When considering how financial assets should be divided on divorce, the court has a wide discretion taking into account factors such as, amongst others, the length of the marriage, age of the parties, earning capacity, income and assets and the parties’ needs. For many, this creates uncertainty. It is now being proposed that to deal with uncertainty there should be a definition of financial needs and a calculator which divorcing parties can use to give guidance on how assets should be divided. On the one hand, that would seem to be sensible and could save legal costs. If two people have only been married for a short time, have no children and neither has been financially disadvantaged by the marriage, that could work. On the other hand, if it is a long marriage where there are children and complex financial assets such as businesses and pensions, a “one size fits all” calculator could result in injustice. Every family is different and for that reason, every case will have its own particular circumstances. It is hoped that if there is a definition of “financial needs” that the court will use its discretion in a consistent manner and so even where there are complex assets, the changes may provide more certainty and reduce legal costs.
Many people have tried to create certainty by entering into a pre-nuptial agreement before the marriage to provide for what should happen to assets in the event of a divorce. Although pre-nuptial agreements are increasingly being upheld by the courts, they are still not automatically legally binding. The Law Commission is proposing that pre-nuptial agreements should become legally binding, if certain safeguards are met, such as the parties having legal advice and both parties setting out their financial circumstances at the time the agreement is made.
It may take time for changes to come into effect. Increasingly, families are wanting more control over how assets are divided on divorce and want to achieve cost effective solutions to reduce legal costs. Some choose to attend mediation to try to reach agreement and then go to lawyers to have that agreement put into legal form. However, more people are using the collaborative law process to reach agreements.
Essentially the parties negotiate together with their lawyers, all in one room, making decisions together for the benefit of the family. This can reduce the time it takes to reach agreement and reduce legal costs.
The way we deal with family law has got to change. Since April 2013, changes to the legal aid system mean that legal aid is only available in very limited circumstances. People want to make decisions and have more control over financial outcomes at the end of the marriage, but many people still want or need the help of a lawyer. The proposed changes and the increasing use of mediation and collaborative lawyers may just achieve that.
If you are concerned about the legal issues that may arise please contact us on 0121 698 2200 or fill in our online enquiry form.
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