The waiting game: addressing finances at the time of your divorce

The Case

A husband and wife separated and divorced over 20 years ago. Their financial situation at the time wasn’t ideal, but they agreed on how they would share what they did have and drew up a written agreement in 2001 that was intended to become a finalised court order (subject to the court’s agreement) known as an Xydhias agreement (after another famous case among family lawyers). They both acted on the terms of the agreement, but somehow the court’s finalised approval was overlooked and no one noticed. They went their separate ways, staying in touch from time to time but doing their own thing financially. The now ex-husband does very well in his later business ventures, the wife does less so.

A few decades pass and the ex-wife, encouraged by someone who perhaps wasn’t acting in her best interests, instructs solicitors and a letter is sent to the ex-husband stating she now needs several million pounds to meet her financial needs, as they had not concluded their financial claims against one another over 20 years ago.  The ex-husband, unsurprisingly, doesn’t agree and the matter ends up in the family court for a determination.

The Decision

Ultimately, the court’s decision was that the wife’s claim was not successful and the agreement the couple had reached back at the start of the century was upheld as a final arrangement between them (the case is called LIN and PAR). The ex-husband, having paid some of the ex-wife’s legal costs as well as his own, by this point had spent somewhere in the region of £1.75million pounds. Eye-watering amounts for the majority of us.

You might think this is an unusual case or one where only people with pots of money are likely to have this problem. You’d be wrong.

It is not that uncommon for people to get a divorce or dissolution and move on with their lives, presuming that time passing or a remarriage means there are no more financial matters between them and their ex. That is potentially wrong.  The ability to seek a financial order does not necessarily end because of time passing or because of a remarriage.

It is also not that rare for people to inherit a sum of money, win on the lottery or create a thriving business. All of these sums of money can be life-changing for the recipient but also significant when factored into a divorce or dissolution.

The problem in LIN and PAR was that the ex-wife asserted she should receive a significant sum of money from the ex-husband for the wealth he had accumulated in the period after the marriage had ended and (as the court held) after she’d received a fair share of the marital assets available at the time. The court disagreed with her.

Ask most family lawyers and they will all be able to think of a client who came into money (or the ex did) just before or just after the divorce/dissolution was concluded.  Ask the same family lawyers to think of cases where a client comes in years after the divorce/dissolution and asks about financial provision – they will also have a number of those in mind.

The majority of family lawyers will advise most, if not all, clients that addressing finances at the time of the divorce/dissolution is usually going to be best for all concerned. This isn’t about encouraging you to spend more on legal advice for the sake of it; this is about ensuring you end up with certainty about what you are entitled to from the asset pot and having a stronger chance of keeping track of what actually exists. It also avoids you facing claims for financial provision years and even decades after the event, when you had been quietly getting on with the rest of your life.

So, regardless of your current feelings about asset separation on divorce or dissolution, regardless of how amicable it is, don’t overlook the finances, even if you don’t think you have much now, as it could come back to haunt you at a later date.

For advice about arrangements post-separation finances when heading into divorce or dissolution, whether through use of the court process or one of the many non-court options including mediation, arbitration, private Financial Dispute Resolution hearings and early neutral evaluation, please contact any one of our Family Team members at Geldards for advice.