Surviving the financial fallout of separation by Gareth Curtis

financial settlement

The fallout from a separation can often be dramatic and have immediate and serious financial consequences. For instance the discovery that your spouse is involved in an illicit relationship may well compel you to move out of the former matrimonial home into separate accommodation when tempers flare.

It commonly takes six to 12 months to resolve the long term financial issues associated with divorce proceedings. But separating couples should take expert advice in the immediate aftermath of separation, particularly the economically weaker spouse, who is often the parent with the care of any children.

Many people who find themselves in this situation are not aware that, as the economically weaker, dependent spouse they are entitled to immediate ongoing financial support from their spouse following separation. This is at a point often well before the divorce proceedings have concluded and long term financial issues have been resolved. Courts have the power to award maintenance pending the final divorce (decree absolute), known as maintenance pending suit.

These are ongoing payments to meet immediate monthly needs such as the mortgage repayments, council tax utilities or car running costs. They may also cover discretionary expenditure such as clothes, food and social events. Both spouses should take advice on their legal position in order to fully understand their rights and obligations and also to help them reach an agreement about the appropriate payment without the need for the courts to become involved.

The non-earning spouse is entitled to a reasonable or fair level of support – but what that actually amounts to will depend upon the income and resources of the economically stronger party and the parties’ reasonable needs. The law looks at the standard of living enjoyed during the marriage as a benchmark. Inevitably however, when one spouse has moved into alternative accommodation, both parties must cut back as there is often just one income or set of resources available to run two households, rather than just one like before. Hence the need to balance competing needs in an already contentious family situation when tensions often run high. Pragmatic and realistic legal advice becomes imperative.

If the parties cannot reach an agreement or the economically stronger party refuses to negotiate given their position of power, then the vulnerable party can ask the courts to intervene. Judges can make an award to solve short term cash flow issues – and this can provide a benchmark for the long term future resolution of the case.

If you want to make such an application, you will need to think very carefully about what you will be asking for and work closely with your solicitor to prepare a suitably detailed budget of reasonable interim needs.

The court will examine the budget critically and exclude long term needs. Your lawyer should use the benefit of their experience and knowledge of the local Judges to pitch the case at the right level. Family courts have the discretion to make awards within quite a wide range, so legal advice is essential. Furthermore, the current pressures on the court system, leading to delays in listing hearings, means it is important to act quickly.

The paying party needs to be aware that they have a duty to give full, frank and clear disclosure of their means. They will need to provide bank statements and evidence of their regular income and any expected bonuses. It is routine for expenditure to be examined, as well as payments into and out of their bank accounts.

Failure to provide full and frank disclosure can lead to the court making robust assumptions about a party’s ability to pay and this can have far reaching consequences for the case as a whole. Often, immediately following the breakdown of a marriage, neither party can see the wood for the trees. One or both parties might feel aggrieved at the other spouse, particularly if someone else is involved. Feelings run high.  Thoughts of revenge are commonplace as is the desire for financial pressure to be brought to bear on the spouse seen as having caused the breakdown of the marriage. So the need for clear headed advice from an experienced family lawyer is obvious. Choosing not to take advice to save the costs of paying a lawyer and attempting a DIY approach can often have hugely detrimental effects on the case as a whole. The well know quote ‘act in haste repent at leisure’ springs to mind.

Where the parties have, during the marriage, been supported by a third party such as a parent or a family trust or company, there can be an obvious tension when this support benefits the spouse seen to be at fault. Often that financial support is brought to an end or diverted to the recipient through alternative sources,  lest the payments be perceived as paying for the lifestyle of the other spouse. In these circumstances clear evidence should be produced to establish that those payments have stopped and will not resume – or the court may assume it will continue.

When there is a prenuptial agreement in place, the court will generally follow it unless one party can establish a good case why it should not be binding when it comes to resolving the long term financial issues, such as undue pressure.

Interim maintenance is not normally repayable and if it goes unpaid is an enforceable debt. Any decision by a paying spouse not to comply with a court order – sometimes for emotional reasons – can affect his or her long term borrowing capacity if enforcement action is taken. The court takes a broad brush approach and will base its decision on written evidence and submissions, often after a short court appointment lasting just one or two hours.

It is important for spouses to understand the consequences of not reaching an agreement. The successful party can often expect to recover some or all of their costs after a court-imposed award. This is different from the normal rules in court proceedings dealing with long term capital awards or maintenance arising from a divorce. Then, unless there has been serious misconduct, the starting point is that both parties should pay their own legal costs.So there is clearly a need to take a reasonable approach and reach an agreement if possible – and more importantly, to secure good legal advice and representation.

Gareth Curtis is a Partner in Stowe Family Law’s Hale office. Stowe Family LawHe has a wealth of experience in advising and acting for clients who need urgent advice on financial support following the breakdown of a relationship or marriage.

 

 

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Stowe Family Law Web Team

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