08 Feb 2021
Family & Matrimonial
Following a divorce, sorting the division of funds and assets is a daunting but unavoidable task as it allows a clean break following the split. In many cases, an agreement over the division of funds can be achieved through mediation but if not, financial remedy proceedings allow the dispute to be settled fairly in court and establish how the money and assets should be divided between the two parties.
Often, claims are made on a ‘needs’ basis with one party claiming that they need more than half of the share of assets. A financial remedy order can include lump sum payments, shares of pensions, property ownership and regular payments for childcare and other needs.
During these strange times in which we all find ourselves, financial remedy proceedings are proving to be very different from those in pre-Covid days.
The pandemic has affected every aspect of people’s lives, not least their finances, and the economic outlook is currently uncertain. In the wake of the crisis, share prices have fallen, interest rates have been cut, we have seen unprecedented government spending and thousands of businesses are sadly collapsing.
Clearly, this means that the value of pension funds, property values, investment portfolios and company shareholdings are all likely to be reduced, and while all this is obviously being taken into account in the courts when decisions about the long term financial needs of both parties is being considered, it is making it more difficult for the courts to get a clear picture of the couple’s finances going forward.
If you are currently going through a divorce and your assets had already been valued before the Covid crisis, it would be wise to arrange re-valuations before continuing settlement negotiations.
The shifting global financial position has meant that, on the whole, the courts have been showing more generosity in their awards to the party who has the weaker financial standing.
We have also found that the courts are awarding Mesher Orders or ‘orders for deferred sale’ more frequently than they have done previously. These allow the sale of the family home and the division of the proceeds of sale to be postponed for a certain period of time or until a particular trigger event happens, such as when children finish full-time education.
As well as the Coronavirus pandemic, the publication of the Pension Advisory Group Report in July 2019 has also had a significant impact on financial remedy proceedings. Until this report was published, one party in divorce proceedings would often ring-fence part of their pension that was said to be ‘non-matrimonial’ – i.e. any contributions that they made before they were married – and this would be excluded from financial settlements.
One of the main outcomes of the Pension Advisory Group Report was that a clear and unified approach was needed across the courts as while this ‘apportionment’ of the pension pot was common in some areas, in others it was not. This means that we have been seeing a real shift towards the entire pension being divided between the two parties.
For many recent divorcees whose financial situation has changed significantly as a consequence of the pandemic, this is obviously cause for concern. Any settlement already mandated by the court will have been decided based on previous years’ income and assets, but for many, these figures will have been turned upside down since the pandemic began.
If an order was made before the pandemic and the financial situation has changed drastically as a consequence of the crisis, it may be possible to revisit the financial remedy order and get it set aside, but this will only be allowed to happen in truly exceptional circumstances. It may be possible to apply to the court to vary a financial order in advance of a continuing or future obligation, but usually only before it has been implemented.
Leah Thomas is a senior associate solicitor in our Family & Matrimonial department at Harding Evans and knows how stressful and emotionally draining divorce can be. Our expert and friendly team can advise you on all aspects of getting divorced and will help to minimise the stress and upset that inevitably comes with ending a marriage. For a confidential discussion about your situation, please contact the Family Law team on 01633 244233 or email firstname.lastname@example.org.
Harding Evans is a trading name of Harding Evans LLP, a limited liability partnership, registered in England & Wales (registered number: OC311802), authorised and regulated by the Solicitors Regulation Authority (SRA number: 419663).