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How Mr and Mrs Average can agree a financial settlement on divorce

“Big Money” cases are highly prized, glamorous cases to us family lawyers. The lives of the rich (and in some cases famous as well) can be fascinating, and during the case we often learn about lives spent at fabulous homes around the globe where money is no object. We lawyers still retain our professional approach of course – we aren’t fazed, we know what to do and how to handle such clients (often they require kid glove treatment).

We know how to assess their wealth and at the end, we part company, job done. There will have been ups and downs along the way. These cases will frequently start off with a loud bang – for example, a worldwide freezing order, if one party doesn’t want to play ball – but most cases do settle down in time. There might be a lengthy discovery and disclosure process, some long and hard negotiation, but the case will ultimately settle or a hard headed High Court judge will give judgement. In most cases the sums due are paid, the parties move on and at the end of the day, any depletion of wealth is not going to affect the divorcing couple all that much. The case is closed and the boxes of files and papers, sometimes huge, will be carefully archived away.

So that’s Mr and Mrs Big Money. But many years of my career were spent representing Mr or Mrs Average, and even Mr or Mrs Below Average, and looking back, I think representing them was in many ways, more of a challenge.

Recent requests for help I have received on the blog from people who don’t have lawyers and are trying hard to sort out their finances when there is very little to go round set me thinking back to those years. Things haven’t changed much. The issues are still the same. How do couples with very little to split between them sort out their case and settle?

The real beauty of our often criticised divorce law is this: it does not revolve around a simple mathematical division.

Many readers of this blog are under the misapprehension that there is an automatic, set percentage division of assets in every case. Readers write to complain their spouse won’t accept a 50/50 split or even a  60/40 split and want my opinion, which they hope will reinforce what they believe to be correct. Other readers complain that their spouse won’t agree a Mesher type order and still others complain about the effect of a Mesher order which they have previously agreed.

None of them understand what the law really, and how it is applied.

So let me help. I won’t set out the law. You can read it all for yourself in my book Divorce & Splitting Up: Advice from a top divorce lawyer.

Firstly, in a case involving limited means forget any idea that there is a percentage division. There is not.

Similarly, don’t try to and run before you can walk. By that I mean, don’t think a Mesher order is the answer, because you are desperate to stay in your home. Yes, it may allow you or your spouse to stay in the house for a given period (usually until remarriage or the youngest child finishes secondary education) but you must first explore all the obvious, immediate options. Mesher orders have a sting in their tail which readers of my blog already know. Frequently women with low incomes find themselves having to sell their home at a point in time when their income capacity hasn’t improved and there isn’t enough money left out of their share to buy a new home. Their former spouse may also find their future windfall hit by capital gains tax. It isn’t ideal by any means, and I would not recommend a Mesher order unless it is clear there will be enough money for both parties to eventually buy new homes after the sale.

Instead, consider your immediate, reasonable financial position: what you both have and what you both need. Work them out (my book and this blog provide spreadsheets and budgets). Then, when done, try and agree them together, if at all possible.

How much money do you have in the pot? How much capital is there right now? Put pensions to the side for the time being, and deduct the costs of sale for your home, and any debts, and then work out how much net income you both have, including all your earned income as well as any benefits.

Is it possible for either of you to reasonably earn more? Don’t put yourselves under unnecessary pressure, because child care is exhausting, but if either of you can, then it makes sense to do so. The aim of the legislation is to help you become financially independent as soon as practicable.

Having worked out how much there is in terms of capital and income, you then need to work out your reasonable financial needs.

The first consideration, of course, will always be the children. Who is going to care for the children? Where and with whom will they primarily need to live?

Then, ask yourself how much will it cost to re-house you and your spouse. Have a look online at all the local estate agents to give yourselves an idea. Is it practicable to move further afield? How will that impact on the children’s education and social needs? You both have to be reasonable, no matter how difficult it may be, and try to agree what to do with your limited capital.

How much will you then need to meet your budget out of the available income?

If one spouse earns nothing at all, or less than the other, he or she will probably need more capital to find a new home. The other spouse has more income, in order to take on a mortgage, but paying a mortgage and child support, will reduce income for spousal maintenance. Spousal maintenance is important and mustn’t be overlooked. Many readers assume it isn’t paid and from there, arguments can deepen. So be pragmatic. Spousal maintenance can be a thorn in your side but it is payable in cases of financial need. The income of the family is also divided in such a way as to ensure that both families can manage reasonably and equitably. The same goes for capital.

There may still, however, be room for a trade-off. If you earn more, can you offer more capital in return for paying less maintenance, or a cut-off date for paying spousal maintenance?

Consider how long spousal maintenance should be paid. If the spouse receiving the money cannot earn any income at all, then in cases where there are children, or a long marriage, there may be no cut off point, unless they remarry, die, or a further legal order is made.

It might be worth offering more capital, however, in exchange for having an end in sight.

But in most cases, the ‘recipient spouse’ can go to work, especially as the children grow older and become less dependent. There may be ‘term maintenance’ agreed – a spouse may agree to accept more capital from the house in return for a certain cut-off date, or even to swap no maintenance at all for more capital. Alternatively, there may be an agreement reached that after a certain period of time a spouse has to demonstrate to the court why maintenance should continue.

The pension may come in useful here. A deal might be done for the paying spouse to receive all or most of the pension in exchange for an agreement on paying more immediate capital or maintenance (or both).

In the end, it’s far from easy, but it boils down to taking a long, hard and cold look at what there is, and what is needed, for Mr and Mrs Average or Less-than-Average, to practicably move on.

The blog team at Stowe is a group of writers based across our family law offices who share their advice on the wellbeing and emotional aspects of divorce or separation from personal experience. As well as pieces from our family law solicitors, guest contributors also regularly contribute to share their knowledge.

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  1. Paul says:

    It would assist greatly were there a public service available outside of a legal setting, which people could call upon for objective information and advice when asking the questions.

    • Marilyn Stowe says:

      Dear Paul
      That’s exactly what the government wants you to do. It already exists. It’s called non lawyer mediation, CAB, and so forth staffed by well meaning but ultimately ignorant people because they don’t have the professional skills and qualifications to advise people about a LEGAL matter.
      What we want is a return to legal aid as it used to be when I first qualified when 80% of the population qualified for legal aid most with a repayable contribution. Properly run it would still work today. The fees of legal aid lawyers are very low but there are plenty who did and would continue to do it.
      You go to a dentist for your teeth don’t you? Or a GP for your health? Why go to a well meaning amateur for something as vital as the consideration of the rest of your life and your family?
      Fight for the right of all to access a lawyer.

  2. Luke says:

    I think the general of the view of the public is that Legal Aid costs too much money, it is not like going to the Dr or the dentist. The whole thing becomes a money pit for Joe Taxpayer.
    This problem has been exacerbated by the fact that one party in a case would get Legal Aid and the other party didn’t, putting the latter at a massive disadvantage and totally skewing the system.

    It would be great if all of it was affordable – but I’d like a singing-ringing tree in my back garden and that isn’t going to happen either 🙂

    • Marilyn Stowe says:

      Dear Luke
      It did once and there’s no good reason why it shouldn’t happen again. What worries me more, is the increased power of the Executive generally within our unwritten constitution. The Judiciary should act as the “check and balance” but with the lack of funding to access the courts, the power of the Judiciary to act in that role to safeguard the people, is being emasculated and of course ordinary citizens are being denied access to justice. They are being brain washed into thinking lawyers and courts and law itself is bad and unnecessary.
      Yet they court the oligarchs and sheikhs and beg them to litigate here, purely to make money because that suits them.
      It all began as I see it with the devaluation of the office of Lord Chancellor by Tony Blair and successive governments have seized upon it. Now we have a “Lord Chancellor” who is not even a lawyer but a former Tv Executive concerned with cutting cost.preservation of our great legal system means nothing to him nor access to it by us all, as of right.
      I think the great Lords Bingham Devlin and Denning would be turning in their graves. As it is, Lady Hale has just spoken out and I’m covering her speech shortly on the blog.

  3. Paul says:

    That’s not the notion I had in mind, Marilyn. We already have Surestart which is a government backed initiative aimed at helping children off to a good start in life. Parents can go on a parenting course for example. Surely we ought not to turn a blind eye to those children potentially at risk from the consequences of parental separation. Surestart could be repositioned as “Families First” and embrace a wider range of functions to include counselling and childcare arrangements when separation occurs.

    Bringing up your child should not be a matter requiring legal advice. Warring couples need to be advised on the consequences before going to court which is a system based on winning and losing. People need to be warned off court as the effects on children are dreadful. People also need to be educated about the importance to a child of maintaining a healthy paternal relationship post-separation.
    Society has completely undervalued fatherhood and there’s a big job to be done to keep natural fathers attached to their first children in a continuing, long term way. Virtually the whole of social policy presently is directed at telling separated fathers to get lost and go and start a new family somewhere else if they still want children. I’m not a great fan of patchwork families myself.

    I’m talking about a place where a separating couple can get continuing advice on post-separation arrangements for their children, not advice on what the Children Act (and its vast body of case law) might mean if they go to court.

    • Marilyn Stowe says:

      Dear Paul
      Fair enough. Third parties can see things clearer and professionally trained people can be very useful. But the law courts should never be supplanted. I’ve worked in the law for thirty odd years and for most of my career the thought of people being unable to go to court was unimaginable. But that’s how it is now and it’s inexcusable and absolutely wrong.

  4. Luke says:

    The problem is Marilyn is that I don’t remember a time when the legal system was easily accessible to Joe Public – I don’t think it has ever existed.
    It appears to me that the whole system is antiquated and not fit for purpose – the fact that lawyers AND barristers still exist is a perfect example of that in my opinion.

    My relative has just finished their legal proceedings in divorce court and they asked me to help them throughout in what little way I could. In the end they settled on a number of issues against an intransigent spouse that they thought to be very unfair because the lawyer/barrister fees were so massively expensive there really was no choice but to surrender. It became a case of just desperately getting out of the court system and stopping the gravy train for these people as quickly as possible. Even so a significant percentage of the total assets were taken by them.

    I found the whole thing to be out of touch with reality, extremely sloooooooow and prohibitively expensive. I don’t think I am alone in that view.

    • Marilyn Stowe says:

      Dear Luke
      It needn’t be either, but the pre requisite is equality of arms. The law is good law, it is extremely flexible. But parties do need lawyers to argue their case. They can’t possibly be expected to know what to do, how to argue their case, how to deal with the other side. And as we see time after time on this blog the unrepresented litigant always loses out. It’s terribly wrong.
      Rather than go down the deliberate blind alley the government is trying to sell, people should be demanding the right to be represented, not to flounder around in or out of court by themselves, when their entire lives and that of their family is at risk.

  5. Steve says:

    Do you really need a lawyer, I got very little advice other than “its upto you” or “leave it to the court to advise”, so whats the point of a lawyer????

    • Marilyn Stowe says:

      Dear Steve
      You do. The law is mostly set out in Sections 22-25 Matrimonial Causes Act 1973 and there are numerous cases which set precedents. If you don’t know what the law is and how it’s applied you won’t be able to argue your case as well as a lawyer on the other side who does.
      I’ve given you a basic snapshot, my book is more detailed but your own lawyer should give you the most appropriate and detailed advise. If you don’t get that, you could change your lawyer.
      Furthermore the lawyer will be impartially and objectively advising negotiating and arguing your case where there may be disagreements as to income capital and the appropriate settlement.

  6. Steve says:

    Hi Marilyn I so wish you were involved in my case!

  7. Bernie says:

    My wife and I have mutually decided to divorce after 21 years, with no children. I have been the sole earner for the vast majority of the marriage, whilst my wife has had sporadic part time jobs.

    Four years ago, she was diagnosed with chronic fatigue syndrome, a medical condition which, in all likelihood, will preclude her from working. I am prepared to give her the full equity from the sale of the house, plus spousal maintenance until re-marriage or co-habitation. The equity will give her the ability to be mortgage free, and the SM should cover her reasonable expenses. I have two questions:

    Pensions. I receive a small forces pension, and I have been in my employers scheme for 16 years. I would like to ring fence these from the financial settlement, as I won’t be able to afford to buy another property and will have to rent beyond retirement. Is this considered reasonable?

    Spousal Maintenance. If her medical condition changes and she can work, can I get a reduction or cessation of SM based on her income?

    Your insight would be appreciated.

  8. Dan says:

    Hi marilyn,

    I really wish you could help me my wife has had an afair now we are trying to sort out finances and she says she put most the equity in when we got together but I signed nothing to agree to this but her lawyer says that im only intital to a very small fraction I cant see this is right or fair I have brought her son up in the last ten years as her former partner has paid no maintenance due to her keeping equity out of there previous home so she says its all hers and that I dont have any right, is this correct I really need some help as I dont have the money for to many lawyers letters so beforei start spending money is she correct?

  9. Rachel says:

    Hi Marilyn
    I am divorcing my husband on the grounds of adultery with an unnamed woman. We have been married 13 years and have an 11 year old daughter. He earns £200,000 per year whilst I earn £20,000 a year working part time. We are using collaborative law to try to come to some financial agreement as obviously my financial position is very different to his. I feel like he is riding roughshod over me because of my lack of money and I want to know how do I know if I’m getting a reasonable offer from him during negotiations whilst avoiding court and the huge bills that go with it.

  10. Niv says:

    Hi I’m sorting out my divorce on my own. Ex lives in Australia with new family so I’m liaising with his solicitor via email. Basically we have reached decree nici and the absolute can be done 6 weeks and 1 day later so I’ve found it.

    Anyhow my question is this, he wants me to disclose my finances so we can do a financial settlement. At the moment he is agreeing to pay me £170 per month but it isn’t in writing.

    Once the divorce is sorted can he stop child maintenance payments even if the financial settlement hasn’t been sorted.

    I don’t believe personally her should receive anymore equity, I believe this is what he is aiming for, as when we first parted company. I had the larger share of the equity to re home our daughter and myself due to me being on a low income and him being on a good one. It’s still the same now.

    Any help would be appreciated.


  11. stitchedup says:

    The most amicable settlement is each party walks away with what they put in. If he earns more than you then you can find a better job. If you’re not as well qualified then get as well qualified. Don t try to profit out of him, accept equal liability for the child and get on with your life.

  12. Anne says:

    I have to agree that it is important to have good legal representative in a divorce financial settlement and would never not have it. I am at the point that I am trying to keep costs down and trying to have conversations with my ex outside the solicitors rooms to sort something out. I have talked about whatever we decide between ourselves we can take to our legal representatives who can see if it reasonable and safeguards our interests. However it is so difficult to negotiate a potential settlement with your ex partner who is unwilling to do so and is unreasonable in their expectations of what they think they should get. Ex will not discuss or bring anything forward without being prompted. He is sitting tight in the family home which we both have to share at the moment. The question is, what avenues are open to me to move this forward if it is a stale mate? I havent got thousands of pounds to go to court with and neither can I allow it to drag on. I am one of the less than Mrs Average people who work. Situation to date is as follows:
    Long Marriage. Children over 21. Decree Nisi came through in Oct 2015
    Both living in the family home. Severance of Tendency was served on me in Feb 15, so we both own 50% each of it. I have an NHS pension, he has a small pension. He wants my pension, and the house. My pension is my main asset other than the house. some savings. The two offers he has asked for are not reasonable at all. I can just see this going on and one . Mediation is unlikely as he is unwilling. Such a frustrating situation that I am sure many have been or are in. Your thoughts appreciated. I do have a solicitor but I want to be able to take something to them or give clear instructions on what to do, not keep passing letters between everyone.

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