Family Law experts say that the process of divorce, negotiating over finances and family arrangements, is becoming ever more complex, and suggest couples should be more open to making agreements and understanding finances from the outset.
The value of family assets is on the increase particularly for middle-aged couples, which means when couples come to hammer out a fair division after a marriage breakdown there is more at stake. Wealth statistics from ONS show that by 2014 half of all households had total wealth of £225,100 or more.
Pensions are increasingly important in divorce negotiations
Family property tends to be thought of as the biggest asset. However, thanks to stock market increases pension values have surged and the Wealth Statistics show private pension wealth was the largest component of aggregate total wealth.
In addition, recent changes in legislation have opened the door to greater flexibility in accessing pension pots which makes them increasingly significant in divorce negotiations.
Many more partners are seeking a share of pension arrangements on divorce. The Ministry of Justice report a 43% increase in pension sharing orders, at 11,503 in the 2016-17 tax year, compared to 8,027 in 2015-16.
Pension sharing orders are issued by the court, setting out the share of a pension an ex-wife or husband will receive from their former spouse.
Can a spouse expect an equal share?
In recent years spouses divorcing after a long marriage have come to expect an equal share of all assets, irrespective of any decision on needs, and whether or not one was the home maker.
However some have seen the recent case of Hart v Hart as a shift in attitude. After a 23 year marriage the wife was awarded £3.5m, out of total resources of just under £9.4m.
Despite the long marriage the judgement gave greater weight to the pre-marriage wealth of the husband. The wife’s settlement was based on a calculation of needs, rather than equal sharing of assets.
Advanced preparation may prevent future uncertainty
This case was a complicated one, and it is unusual to see pre-marital wealth being given such consideration after a relatively long marriage, during which finances may have mingled.
But, together with the increasingly complex finances of those embarking on late, second or subsequent marriages, it’s an outcome that may encourage more new couples to seek pre-nuptial agreements, or sometimes post-nuptial.
While such agreements are not automatically legally binding in England and Wales, they are likely to be upheld, if done properly, following the 2010 landmark case of Radmacher v Granatino.
It’s a way of clearly setting out what each person has brought into the relationship, in case of any later division of assets and final payout.
What is important is open communication and understanding of financial affairs, and making such an agreement can help couples to have a more frank discussion at the outset.
Often, one partner may take the lead on finances, or some couples may just avoid it, as they think it’s a tricky topic. But understanding what you have today, in a positive, settled relationship, may mean you can better cope if the worst happens and things become difficult in future.
ABOUT DANIEL RUSHTON
Daniel has over 20 years’ experience as a specialist family law solicitor. He is Head of the Family Law team at Grindeys Solicitors based in Stoke on Trent.
Daniel has a particular interest and experience in dealing with business owners, company directors and members of the medical profession in matrimonial situations. For this type of work a solicitor who understands your business accounts and business structure is vital to obtain the best financial settlement possible.
Recent cases include one involving an international business and extremely valuable assets and pensions, as well as property abroad.
He has acted for numerous doctors and other medical professionals, council workers, police officers and serving members of the armed services. In twenty-three years, Daniel has dealt with all walks of life and will adopt a professional yet caring approach to your situation.