template-data/logo
Content search
AddThis Social Bookmark Button
 
 
Ask the Editor
 
Home Page > Finance > Can You Afford the Split?

Can You Afford the Split?

lorraine_saunders.jpgBy Lorraine Saunders

Believe it or not official statistics reveal that the divorce rate in England and Wales has fallen to its lowest level for 22 years. It appears that the cost of the divorce process coupled with the recent spate of high-payout divorce cases appears to have deterred those contemplating divorce from embarking upon the process, forcing many people to remain in unhappy marriages. 

The divorce process consists of three main stages:

-  the divorce itself; the financial settlement and the arrangements for any children. 

-  obtaining the divorce itself is likely to cost in the region of £1,100 including legal fees and court fees. 

-  deciding on the arrangements for the children should not cost anything provided both parties agree on the best way to proceed.  However, if there are significant disputes about where the children should live or how much contact they should have with one of the parents, and judicial intervention is needed, the costs of the children proceedings will escalate substantially.  www.resolution.org.uk

Working towards a satisfactory financial settlement is when the legal costs usually mount up. 

This involves a two-stage procedure. 

-  First, both parties make full and frank disclosure of their respective financial positions, which is usually done by each completing a Financial Statement (or “Form E”). 

-  Second, once the size of the “matrimonial pot” has been established, attempts can then be made to negotiate a financial settlement.  If an agreement cannot be reached, or if one party is uncooperative during the disclosure process, “ancillary relief” proceedings will need to be issued at court to enable a judge to lead the proceedings and either assist the parties to reach a financial settlement or impose an order.  This will cause the legal costs to increase, but sometimes saves costs as the court-led timetable prevents the case from dragging on, which, in itself, can cause costs to unnecessarily increase.

Often, those embarking on a divorce are, understandably, conscious of how much their legal costs will be. However, there are steps that they can take to ease the financial burden of breaking up:

1)  Try to keep things as amicable as possible. In an acrimonious divorce, the parties will pay dearly as the case is likely to last a lot longer than a divorce where the parties are reasonable and amicable, and are able to negotiate a settlement at an early stage without court proceedings having to be issued;

2)  Avoid the “do-it-yourself” divorce.  Whilst many couples feel that they will save money by downloading the relevant forms from the Internet rather than instructing a solicitor, this is likely to be something of a false prophet.  Internet divorces fail to deal with the financial and children issues that accompany the divorce process;

3)  Finding a reputable matrimonial lawyer is imperative.  Instructing a solicitor, preferably one who is a member of Resolution www.resolution.org.uk/find_a_member/  (previously known as The Solicitors Family Law Association), at an early stage can help to make the process as painless as possible, both emotionally and financially. Membership of Resolution commits family lawyers to resolving disputes in an amicable and conciliatory manner, encouraging agreements between the parties and keeping costs to a minimum;

4)  Consider waiting until April 6 before commencing divorce proceedings, as any assets transferred between a husband and wife in the tax year of separation are free of capital gains tax.  As the divorce process can take several months to conclude, separating a short period before April 6 leaves only a small window before the end of the tax year and realistically couples will be unable to get everything sorted in time.  By waiting until April 6 divorcing couples can benefit from the whole of the tax year to move assets around without tax implications;

5) To reduce costs during the disclosure process, the parties should collate all their financial documentation, such as bank statements and details of any assets or liabilities, and obtain an informal valuation of the marital home and the transfer value of their pension. This will enable the completion of the Form E to be undertaken as cost effectively as possible;

6)  Obtain a final consent order to ensure closure on the financial settlement.  Only then are financial ties severed, preventing both parties from claiming against the other in the future.  People fail to realise that they need to tie the divorce up with a final consent order, as the rush to achieve closure often masks the importance of obtaining a fair and watertight financial settlement.  Instead, in an attempt to cut costs, couples sometimes neglect to sort out their finances or reach an agreement by not have it made into a legally watertight order. 

Frequently, they attempt to negotiate a financial settlement themselves, believing that a 50:50 split of their finances is the fairest settlement, when sometimes it is not, as one party has a claim for monthly spouse maintenance that needs to be taken into account in the calculation.  This could end up costing one of the parties much more in the long-run, as either assets go unconsidered or one party comes crawling back out of the woodwork years later, saying they have never had a financial settlement and want some more money now.

For help and assistance with cost-effective and cost-mindful divorces, or any other matrimonial and family issues please contact Lorraine Saunders, Aaron & Partners LLP be email family@aaronandpartners.com or  on 01244 405573 a matrimonial and family law specialist and member of Resolution.
 


 
Copyright © WOMENS EVERYTHING 2008 Advertise | | Privacy | Terms & Conditions | Sitemap Web design by 7Soft.co.uk