The impact of no-fault divorce on the settlement of finances
This week, the new no-fault divorce law is introduced in England and Wales. As well as transforming divorce law, these overdue changes will also be applicable to the dissolution of civil partnerships.
It is a view held by many in the family law sector that the fault-based divorce law in England and Wales was outdated and no longer fit for purpose. Under previous law, the petitioning party was required to blame the other party for the divorce if they had not been separated for a period of two years or more, which was a common occurrence. In many cases, this led to unnecessary animosity and upset. The move to no-fault divorce removes the need for blame, and is therefore a welcomed change.
But what impact, if any, will no-fault divorce have on resolving the financial aspects of a parties’ marriage? Stowe Solicitor Melanie Quinn tells us more.
Finances and divorce
When a marriage comes to an end it is crucial that as part of the divorce process, the parties’ finances are also resolved, and that they reach a final settlement on how their assets should be divided which is transferred into a legally binding court order.
This is vital to ensure that both parties have financial security and certainty going forwards.
Reaching a financial settlement is necessary regardless of financial circumstances because in entering into a legally binding agreement as part of a divorce, a party is protecting their financial position not just at the time of the divorce, but also in the future. For example, they can protect any future assets they may accrue and equally protect themselves from being responsible for any debt their ex-spouse may incur in the future.
Issues with the old fault-based divorce law
Previously, the most common fact relied upon for divorce was “unreasonable behaviour”. This required the petitioning party to give examples of the other party’s behaviour, which they considered to be unreasonable. Such allegations needed to reach a certain threshold to persuade a court that the marriage has broken down irretrievably. Therefore, in many cases, the petitioning party had to raise unpleasant marital issues, when they would otherwise have no wish to.
Even for the most thick-skinned respondent, it was unpleasant to read details about themselves of this nature, never mind for these allegations to be recorded in a court document.
There was an understandable common misconception that the allegations made would have a bearing on the financial outcome of the divorce. However, the reality is that only in very extreme circumstances will a court consider a party’s behaviour when determining a financial settlement. Therefore, the unreasonable behaviour particulars were a very unpleasant means to an end and it was difficult for parties to understand why these needed to be raised in the divorce petition, only to then be put aside in the next stage of the divorce when they came to resolve the finances.
Furthermore, the court places a big emphasis on parties attempting to reach a financial agreement by consent, without the court becoming involved or indeed, without the court making the ultimate final decision on how the assets should be divided. Given this emphasis on the parties reaching a financial agreement amicably, it is easy to see why this was somewhat at odds with fault-based divorce law. This was arguably not conducive with the parties then reaching a mutual agreement on how their assets should be divided and understandably, if one party is upset about allegations made against them in the divorce petition they may be less inclined to take a fair and reasonable approach when negotiating the divorce finances.
No-fault divorce law and financial agreeements
Without the need for blame, it’s likely that the new no-fault divorce law will have a very positive impact on the financial aspects of a divorce.
Under the new procedure parties will even be able to make a joint application, meaning from the outset couples can work together where they have reached the conclusion that their marriage has broken down irretrievably. They will be able to take a cooperative and collaborative approach to the entire divorce process which can only be a good thing.
Of course, there will still be cases where financial matters become contentious, regardless of the reason for the divorce. However, in these circumstances, having a divorce process that required one party to apportion blame, arguably only made matters worse.
The new cooling off period
As part of the reform to the current law, a minimum cooling off period is going to be introduced. This will be a period of 20 weeks between the initial divorce application and the conditional order (previously known as decree nisi). This is in contrast to the old process where as soon as a respondent had acknowledged the divorce petition the applicant could apply for the decree nisi.
It is hoped that this new cooling off period will allow parties time to resolve the finances of their marriage. They will then be in a position to lodge a consent order recording the financial agreement they have reached with the court, once the conditional order is made.
The reality is that reaching a fair financial agreement can take time, and this pause in the divorce process therefore better reflects this fact, ensuring that financial matters are not rushed through because one party has a desire to end the marriage as soon as possible.
Of course, there will be cases where even after the conditional order is made a financial agreement has not been reached. However, it is hoped that in those circumstances, the extended time frame will allow time for some clear headway to be made in addressing financial matters.
Reaching a conclusion
In most cases, the reason for divorce has no bearing on financial matters. Any increased animosity caused by the reason for divorce was therefore only likely to be a hindrance to reaching an amicable financial resolution. The divorce law reform is therefore welcomed for the positive impact it will have on couples, allowing them to act in the best interests of both parties and therefore, in turn, any children of the marriage.
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