divorced? 

“It can be daunting to take advice if you are the financially weaker partner or spouse, and it’s not unusual for them to worry about the costs that this might incur or how these can be met. However, this should not be something that pushes you to do a deal without lawyers, which can be a costly mistake. An early, initial consultation with a specialist family lawyer will be invaluable in helping you understand what your entitlement might be and also what the various options are in terms of funding the divorce process. For example, if you cannot access money to meet legal fees but your partner or spouse has sufficient funds which they are controlling and will not let you have access to, this is one of the first steps you could instruct your lawyer to resolve.” – Carly & Ellie 

Is it always the case that you each pay for your own solicitor? 

“Generally, each party meets their own costs. However, it is possible to obtain help with funding from the other party if they are in a much stronger financial position. It is also possible to obtain commercial lending through a litigation loan to help see you through the proceedings (there is specific criteria when applying for both of these types of options which apply and require thorough consideration). Cases can take longer than first anticipated, especially as the pandemic has affected staffing in courts up and down the country. If you are with the right lawyer, they will help to manage the costs incurred on your case and will have in mind the court’s duty to deal with matters proportionately.” – Carly & Ellie

“Bear in mind most solicitors charge on a ‘time spent’ basis and will be clear about their fee structure from the outset. Some firms offer fixed fee options or packages which may help with financial planning, especially if the divorce arrangements become more complex.” – Shona 

Does how much you are jointly/individually worth affect who you should instruct – for instance, is there a reason some people appoint a big London firm as opposed to a high street solicitor? 

“The nature and make-up of a family’s wealth can have considerable bearing on fees, and which law firm is right for the case. If the family assets are complicated, for example, including trusts, business interests, significant pension funds and/or assets in other jurisdictions there may be a need to bring in other private wealth specialists from within the firm such as tax, trust litigation and possibly corporate/commercial assistance. In these circumstances, appointing a firm with broader capabilities may be very important and can assist considerably as the experience and expertise within such law firms in dealing with complex cases in a commercial and pragmatic manner can be central to achieving the right settlement.” – Shona 

“When determining what type of lawyer you want to instruct and establishing whether or not you need a specialist, it’s helpful to think of it like a medical problem. Is the problem relatively straightforward? Could it be resolved by a GP or is it complex – do you need specialists and more resources? Determining the complexity of your situation can depend on a number of issues, including whether you have children and what their needs are, whether you divide your time between the UK and another region, or how your combined assets are held. The specialism and resources that the leading matrimonial firms can provide explains the difference in cost. Hourly rates vary between firms – those who are specialist will cost more than their high street counterpart. There is both a financial and emotional cost of litigating matters. Many of the country’s best matrimonial lawyers are the ones who help their clients to avoid the acrimony.” – Carly & Ellie

If you don't have your own income, what might you be entitled to?

“The English court does not discriminate between the homemaker and the breadwinner and the starting point (although always subject to some exceptions) is that assets built up during the marriage should be divided equally between the parties. In relation to spousal maintenance, there is no set formula or calculator used to quantify this and every case is different; your entitlement will depend on myriad factors that will all need to be considered in the round, including how much capital you have to meet your needs.” – Carly & Ellie

“Financial matters in a divorce are based upon the parties’ reasonable housing and income needs and the needs of any children. If the parties’ needs are all met and there is an excess remaining then the “excess” may be shared – but this depends on the length of the marriage, the provenance of the wealth, whether there is a marital agreement etc. It makes no difference whether the husband or wife works or who has the assets. All the assets in the case will be taken into consideration.” – Shona 

What if you are the main breadwinner in your marriage?

“In England and Wales, the court will look at each party’s earning capacity, the income that each party is bringing in and how the family have lived during the marriage. They will also take into consideration factors such as the length of the marriage and whether there are any children or not. These factors will all combine together to determine the other party’s entitlement. In much the same way as if a female after a long marriage – having been the primary carer of the family’s children and having stepped out of the workplace to take on this role – is likely to be entitled to ongoing income support, their male equivalent would be too.” – Carly & Ellie

Whose responsibility is it to provide for children financially after a divorce?

“If the children are living predominantly with one parent, then the other parent may have to pay child maintenance, dealt with by the Child Maintenance Service. If the children are living between two households equally, then child maintenance may not need to be paid.” – Shona 

“In England and Wales, it is not possible to ‘contract out’ of financial obligations owed to a child. There is a nifty calculator on the official government website which can help you work out what support you could obtain from the other parent (or, likewise to work out what you may need to pay). The calculator looks at gross income, how much time each parent spends with the child and how many children there are overall. If the party likely to be paying the child maintenance earns more than £150,000 gross per annum, then it is possible to make an application to the court to determine how much child maintenance that parent should pay. Otherwise, it falls to the Child Maintenance Service to calculate the appropriate figure.” – Carly & Ellie

The English court does not discriminate between the homemaker and the breadwinner and the starting point (although always subject to some exceptions) is that assets built up during the marriage should be divided equally between the parties

What's the difference between marital and child support?

“Child support is to help maintain a child and meet their expenses, for example, their food costs, share of utility bills, clothes and the like. It is not possible for a parent to contract out of this obligation. Spousal maintenance or ‘marital’ support is different. This is an entitlement to income arising from the marriage (and lots of various factors). This enables the financially weaker party to meet their outgoings until they are able to achieve financial independence.” – Carly & Ellie

What happens to any cash held in joint accounts?

“You are entitled to 50% of the funds held in the joint account. If the joint account is used to meet all of the regular family outgoings and utility bills, this should be kept in place until such time as the finances are resolved – unless it no longer becomes affordable to do so or one party abuses the position and spends in an excessive and reckless way. In those circumstances, it will be necessary to agree interim arrangements to meet the family’s expenses whilst the substantive financial issues are resolved. If you are concerned about how the funds in a joint account might be used by your partner or ex-spouse, it would be better to get on the front foot and take advice as to what is the best way to mitigate any concerns or risks.” – Carly & Ellie

And what about shared assets like pensions or health plans?

“It is possible for the court to order that pensions be shared. It is also possible for parties to agree or promise to maintain health or other insurance plans.” – Carly & Ellie

“In some cases, a pension sharing order may be made. If one party has company or private health cover this may be continued for the children, but it is unusual for the cover for the divorced spouse to continue under that plan.” – Shona 

And who ends up responsible for joint debts like overdrafts, mortgages or loan repayments? 

“The starting point will be any joint liabilities that are shared equally. However, it all depends on the resources available and what can be done to achieve a fair settlement. It may be fair for one party to take on the greater share of the debt if they are better equipped to service it in the long run. There is no exact answer – every case is different.” – Carly & Ellie

Is it always necessary to sell your house and how do you split the proceeds?

“This varies in nearly every case as it depends on what other resources are or are not available.  It is certainly not the case that the family home is sold in every divorce. It is possible to have creative solutions such as one party buying out the other, or if that is not possible, perhaps remaining in a property, for example, until a child reaches 18 or 21. It all very much depends on the circumstances of the case.” – Carly & Ellie

Can mediation – that is, not involving lawyers – be enough to secure your financial future?

“Mediation can be a really practical and cost-effective way to resolve disputes. A mediator is independent and their role is to facilitate an agreement between you and your ex. Mediation is typically most successful when you have a lawyer in the background or you have at least taken advice prior to mediation so that you can be sure that any agreement reached is fair and reflective of an outcome the court might impose (or if not, you have at least made an informed decision as to why not).” – Carly & Ellie

What should you do if you think your spouse might be hiding financial assets/errors?

“Take advice, and the sooner the better. The right advice and right resources could make all the difference. The court does not take kindly to husbands or wives who try to squirrel money out of reach of their spouse and it is very difficult to do this successfully. Not only is it hard to truly hide assets, the court has powers to stop and/or reverse transactions that have been done with an intention to defeat the other spouse’s claims.” – Carly & Ellie

“It is a duty of both parties to provide full and frank financial disclosure while resolving the financial issues. If you think your spouse might be hiding financial assets, then you can go to court to seek an order for further disclosure. If parties do not fully disclose their assets following a court order, then they can be sent to prison for contempt of court.” – Shona 

Do prenups make any difference?

“There was a time when people in England and Wales believed pre-nuptial agreements were not worth the paper they were written on. But times have changed. Provided certain criteria are met, a pre-nuptial agreement could have considerable weight in determining the outcome of a case. It is no longer safe to assume that if you enter into one, you will not be held to it. Indeed, people who have entered into a pre-nuptial agreement that has been properly prepared with independent legal advice should assume that they will be held to its terms.” 

“Pre-nuptial agreements do carry a lot more weight than they previously did, and while they are not yet legally binding in this country (as this would require a change in the law), they are certainly a major factor that is taken into consideration when finalising the divorce settlement. It is also possible to enter into a post-nuptial agreement – i.e. a marital agreement after you have got married in the event that your circumstances change.” – Shona 

Carly Kinch is a partner and Ellie Hampson-Jones is an associate in the divorce and family team at Stewarts. Shona Alexander is a partner & family law specialist at Charles Russell Speechlys. For more information, visit the government website here.
 

*DISCLAIMER: Features written by SheerLuxe are not intended to act as official or financial advice in any capacity. Views expressed in this article represent those of the qualified experts interviewed. Always seek professional advice before making any decisions. 

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