Finance on Divorce; Its so complicated?

 or… What’s mine is mine, what’s yours is yours, and what’s ours isn’t all our’s but some of it is ours and the rest is mine!

or… Don’t be stupid, we can’t sort things out fairly without everything going into the “matrimonial pot” (like, er lets not include my pension or inheritance!)

or… I had assets before we married, I don’t think its fair they are taken into account…

or… Its all so complicated,I’ll just see you in you in Court!!

There is not a computer that you can feed into, the details of your marriage, and which will compute a fair settlement.

The Divorce Law is Matrimonial Causes Act 1973.

Whist there have been amendments since, such as the introduction of pension earmarking orders and pension sharing orders; the basic law still has its limitations in terms of  what orders a Court can make.

It is a long time since 1973 and the world is a very different place.

Both the strength of the Matrimonial Causes Act, and a weakness, is its vagueness.

We have discussed the Section 25 criteria in a separate Post. Underpinning everything is the intion of the Court for the to be a fair outcome, where the needs of the children are the first consideration.

It is a Judicial discretion to make any Order or approve any agreement. In other words, a couple can agree what they want, but if it is not fair, the Court will reject the agreement and ask them to think again. This is good, because it is a protection for the more vulnerable of the couple.

But what is fair?

Well, fairness in 1973 is not fairness in 2013.

The world was less equal in 1973. The law was probably weighted in favour of the husband, certainly by today’s standard.

Over the years the Courts have adapted the idea of fairness, so that it is not wildly out of step with the world in which we live, if it is out of step at all.

The section 25 criteria bring in all of the matters which need to be looked into.

The Human Rights Act has helped in terms of how we look at equality.

A difficulty is that the Cases decided by the Courts are “big money cases”.  This is because ordinary family’s do not have the thousands of pounds needed to take cases to the Court of Appeal or Supreme Court.

Where principles are discussed, it is in the context of the wealthy or “high net worth” as lawyers describe the well off.

Some of concepts discussed over the last decade include;

• The yardstick of equality
• stellar contributions
•  the relevance of prenuptial agreements
• matrimonial and non matrimonial property
• whether the corporate veil can be lifted
• sharing the “fruits of the matrimonial partnership”
• Post-separation accrual or after-acquired assets

All cases are different.

Most cases will be decided on the basis of needs (but what needs are reasonable and what needs are not reasonable?)

But peoples idea of what is fair and what the Law would consider to be fair, can differ, often significantly.

Also, because there is no one absolutely correct solution (rather a range of fair outcomes), different Judges can make different decisions on similar facts, and the advice of Lawyers can differ markedly.

You see this when Mediating. As a mediator, you might identify an issue where the couple need advice in order to make informed decisions. You frame a question for the couple to get advice on. They will take with them a draft financial summary, so the information they take to their meetings with their Lawyers will be the same. But often, they will come back to the mediation with different advice! As a mediator, you can work with that.

The difficulty is when as mediator, the couple wont spend money on getting advice. As a Solicitor, you get approached by people who have mediated with a non Solicitor Mediator, who have not taken advice as they have gone along, and want you to implement something which is not fair, or sometimes, not legally possible.

You also have difficulties when one or both has an incorrect view of where the parameters of fairness lie.

Mediation is often the best way to achieve solutions, because it is more civilized as well as being cheaper, but mediation only works when the couple get good legal advice as the process proceeds. Personally, If I had to enter mediation, it would not be with a mediator who was not a practicing Solicitor (but that is not to say that there are not good mediators who are not practicing Solicitors).

But, I suppose the punchline to this piece is, that the Law is superficially straightforward, but it is also highly complex.

As a Solicitor and a Mediator, I have over the years developed a sense of where fairness lies, but that is through keeping up to date with the relevant law.

It is in my view, madness to seek to finalise arrangements after separation, without getting Legal Advice from an experienced Solicitor.