The ONS tells us that marriages ending in divorce by the couple’s silver wedding anniversary (25 years) has increased significantly: for couples married in 1963, 23% had divorced by their 25th anniversary (1988). Compare that with 1996 marriages, where divorce within 25 years had almost doubled to 41%.
Longer marriages bring many different considerations, and Stephanie Calthrop-Owen of Morr & Co joins us to share some legal “food for thought” for those in this position.
- No Fault Divorce
The blame-game has ended. Under the “no fault” system which came in in 2022, parties can press through divorce proceedings without proving fault, and without their spouse’s consent. It’s a simple online procedure.
Think carefully before doing so however: complexities can arise and a stitch in time really does tend to save nine.
In cases involving significant pensions in payment, it is important not to rush off to court without first considering the options: is it a divorce you need or would judicial separation be better? Sharing pensions is only possible through court orders on divorce, which is therefore the only way to achieve a “clean break” – but pension values can be damaged in certain circumstances.
- Financial Resolution & Alternatives to Court
To finalise any financial split, parties need a court order setting out agreed terms and a court order by consent is therefore the ultimate goal – ideally as a paper exercise.
To negotiate agreement, family courts encourage parties to go elsewhere – ie non-court forums. Ironic perhaps – but in fairness, the alternatives are widely regarded as preferable, by lawyers and clients alike.
There are many and various ways to negotiate – ask your solicitor.
- Asset Division
In long marriages with children, the starting point will be equalisation of marital assets, and outcomes must cover both parties’ reasonable needs.
Complexities arise in defining “marital” assets: will this include pre-marital or inherited assets? Is there a pre or post-nuptial agreement? Pensions
There is a vast bank of caselaw to help guide family lawyers advise clients, but the goal will be first to cover the parties’ reasonable needs and only if there is more left after that, will these other considerations come into play.
- Parties’ Needs
Income:
After longer marriages parties might be approaching retirement. Most parties prefer a “clean break” and lump sum capitalisation should be considered and/or pension sharing for income post-retirement.
Housing:
After long marriages few parties have significant mortgage capacities, and courts are reluctant to require mortgage borrowings to be taken on later in life. Downsizing may be the only option, particularly if the children are adult.
Pensions:
In lengthy marriages, significant pensions have often accrued. The parties may not realise just how valuable they are – often more so than the house. This is a hugely complex area and expert advice is needed. But pensions bring many options – there might be tax free cash available on retirement which could be used as a deposit on new property. Instead of equalising pensions, they could be “offset” to give one party more of the family home and the other more pension.
- To Divorce or Not to Divorce?
If pensions are already in payment, that is a more complex question than you might expect. Take legal advice at an early stage.
Pensions on divorce is an extremely complex issue and you need specialist advice on this. However, its worth bearing in mind that there are ways of preserving value in pensions and where a divorce is not needed in order to facilitate remarriage, it might be worth thinking twice before issuing a divorce application.
Final salary pensions tend to lose value after they come into payment and dividing them up is often only possible by extracting a portion of the pension from one spouse’s scheme to invest into a new pension for the other. The actuarial value of the pension reduces as the member continues to draw on it but as it’s a guaranteed amount of income, that remains stable whilst the capital value falls: on extracting value, therefore, the member’s income drops but the capital sum invested into a new scheme is far less than might be expected, and the newly created pension might not yield much income.
Judicial separation can assist: courts can make almost identical orders as in divorce, but cannot make pension sharing orders as they are only available on divorce. So pensions are preserved intact (but remain in the member’s name).
Judicial separation proceedings are rarely used but worth considering where pensions are large.
Best advice is to take advice: pensions on divorce are highly complex and present great opportunities as well as significant traps.
There can be tax free cash available under such pensions (from age 55 upwards), lump sum death benefits and pensions for surviving spouses, and much more. Where those pensions are already in payment, divorce proceedings can
- Pensions
Many people choose to deal with the divorce proceedings themselves, particularly with the online system. However, there is often the misconception that your decree absolute also severs your financial ties. It does not! If you have a reached an agreement relating to the financial aspects of your relationship, or even where there are no finances to divide, you need a financial order to provide you with a clean break and prevent future financial claims being made. Financial orders can be technical, and you need to get it right, so please make sure they are drafted by a solicitor who specialises in this area of law.
If you would like to discuss your situation with an experienced solicitor, our experienced family team will be able to answer any questions you may have. You can contact them by email [email protected] or by calling 01737 854500.