How do you divorce when you don’t know anything about the finances?

How can I separate and divorce when my spouse is controlling the finances?

It is not uncommon for a spouse in an unhappy marriage or civil partnership to feel that they are trapped financially and have no option but to carry on as they are. As a family solicitor, I see cases regularly in which there is an element of financial control. “Control” does not always mean domestic abuse but rather that one person has simply taken the lead on sorting out the finances during the relationship so they know more about everything on that front than the other person does.

I often hear phrases such as ‘I don’t even know what we have”, “I can’t access any of the money” or ‘They have already told me that if I leave them, I won’t be entitled to much because they earned it’ and ‘How could I possibly survive financially if we were to split?’.

Getting clarity and support at the point of separation

When a new client comes to see me and they are experiencing financial control or financial inexperience in their marriage and they wish to separate, I aim to provide reassurance and explain how we can get a clearer understanding of the financial elements of their relationship at its end.

Whilst going to court is hopefully a last resort, it’s important to understand that the court does have very wide ranging powers to deal with financial matters including those of abusively controlling relationships and where someone is wilfully not disclosing their financial information.

Because a court based approach can be far more contentious, expensive and lengthy, every effort should be made to come to an agreement using a form of non-court dispute resolution such as mediation or arbitration where possible.

The court’s powers can be accessed once a divorce application has been made.

Financial disclosure requirements in divorce

There is a general expectation that both people will provide one another with appropriate (which means full and frank) information about their respective and joint financial positions. If they do not, then the court then has the power to require a party to a divorce to provide that financial disclosure, comply with orders made including obtaining expert evidence about businesses, pensions and property values, attending court hearings and generally engaging in the court’s process.

The court also has “interim” powers which means it can make orders whilst the case is ongoing and before a final order. A common interim order is for one spouse to pay interim financial support to the other spouse while the overall matrimonial finances are being negotiated and the divorce then concluded.

The court can also make Legal Services Orders, which require one party to provide a capital or income sum to the other party towards their legal costs, so that the parties can both access legal advice, and therefore be put on an equal footing in negotiations.

In more extreme cases, the court also has the powers to make freezing orders on assets which can prevent them being moved beyond reach perhaps overseas or orders undoing transactions that were designed to move the asset away from the marital “pot” too.

It is not the case therefore, that a financially controlling spouse on marriage breakdown, can freely dictate that the matrimonial finances are to be dealt with on their terms but it is important for people to get legal advice about what they may be entitled to receive short and longer term.

How courts divide finances on divorce

One of the many misconceptions I hear repeated regularly is that the individual who went out to work should retain the lion’s share of the assets because they made all the effort. Even if one person was the main wage earner, the other person’s contributions to the marriage partnership, such as being the main child carer, or supporting the other’s high flying career, are generally seen as of equal value to the court.

In practical terms, the court has a wide discretion to decide cases when it comes to splitting assets of the marriage. The starting point for the court is a long list of factors set out in the Matrimonial Causes Act that must be taken into account when considering the division of matrimonial finances. First though, the welfare of any children of the family under 18 must be reviewed.

These factors are things you might expect such as what all available capital and income resources are, the ages of the parties and how long they have been married, but there are various other factors such as the standard of living the parties have had during the marriage, whether either has any disabilities and what contributions they have each made (which needn’t only be financial).

Due to the court’s wide range of decision making powers, different judges arrive at different conclusions to decide what is fair in each case and over the years some guiding principles have developed which can be boiled down to: needs, compensation and sharing.

Matrimonial vs non-matrimonial assets and financial outcomes

The court identifies whether assets are to be treated as matrimonial (so accrued during the marriage) or non-matrimonial (generally assets they have been gifted or inherited or acquired by a party commonly before it starts or after a marriage has ended).  The family home is normally considered as matrimonial, due to its place as the central asset in the marriage even if it came about through inheritance.

The starting point is an equal division of the matrimonial assets. If that division meets the capital and income needs (including for the children) that is usually where matters end. The court is likely to depart from equality of division of matrimonial capital if required to meet financial needs.

If necessary, the court can apply non-matrimonial capital to meet those needs, although it will try to ensure a party retains its own non-matrimonial resources.   Sometimes that means the maths of the division leads one person to look like they have more or less than the other.

Contributions are harder to argue about in most relationships because, as noted above, one person going out to work whilst the other might have maintained the home does not mean they didn’t contribute equally, just differently. Contribution- based cases tend to focus on exceptional contributions over and above the “norm” and often appear in very big money cases where the wealth has perhaps been generated off the back of a business or a particular stream of work by one person that goes above and beyond.

Whilst the court has a duty to try to achieve a clean break (i.e to end all financial claims), it can make spousal maintenance order (or “periodical payments”) s i.e for one person to pay an ongoing income to the other for a period of time, usually to help them whilst they transition to financial independence. Whether maintenance is ordered generally depends on whether needs require it, standard of living during the marriage, and the other party’s ability to pay.

Non-matrimonial assets are generally retained by the person who holds them, unless virtually all assets are non-matrimonial, and then the division is dictated by the weaker financial party’s needs.

In some circumstances former non-matrimonial property can be viewed as ‘matrimonialised’ and becomes part of the matrimonial assets that are subject to the equal sharing principle, due to the way it has been treated i.e as a shared asset.

Enforcing financial orders and taking the first step

So, if you are considering or facing a divorce but feel you don’t know anything about the state of your finances within the marriage or Civil Partnership, please don’t despair but do seek legal advice sooner rather than later. The assistance of a (non-legal professional) divorce coach can also be helpful for some people as they can provide practical and emotional support alongside the lawyer’s guidance.

The court also has the power to enforce the terms of a final financial order once it has been made e.g to ensure a property is sold (the Judge can sign the legal sale documents) and the proceeds divided, a lump sum and/or maintenance is paid and a share of a pension transferred over.

Ultimately if a spouse fails to comply with a court direction, such as to provide disclosure, an order can be made with a penal notice attached, which means if that if the person subject to the order is found to be in breach they can be fined or imprisoned. The threat of such an application generally achieves the desired outcome.

The important thing if you wish to separate, is to obtain independent legal advice.  This can be obtained on an entirely confidential basis before informing a partner of a desire to separate. In my experience, obtaining that advice can provide the necessary strength to enable a spouse to initiate the divorce process.  Geldards Family Team can help with all stages of the divorce and separation process including mediation and financial dispute resolution.