This is a guest post from Anna Heenan, lecturer in law at Cardiff University School of Law and Politics and consultant with the Family Law Practice, Bristol. Anna would like to thank Dr Sharon Thompson for her assistance with this post.

This week, the Telegraph featured an article with the headline I’m getting divorced. Do I need a financial adviser? The article appears to be an advert for the financial advisers Quilter, so it is perhaps unsurprising that it promotes financial advisers as a potential solution to expensive legal fees. Financial advisers can be useful for some couples, and can bring expertise that neither divorcing couples nor their lawyers have themselves. However, the article makes several errors about divorce law and procedure, and glosses over the complexities of how assets are split on divorce. Additionally, at times, the article appears to suggest that using a financial adviser may be a substitute for legal advice, which it is not (neither is this blogpost!). 

What is the goal of financial arrangements on divorce?

The article wrongly states that ‘financial equality is the goal’ of dividing assets on divorce. It incorrectly uses the case of White v White as authority for this, when the judges in the case clearly said the aim is fairness. In suggesting that an equal division is the default or likely outcome of most cases, the danger is that the Telegraph article might discourage a financially vulnerable party from exploring their options and entitlements, when in fact they might have good prospects of securing a greater share of the assets than their ex in order to meet their needs.

For most couples, fairness means dividing their assets so that both of their needs are met. Needs are judged according to the couple’s lifestyle, but will often include things like a need for housing and income. You can find more guidance about needs here.

Often, dividing assets equally won’t be enough to meet both spouses’ needs. For example, if one partner is working part-time to look after children, they may need more from the joint pot because they will have less income of their own.

Where needs are met (in practice, this means where a couple is relatively wealthy), it is more likely that fairness will equate to something like equal division of that wealth, but even here the court will consider two extra principles in deciding what is fair: compensation and sharing. Compensation cases are rare; they generally involve one spouse giving up a very highly paid job to look after children. Broadly speaking, the sharing principle means that if there are assets left over after needs have been met, they should be divided equally unless there are good reasons not to. Examples of good reasons might be if assets were inherited or owned before the marriage. These arguments are only relevant if needs are met. For most married couples, all assets are considered: dividing one household into two means there is less for everyone, so everything is required to meet needs.

What orders can a court make?

The article suggests that having a financial adviser to help you divide things equally ‘could even avoid a costly court case’. However, even in cases where the sharing principle applies, a court would not normally expect a couple to divide each individual asset in half. In court decisions about financial arrangements on divorce, courts can make orders against capital assets, pensions or income. These different things can be offset against each other. For example, you might decide not to claim against your spouse’s income (often called spousal maintenance) in return for keeping your pension or home. The idea is to make the right combination of orders for your individual circumstances.

How does the court process work?

The article wrongly says that ‘orders relating to this [financial matters?] must take place before a divorcing couple apply for decree nisi’ (the midway stage of the divorce process, outlined below). If you and your spouse can agree, there is no need to physically go to court about your finances. You can send a draft court order for the court to approve (known as a consent order) as part of the divorce process. The key steps in that process are as follows:

  • One spouse (often called the petitioner) sends a divorce petition to the court
  • The petition is sent to the other spouse (often called the respondent). They fill in a form called an acknowledgement of service to confirm they have received the petition.
  • The petitioner applies for decree nisi. This is the midway stage of the divorce petition and does not end the marriage.
  • 6 weeks and one day later the petitioner can apply for decree absolute (which ends the marriage)*

(* NB if you plan to share pensions on divorce, it is important to get legal advice on the timing of decree absolute. The rules are complicated, and there are risks if this is done incorrectly). 

In terms of when the court would make an order dealing with financial matters, as set out above, the article’s suggestion that this must take place before decree nisi is wrong. While it is sensible to start financial discussions as soon as possible, because it can take time to agree and work out the practicalities, a court cannot make financial orders until there is a decree nisi.

What should you think about when trying to sort out your finances on divorce?

Once a court has made an order dealing with your financial position on divorce, it is very difficult to revisit this, even if your circumstances change. That is why it is really important to make sure things are done properly. While a financial adviser can be a useful part of the process for some couples, you should not rely on one as a substitute for a lawyer. A financial adviser can guide you on how use and make the most of your assets and income at or after division, but a lawyer can advise you on your entitlements and prospects and help you negotiate a settlement or fight for those entitlements if they can’t be agreed. Additionally, as this blogpost explains, the Telegraph article is misleading about the law in several respects. In particular:

  • Fairness, and not financial equality, is the goal when making financial arrangements on divorce.
  • For most couples, fairness means making sure everyone’s financial needs are met.
  • The normal time to apply to the court for a financial order is after decree nisi and before decree absolute (not before decree nisi) BUT it is especially important to seek advice about this if you are sharing pensions.

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Image courtesy of Aaron Shumaker on Flickr – thanks