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Untangling Assets on Divorce

IMAGE: House Cut By Scissors

IMAGE: House Cut by ScissorsDivorce can be bewildering for clients. Should they try and sort things out with their partner? Or should they go to mediation or would going to court likely mean a better result? This is a massive decision and the needs of each client can vary dramatically. Clients need to feel that their situation is being managed and controlled effectively. It is they, not the lawyers, who have to live with the outcome of untangling assets on divorce.

Fairness is the Golden Thread
The central question is whether it is possible for the sharing of assets to be fair to both parties. Despite all the cynicism which can surround the divorce process, the concept of fairness is the golden thread that runs through all divorce cases. Fairness is of course a subjective test and – if the parties cannot agree what is fair – one upon which ultimately a court will adjudicate.

There are some elements of the divorce process which don’t help to prevent the adversarial approach rearing its head. We still have a fault-based divorce system so unless the parties agree to divorce after two years separation, one spouse will have to file for divorce on adultery or unreasonable behaviour. Thankfully the whole process of naming of the third party or co-respondent is now very much redundant.

It is good family law protocol to send the divorce petition to the other side first to read and to try and agree what should and should not be said about them. It can save a lot of unnecessary angst and bitterness if the divorce petition is drafted from the outset as sensitively as possible but with both parties in mind.

But this won’t always be possible. For example, where there are jurisdictional issues to take into account, it may be necessary to issue quickly and without notice, simply to get the proverbial legal foot in the door of the court of your preference. However, at the other end of the scale, amicable uncontested divorces can be fairly straightforward paper exercises, perhaps without any need to attend Court at all.

How to Begin Splitting the Matrimonial Assets?
The care of children aside, the most complex aspect of divorce is how to distribute assets and money. The first step is to know what is in the matrimonial pot. There are clients who know exactly the assets of the marriage. There are also those who may have left the financial management of the family’s wealth to their partner. Information and its gathering is crucial to achieving a fair outcome.

The law specifically requires both parties to make a full and frank disclosure of their assets, liabilities and income. This means details of all assets to include property, cash, investments, shares, pensions and any trust funds to which one may be a beneficiary.  Some seek to interpret the concept of full and frank disclosure in various ingenious ways. This is generally unwise. The concept is not complicated: you state what you have and back it up with written evidence in the form of bank statements, valuations or other appropriate documentary evidence.

The Truth is Generally Exposed
The existence of a family business can tend to complicate matters. The business may need to be valued, particularly if both parties are directors and shareholders. The goal is to untangle the parties’ joint finances in a manner which enables each to move on with their lives. Attempts at evasion are likely to be treated unfavourably by the courts. Experience demonstrates that the truth is generally exposed. Thus, it is either done the easy way or the hard way, with the latter seeing legal costs escalate as the family pot diminishes.

A Needs-Based Approach
The judicial system takes a needs-based approach and, in the majority of cases, what the parties end up with depends upon their reasonable needs. The most basic of needs is for a home and an income. Where – if split equally – the assets of  the marriage will provide a home for both parties, then generally that is the right outcome. If, however, one spouse is the primary carer and is restricted in their earning capacity, they may require more than 50% to meet the basic need of a home for them and the children. In cases where one spouse is the higher earner, spousal maintenance may be appropriate again to try and achieve an outcome which is fair to both parties.

Remember the Children
Amidst all of the above, any children of the family will be trying to come to terms with the fact that their parents no longer live together. How well the parents handle their divorce will have a profound effect on how well the children cope. An amicable relationship going forward will have a tremendous positive effect on the children. Our divorce procedure and law very much supports and encourages parents to sort out arrangements for the children together and with some degree of consensus to minimise damage to children. Court proceedings should not be necessary except where contact has broken down or there are serious issues over residence. To minimise the collateral damage of a divorce or separation you need the right legal team with the correct approach as applicable to your particular situation.

For more information please contact Sarah Martin, Family Law & Divorce Solicitor 

Disclaimer: While we do all that is possible in terms of ensuring its accuracy, this blog contains general information only. Nothing in these pages constitutes legal advice. You need to consult a suitably qualified lawyer from the firm on any specific legal problem or matter.

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