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12 February 2020

Potential pitfalls of delaying divorce

Dealing with the financial ramifications of separating from your husband or wife can be a daunting task. Especially with the prospect of dealing with:

  • what should happen to the family home;
  • should you have a share of your spouse’s pension; and
  • whether one of you should be paying the other spousal maintenance.

All whilst going to work, managing the home and caring for the children; it can often be overwhelming.

Whilst it is frequently advisable to take time to reflect on whether you wish to formally separate and/or divorce, and ensure you are mentally ready, it is also important to consider the practical and immediate risks of delay.

Amongst the key issues you should consider are:

  • standard disclosure of your husband or wife’s financial position usually only goes back 12 months from the start of the process;
  • an unscrupulous spouse may try to hide assets or dissipate them in the intervening period;
  • the tax implications of separating; and
  • potential complications of new partners and children.

Standard financial disclosure

In court proceedings, standard financial disclosure of your and your spouse’s financial position usually only goes back 12 months. However, with mediation and other voluntary processes it may only go back three or six months.

Unscrupulous spouse

Your husband or wife may embark upon a spending spree post-separation, thereby depleting the financial resources available for distribution. Even if you can show that your spouse’s expenditure has been excessive, arguments for such spending to be taken into account when dividing the assets available (known as an ‘add-back’ argument) are rarely successful. In any event, such arguments are very expensive to run as you are required to show the court that there has been a ‘wanton dissipation’, which is a very high bar. In addition, in the majority of cases there are simply not the financial resources available to ‘add back’ such spending and still meet the needs of everyone moving forward. Despite the perceived unfairness of the situation, the court’s focus is on the practicality of the current circumstances, not on punishment.

In those cases where there is a deliberate attempt to put assets out of reach, such as transferring money to a friend or relative, it is possible for the court not only to prevent such transactions but also to set aside ones that have already occurred. However, such proceedings are also costly. It is therefore best to take preventative action where possible. For example, if you are not the legal owner of the family home or other properties owned by your spouse, a solicitor can register a notice with the land registry to help protect your interest pending the resolution of your divorce.

Taxation

In the midst of marriage difficulties this may be the last thing on your mind. It is, however, vital for you to seek advice on the tax implications of separation, divorce and any proposed settlement at the earliest opportunity. More detail about the common tax issues that need to be considered are outlined in this article.

New partners and children

As time passes, you or your spouse may find new partners and have new families. A new child will, of course, have financial implications as there will be a further dependant for the court to consider. While having a new partner in itself does not make a difference to the financial outcome, it does run the risk of making it harder to reach an amicable settlement.

What to do

It is important to get advice at an early stage so that you can make an informed decision about what to do and when. Every case is fact specific and it may be that, in certain circumstances, a delay is appropriate to enable you to attend marriage guidance counselling, or so that the financial landscape can be made clearer.

If you would like further advice in respect of separation or divorce please contact a member of our family and matrimonial team, who will be able to assist you.

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