Divorce and Family Finances in Times of Uncertainty

Family lawyers always advise their clients that without a full picture of the family’s financial resources and obligations it is difficult if not impossible to advise any particular client in anything other than general terms.

The settlement of financial remedy claims following separation and on divorce also requires a degree of speculation as to how their financial position will develop over the coming months, if not years.

Lawyers regularly advise their clients about the principles that the Family Court applies to the distribution of assets, resources and obligations talking of “needs” and “sharing”. As we now find ourselves in times of great financial and other uncertainty, how can someone know what sum they will need to purchase a new home when property prices are so uncertain, or whether they require maintenance if their job is suddenly insecure? How will someone know whether a proposed settlement amounts to half of the family assets when values of investments and pensions change daily, and businesses very difficult to value?

What Options Do You Have?

The most obvious route to take is do nothing now and wait for better times. This has the obvious attraction that once things become clearer, clients will be better able to value their assets and assess their future needs. If the parties have stable and affordable interim arrangements, then this may be sensible. Negotiations could be paused.

Formal Court Proceedings

Where there are formal Court proceedings, the Court could be asked to postpone resolution of the whole of the claims.  Adjournment of one or both parties’ lump sum claims is also possible as an alternative to deferring settlement of the entire case and in principle there would seem to be no reason why a lump sum claim cannot be adjourned in view of the uncertain circumstances. This step is usually restricted to exceptional cases but there may now be cases where one of the parties would be able to demonstrate that there is a genuine need to adjourn the claims.

Providing For Different Scenarios

A further way to deal with this could be to provide for different scenarios within any settlement or Court order. For example, the amount of a lump sum to be paid could depend on the sale price of a particular asset or its value on a date with the parties taking percentage shares so that they each share the risk of any uncertainty. Any ongoing maintenance between the parties could be said to be self-varying depending on the earned incomes of both parties. The timing of the sale of any property could depend on advice from an estate agent. Whilst agreeing terms may be more difficult than normal and require a bit more thought and creativity, many couples will still prefer to reach a settlement now rather than put decisions off to some point in the future.

There will be couples for whom doing nothing for now is not an option or for whom it would throw up new issues to resolve.

What Could Happen?

The uncertainties about employment, with the prospect of reduced wages, furloughing or redundancies may mean that the Family Court would need to be asked to deal with maintenance and financial support between parties on interim basis to ensure that urgent needs and obligations are met, whilst an overall settlement is postponed or achieved.

The risk of bankruptcy may also increase as financial pressures mount and specialist legal advice may be needed to protect or preserve assets from creditors – please see my ‘Bankruptcy, Divorce & The Family Home’ blog.

What is clear is that anyone entering into a settlement now does so in full knowledge of the uncertain times in which we find ourselves. It is highly unlikely that someone will be able to ask for a settlement now achieved to be set aside on that basis. Great care is therefore needed to ensure that couples are aware of all the options that are available to them.

 

Adrian Rose
16th April 2020

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