The DIY Divorce: Saving a Packet or False Economy?
If you have considered divorce or separation recently, then you may know that the process for doing so has changed. You no longer need to provide reasons for wishing to become divorced and you and your spouse can make an application jointly if you have agreed that a divorce is appropriate.
Perhaps the most important change is that you can now apply to the court yourself. A great deal of the rhetoric around the new “No-Fault” divorce has been that a couple has autonomy to jointly make the application, on-line, through the courts new simple and streamlined process. This is great news – a couple can save around £1000 on lawyer’s costs if they so choose. (The court fee of £593 will still be payable directly to the court.)
However, what many people do not know is that simply dissolving your marriage does not dissolve the responsibilities that you still have for each other by virtue of your marriage, in particular, in respect of finances.
When you get married, you immediately share all your wealth, including assets, pension and to an extent, income. Even if you get divorced, the ties that were formed in respect of your finances when you married will still be there unless you get an order from the court formally dismissing them.
This is separate to the divorce process and needs to be done along side it.
Case Study
Judy and John married in 1999 and have one grown up daughter who has happily moved in with her partner. Judy is 55 and John is 56. They have a home together, some savings in joint accounts and John has worked his whole life contributing to his pension. Judy has a smaller pension, having spent time out of the workplace to raise the parties’ daughter. The couple have a nice lifestyle: regular holidays abroad, meals out and nice cars each. Judy is now looking after John’s elderly mother who is widowed, and very sick.
Judy and John make the difficult decision to apply to the court for a divorce. John has sadly lost his mother and received an inheritance from her. They sell their home and split the proceeds equally, share what they have in the joint account and look at buying their own homes separately.
By the time their Final Order of Divorce comes through John has been able to buy a bright and airy, mortgage free home, and is thinking of retiring early as his pension can afford him to do so. He has just booked to take his daughter and her partner on a cruise. Judy on the other hand is struggling. She has bought a modest new house with a small mortgage which needs renovating, and her income isn’t enough to meet her outgoings. Her pension forecast is not great, and she doesn’t know what to do.
Judy’s friend Marge mentions to her that when she was divorced a few years ago, she was entitled to a share of her former husband’s pension, and that she should go and have a chat with the solicitor who helped her, to get some advice.
Judy meets with the lawyer that Marge has recommended and has a free initial consultation with an expert in family law. She comes to understand that although she and John are divorced, they remain financially linked, and that the financial disparity that she and John now have could still be addressed.
Advice
Judy is advised that a married couple have claims over each other in respect of assets, income and pensions and that those claims remain live even after divorce until an order of the court is obtained which officially terminates the claims.
There are lots of factors that a court would look at if it were considering this case, but it is likely that the most important factors here are making sure that the parties needs are both met, and that the outcome is fair.
This means that Judy could be entitled to a share of John’s pension – so that she has the same income as he does in retirement. It also means that she might be entitled to some of the inheritance that John received from his mother at the time the parties were separating. A more detailed look at the parties’ needs would be necessary and it is hoped that the former couple could work together to reach an agreement without having to go to court.
Judy is advised that a pension sharing report would be required from a pensions expert to determine how the pension ought to be shared, especially given that John’s pension was now in payment and because they are both close to pension age.
This is good news for Judy, as it means her future could now become more secure, but it will probably not be welcomed news to John, who has invested his inheritance and has settled into a comfortable life having not considered that it might change. He now faces having a reduced income from his pension – he might not have taken early retirement had he known that his pension was going to be shared – and having to find a way to release some of the capital from his new home to ensure that Judy’s needs are met in the same way that his are – he might have bought a more modest home had he realised.
In this scenario, John is probably far less likely to enter into process where matters can be resolved voluntarily or amicably, because he might feel like he shouldn’t have to make changes to his new independent life. Had he and Judy taken advice at the time that they separated then they would have understood right from the start what the law considered to be fair and reasonable, and could have incorporated this into their agreement and built their new lives without it being upturned again some years later.
Now, both John and Judy are facing large legal bills and a period of turmoil while matters are resolved through the courts
At Warners we can support you through your divorce whether you decide to make the initial application yourselves, or wish for us to do it for you. We understand that times are tough; that long and lengthy legal battels are far too expensive for most people to even contemplate and that making a saving of £1000 on legal fees can make all the difference when the cost of living is soaring.
However, the single most important thing you can do when applying for divorce is to arm yourself with the facts about how it will affect you and your family. If you get divorced, you will still have financial links to your former spouse and they could activate a claim at any time. Severing these ties when you get divorced is the best recommended course of action and doesn’t have to involve going to court.
We offer an initial, free, no obligation consultation with a specialist family solicitor. Know your rights and responsibilities, understand the consequences and make decisions based on knowledge.
It’s false economy to do otherwise.
Click here to make a free appointment today.
Slider Photo by Kelly Sikkema on Unsplash
Feature Photo by Zoriana Stakhniv on Unsplash
Author: Tim Larkin
Head of Digital, Ignite Studio with over twenty-five years of professional experience in the design industry.