According to the Office for National Statistics, 42 percent of marriages now end in divorce. Naturally, no couple enters into a marriage expecting to divorce, but it’s important to consider what the financial implications may be and the best way to mitigate them should a separation occur.
No-fault divorce
Divorce is, in fact, straightforward. Since April 2022, separating couples can divorce without finding fault in the other party – this is referred to as “no-fault divorce”. It makes the formal step of legally ending the marriage easier and, importantly, more amicable.
It’s in stark contrast to the old, fault-based divorce system where one party would have to find fault – such as adultery or unreasonable behaviour – in order to divorce straight away. Reference to these sensitive issues is no longer required, so private lives can be kept private.
Financial division and divorce
A common misconception surrounding divorce is that by divorcing and obtaining a final order, any financial claims arising from the marriage are severed. Such an assumption is incorrect. Financial claims arising from a marriage remain live until an order detailing the terms of financial settlement has been filed and approved online by the court (save a few exceptions) – this is normally referred to as a consent order.
This is especially important for those who wish to protect their assets to ensure no future claims can be brought against their hard-earned income and any pension they accrue or have accrued. For those with an interest in a business, such as ownership of a veterinary practice (including any interest or ownership of the property in which their veterinary practice operates), further consideration is key.
Court is often a last resort for many, and you may wish to consider the use of mediation or other forms of alternative dispute resolution
It’s often possible to negotiate the terms of a consent order dividing assets from a marriage without involving the court. However, where it is not possible to reach an agreement immediately between the parties, it’s important to consider the various options available to settle the financial outcome. Court is often a last resort for many, and you may wish to consider the use of mediation or other forms of alternative dispute resolution to achieve a settlement that both parties have a say in reaching.
Marriage asset planning
Many business owners, those with higher earnings from their careers or individuals who have brought significant wealth to their marriage (for example a large pension accrued before meeting a spouse) will wish to protect their assets and look at how this can be achieved before entering into a union.
As divorce is now so common, many couples choose to enter into a nuptial agreement before they marry. This is essential in helping to protect a range of assets and to determine the financial split that would occur should you divorce.
[A nuptial agreement] can provide certainty not only for the individual who owns a veterinary practice or is part of a partnership, but also for any employees who may be adversely affected by such a claim
Most notably, a nuptial agreement – often referred to as a “pre-nup” if entered into prior to marriage, or a “post-nup” if entered into after – can protect valuable individual assets at the time of divorce. This mechanism can provide certainty not only for the individual who owns a veterinary practice or is part of a partnership but also for any employees who may be adversely affected by such a claim: for instance, if a sale of the veterinary practice is ordered by the court should an owner get divorced.
It’s important to take prompt legal advice in order to negotiate the terms of a pre-nuptial (which should be signed at least 28 days before marriage) or a post-nuptial (which can be entered into at any point during a marriage) agreement.
Cohabitation considerations
While divorce rates have risen in recent years, so have the number of couples who choose not to marry and instead choose to cohabit. Although there may be a review of the laws to protect cohabiting couples in the future, those who choose to cohabit at present can only bring far more limited claims – normally only relating to property. Thus, those cohabiting have less to worry about upon separation in so far as pension, income and ownership of a business such as a veterinary practice are concerned.
Although there may be a review of the laws to protect cohabiting couples in the future, those who choose to cohabit at present can only bring far more limited claims