Why ‘no fault’ divorce could still lead to an unfair financial split
The move, which the government says is the biggest shakeup of divorce law for half a century1, also gets rid of some of the archaic terms around marital splits. Instead of divorcees asking for a ‘decree nisi’, followed by a ‘decree absolute’, the Latin terms will be replaced by a ‘conditional order’ and a ‘final order’.
Instead of the current system, where you either have to be separated for two years (or five if only one member of a couple wants to divorce), unless you want to cite ‘adultery’, ‘desertion’ or ‘unreasonable behaviour’ on the part of your partner, there will also be a minimum 20 week period from the start of proceedings to a conditional order being made. The Government says this six month period will offer ‘time to reflect’ and to ‘agree important arrangements for the future – such as those involving children, finance and property’.
An end to the blame game
Dominic Raab, Deputy Prime Minister, says that the move to allow couples to divorce without proven fault will enable them to move on with their lives “without the bitter wrangling of an adversarial divorce process”.
“The breakdown of a marriage can be agonising for all involved, especially children. We want to reduce the acrimony couples endure and end the anguish that children suffer.
“That’s why we are allowing couples to apply for divorce without having to prove fault, ending the blame game, where a marriage has broken down irretrievably,” he says.
Caution still required
While a ‘no fault’ divorce may be quicker and simpler, and mean that fewer couples require adversarial legal processes to split up from their spouses, it is important that fair financial settlements are not overlooked in the rush to exit a marriage.
With a no fault divorce, it is expected that more people will use mediation, where both parties use the same lawyer to agree a settlement. However, you should make sure you use a financial adviser too, to ensure that all decisions are fair as well as binding.
Some things you will need to consider include:
- Your pension
It is quite common for one member of a divorcing couple to have a bigger pension than the other – especially if one has stayed at home to look after children. Under English law, it is likely that the other member of the couple will have a right over some of the pension, and there are various ways to deal with this including a pension sharing order, which splits the pension, or a pension offsetting scheme, whereby the value of the pension is offset by the value of other assets given to the partner with the lower pension.
- Protection plans
In some cases, couples have joint life insurance policies that will need untangling when they divorce. In these cases, one member of the couple may choose to take over the policy or it may need to be cancelled altogether.
With financial circumstances changing, both members of a divorcing couple (especially if there are children under 18) should also reassess whether they need critical illness cover or life insurance to ensure they can meet new financial commitments.
- Your property (or properties)
When you own property jointly and are divorcing, there are many questions to settle about property ownership. A property is often a couple’s biggest assets. If there are children, they are usually entitled to remain in the family home, but there are many ways to ensure that this happens. These include an agreement where the property is sold and the proceeds divided when the youngest child turns 18, or an agreement where the property is transferred into one person’s name but the other receives a proportion of the value when the house is sold.
- Business assets
Even if a partner has never got involved with a business, they may well be entitled to some of the assets on divorce. It is worth ensuring that you consider the value of any business assets as a couple, with a lawyer and financial adviser involved, to prevent unpleasantness later.
- Your will
If you have an up-to-date will you will want to change it in the event of a divorce, so that your assets are distributed in the way you want them to be in the event of death.
- Financial associations
Even if you separate you may still be financially linked when it comes to your credit record, meaning if your ex-partner defaults on debt it could affect your credit rating. The major credit reference agencies have forms on their websites to allow you to apply to disassociate yourself from an ex-partner (Experian’s is here, for example).
A clean break
No-fault divorce may be quicker and less painful. It may even be cheaper. But it is really important that you do not let the ease of a process lull you into a false sense of security. Getting a divorce settlement right first time is a serious undertaking and there will be huge repercussions if the different ramifications are not thought through, so make sure you use professional advice where necessary.