Divorce And Your Finances
July 18, 2005
There are around 150,000 divorces a year in the UK at the moment with the average marriage lasting 11 years. It's often women who do the walking out of a marriage that has gone stale, or where both parties have grown apart but, either way, there's no doubt it can cause ructions. Not just emotionally but financially too. Sadly, some marriages die -- for whatever reason.
For simplicity, this article will primarily deal with divorce from the point of view of a woman who earns and owns less than her husband. Obviously, in some cases, the roles and advice will need to be reversed and it's sensible to get legal advice, especially when substantial sums are involved.
Only a court can decide who gets what in disputes after marital breakdown and it's difficult to work out what the end result might be because there are so many different factors to take into consideration. But there are certain guidelines which will give you a rough idea of how the court will deal with such issues if one, or both of you decide it's time to call an end to it all. Bear in mind that the rules are different if you're not married -- the existence of the "common-law wife" is pretty much a myth -- though you may still be entitled to a share in the home and financial support if you have children together. We'll look at this situation in an article later this week.
Assuming you're married and need financial support, whether you'll get anything at all will depend on which one of you has the most income and assets. If you're the bigger earner for example, then you could find you're supporting him. Your respective ages matter since the court will want to ascertain if you have much of a working life ahead of you and can eventually support yourself.
The length of the marriage is also important and your needs will also be taken into consideration but they'll need to be reasonable ones. You may be entitled to help with the mortgage, for example, if you can't manage it by yourself and you've got children to house. But, just because you've had holidays in the Caribbean twice a year doesn't mean the court will think your ex should pay for them to continue.
There are two main areas for consideration:
You're entitled to apply for maintenance for yourself or your children. If it's for yourself you'll need to apply to the County Court or High Court, and you can ask either for regular payments for a given period of time, or for what's called a "Clean Break" settlement. In the latter instance you'd ask for a one-off lump sum in full and final settlement of all obligations. This is often the route taken by outgoing wives because it means they no longer have to be dependent on someone they don't necessarily like very much anymore and whose circumstances may change for the worse.
If the support is for your children you'll need to apply to the Child Support Agency (CSA) who will work out how much he is required to pay based on how many children there are and how much he earns. The only problem is if the father decides to do a runner to another country as the CSA have no powers at the moment to assess child maintenance payments in such situations. This is rare -- but it happens.
Generally speaking though, both the courts and the CSA have wide-ranging powers to deal with ex-husbands who refuse to stump up. For example, they can ensure that maintenance payments are deducted directly from his pay packet. They can also freeze his bank accounts if you discover he's trying to hide money away. If he owns another property, a charge can be put on it so that when it's sold, the proceeds can be used for maintenance payments.
Since March 2003 new laws governing the way child support is calculated have been implemented. Briefly, absent fathers will be required to pay 15% of their net income for a single child, 20% for two and 25% for three children or more. The maximum income that will be taken into account will be capped at £2,000 net income a week. If the father has a new family then similar allowances will be made for each child in his second family, including stepchildren. Rates of 15%, 20% and 25% will be deducted from the non-resident parent's net income and only the balance will be subject to the standard rates for the first family.
Those who don't or won't pay risk losing their driving licence and if they lie or refuse to provide information, they could be fined up to £1,000. Late payments will also lead to fines.
The income of the resident mother is not be taken into consideration, nor is that of a new partner. So, the lone mother could earn huge amounts each year and still demand, and be entitled to, up to 25% of the absent father's income. Equally, the father could be a millionaire with a vast income but will never be required to pay more than £26,000 a year even if he can afford much more.
The main asset is generally the family home but you will usually be entitled to a portion of the assets that are connected with the marriage. Again, your ages, responsibilities, your earnings and the length of the marriage will be taken into consideration. But, if you have young children who need a roof over their heads, and you are looking after them, then the court will often give you the right to live in the family home until they reach 18 or have finished full-time education.
New laws have recently come into effect, which may also give you the right to transfer some of his pension fund into one of your own immediately. Previously, you could only claim some of it once he'd actually retired so, not surprisingly, women coming out of long marriages often opted for the "Clean Break" settlement, taking the house while he toddled off with his pension fund.
It's worth noting that if you and your partner can come to an amicable arrangement over the finances, a break-up needn't involve huge legal fees and a fight in the courts. However, it is always sensible to get any kind of amicable agreement officially approved by the court so that you can enforce the terms should there be problems later.