Although clients will likely deal with a solicitor first before they come to you for advice, it is important to know what the rules are for divorce, especially in regards to splitting financial assets and how to communicate that to clients.
The Matrimonial and Family Proceedings Act 1984 replaced the minimum time interval between the date of marriage and being able to file a petition for divorce, from three years to one year.
According to the latest data from the Office for National Statistics, the average (median) duration of a marriage at the time of divorce in 2017 was 12.2 years for opposite-sex couples; a high last seen in 1972.
Marriages vs divorces of opposite-sex couples (England and Wales)
Source: Office for National Statistics
While divorce rates for opposite-sex couples in England and Wales are at their lowest level since 1973, which is around forty per cent lower than their peak in 1993, among older people rates are actually higher in 2017 than in 1993 – perhaps due to the fact we have an increasingly ageing population and people are getting married later in life.
Rate of divorce among opposite-sex couples (England and Wales)
Source: Office for National Statistics
It is possible to get a legal separation without an official divorce, where the couple can live apart without officially ending the marriage, or to annul the marriage during the first year of marriage.
While it may sound reasonably straightforward, navigating financial assets in a divorce comes with a whole host of complexities.
Legal complexity
Unreasonable behaviour and adultery are the only two grounds on which spouses can seek a divorce immediately, with the other grounds for divorce involve you being separated for two years or five years.
Any transfers between spouses made prior to the final annulment of the marriage are exempt from inheritance tax, but not following the split.
Also, it is important to note that a will does not become invalid on a divorce but some of its provisions are revoked, for example, legacies to the former spouse and could result in an intestacy.
A will should, therefore, be redrafted following separation to reflect the changes in circumstances.
Where any trusts have been set up it is also worth reviewing these to consider whether any changes are needed; for example, in respect of trustees and beneficiaries.
Clients should always go through a solicitor to make the agreement legally binding and can agree on child maintenance at the same time or separately.
In a divorce, none of the options for pension rights – lump sum payment, offsetting, earmarking or sharing – are mandatory, according to Ian Neale, director of Aries Insight.
Rather, it is up to the parties and their lawyers, and if necessary the court, to decide on the best method.
Mr Neale explains: “A combination of methods can be used, if appropriate, but the rights from a given pension arrangement that are, or have been, subject to a pension sharing order in respect of a marriage cannot then be subject to an earmarking order in respect of the same marriage.”
