This is an uncertain time and everyone is quite rightly concerned about the impact of the coronavirus and the constraints that it is causing. There are pressing questions at the moment regarding the effect that this pandemic will have on finances following the breakdown of a marriage. Here we answer some of the questions we are currently being asked.
- I am about to start the process of exchanging financial information following separation, as myself and my spouse wish to resolve these matters. Is this a good time or should the process be paused?
This ultimately depends on the individual circumstances of your case. You may want to press on with this now to resolve financial matters or you may choose to wait until you have more certainty about the financial market.
It is still unknown what the overall impact of the pandemic will be. In terms of shareholdings, investment portfolios, pensions and businesses, it is very likely that these will be valued at significantly less than prior to the COVID-19. In addition, the housing market will be affected, subsequently house prices could drop. The impact of this is that you may wish to hold off entering into negotiations, until you know more about the situation.
Timing is key. At present, you or your former spouse may be at risk of losing your jobs or receiving a reduced income, which means that any claims for maintenance need to be carefully considered.
If you do decide to exchange financial information now, it is vital that you obtain the most accurate, up-to-date valuations for your property, assets, pensions and liabilities to ensure that you are negotiating with information that is current.
- I have a Financial Remedy Consent Order – is it still effective?
If an order has already been made, you may face difficulties if a condition of the order was to sell your former matrimonial home and/or other properties that you may own. Currently, the government has advised that any conveyancing transactions, which have not yet exchanged are put on hold. Following this, many will be reluctant to sell/buy properties during this ambiguous time, coupled with the fact that it will become increasingly more difficult to obtain a mortgage, due to the uncertainty with income. The impact of this will mean that your property will take longer to sell and you may receive less for it than you anticipated.
You may also encounter problems if a property is to be transferred from one spouse to the other, with the addition of you receiving a lump sum payment, as again lenders will be looking at the present circumstances and this may make it more difficult to obtain a re-mortgage.
You might have agreed to accept shares and other assets, such as pensions, which will now be worth significantly less than anticipated. Unfortunately, it is difficult to address the consequent reduction.
In addition, one party may now want to re-open the agreement and rely on what is called a ‘Barder Event’ (from the case of Barder v Barder). This is where something that happens undermines a settlement and has been unforeseen and unforeseeable. There are four conditions that need to be satisfied to challenge a Financial Remedy Consent Order when seeking to rely on a ‘Barder Event’, which are as follows: -
- The new event must have occurred since the making of the order, which invalidates the basis for the agreement;
- The new event must have happened within a relatively short period of time of the agreement, ideally within weeks;
- The application for leave to appeal must have been acted on promptly by the person seeking to reopen the agreement; and
- The grant of leave to appeal would not prejudice third parties if the outcome was changed.
- My spouse is required to pay maintenance for me - what is the position in light of the pandemic?
Maintenance orders are always variable and with the potential change in the economic climate, it may be problematic for your current level of spousal maintenance to continue, especially if you or your former spouse are subject to furlough or a percentage reduction to your income.
Communication with your former spouse is vital at this time. It may be sensible to consider a reduced amount of maintenance in the short term, rather than make an application to court.
- My spouse is required to pay maintenance for our children - what is the position in the current climate?
Your spouse has a legal obligation to pay maintenance to you on behalf of your children. You could have agreed this together or through the Child Maintenance Service (CMS).
It is now likely that the paying party will make an application to the CMS to have this reviewed, if their employment circumstances have changed and subsequently their income has reduced.
It is very important to communicate with your former spouse, if you can, during this time to try and agree a way forward.
At Stone King, we recognise that this is a confusing and unsettling time for all. We are committed to being here for all of our clients throughout the COVID-19 pandemic and beyond. Should you have any queries please do not hesitate to get in touch with Family & Mediation Team.