Divorce and the financial impact

Together we are Forbes

Article

10 April, 2017

The most daunting aspect for couples once they decide to go ahead with a divorce is the impact of finances. Consideration needs to be given to the methods that are available and to talk through financial issues in order to reach the best, fair and desirable financial settlement. Financial issues are unique to each couple so the outcome will differ from couple to couple.

A helpful chronology to follow is to firstly consider the immediate financial concerns after separation. Couples need to consider how they can keep going financially, preferably without getting into debt, during this transitional period. The next question, which is usually the concern of most couples, is what will happen to the family home and whether it has to be sold. Information needs to be gathered about the valuation of the property, the outstanding mortgage if any and to either spouse's ability to retain it. The family home is often the main asset and pivotal to decisions about the remaining assets.

Thereafter the couple need to gather all information regarding income, savings, investments, pensions, valuations of any businesses and any debts. Once values have been allocated to the couple's asset pot, discussions can then take place about percentage splits and whether (if any)maintenance has to be paid after divorce and how long this should go on for.

There are many options available for people to amicably negotiate, avoiding Court proceedings, so long as the couple share the ability to talk through the issues. Difficulties arise where there is a lack of open and honest communication. Disclosure and honesty are both essential in dealing with finances, it is only then that the couple involved know exactly what they are dividing and that split of assets can be made fairly. If one spouse is tempted to hide assets and not disclose them, or even go so far as disposing of assets, panic can often set in which has a direct impact upon the way financial matters are dealt with, which naturally leads to an increase of litigation costs and animosity. The best conciliatory options available to assist couples work through their finances are through open negotiation, mediation or collaborative law.

If the consolatory approach fails there is always the last resort of Court proceedings, in which the Courts have power to ensure there is full financial disclosure and that the assets are preserved. If the one spouse is found to have hidden an asset, then the Court will take that very seriously and there can be penalties, which can include paying the other sides legal costs or by being given a less favourable settlement. The Court also have the power to reopen a financial case and make a different order if it is found at a later date that either one spouse has not disclosed all of their assets.

All in all the best approach to finances is to be open and honest and, as best as possible, to work together and retain control to reach a valuable financial settlement.

Rubina Vohra is an Associate in the Family Department and can be contacted on 01254 505832 or email Rubina Vohra

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