Alasdair Docwra, Partner at Edinburgh’s Morisons LLP, discusses the financial ins and outs of divorce…
Who should pay for what in the immediate aftermath of a break up?
In Scotland this will depend on the needs and resources of the spouses. Spouses have a duty of aliment to each other which, in practical terms, means that where one party has more net income than the other, the other may look to that spouse to cover any shortfall s/he has in income versus expenditure. If one spouse has moved out s/he will have a duty to maintain any children that remain at home with the other spouse. The exact level of maintenance will depend on a number of factors and usually based on how much the spouse earns and how many overnights s/he spends with the child on average per week. Other factors can come into play, however, depending on the particular circumstances of the case. Usually a negotiation will take place and parties will be encouraged to make sensible decisions as to what each should pay based on their resources and the essential expenditure to be covered.
What is financial disclosure and what information am and I my partner expected to share?
In Scotland the parties’ assets and debts will be valued at the date of separation which will produce a net figure representing the matrimonial property for division between them. This includes assets in joint names and also their sole names. Accordingly they will be expected to share information such as bank statements, investment statements, property values and pension valuations to vouch the worth of these assets at the date of separation. Similarly mortgage, credit card and loan statements are required to vouch the level of any debts. A very important point of Scottish Law is that the only assets and debts taken into consideration are those that were acquired between marriage and separation. This has great significance with regard to military pensions, and the protection of those pensions for servicemen and veterans. Both parties will also be expected to share information on their income and reasonable expenditure where one party is seeking maintenance (known as “aliment” in Scotland) from the other. If one spouse fails to share the necessary information, depending on the circumstances of the case, the other spouse may be able to raise either divorce and/or aliment proceedings in which the court can order recovery of the necessary information not only from the party himself or herself but from the third parties who hold the information such as banks and other financial institutions.
How can a solicitor help to decide what is a fair settlement?
If we are using a traditional negotiation model we will ingather the valuations of matrimonial property and assess the legal arguments that can be made as to how that property should be divided between the parties. Parties will have best case scenario and worst case scenario outcomes and they will be advised that in the majority of cases the difference between the two is not sufficient to make it worthwhile involving the court. Even if a court assessed the case at being nearer the best case scenario end of the scale, the cost of the litigation would often mean that the party was still in a worse situation than if they had accepted a lower settlement in negotiation. Moreover we will always try to avoid litigating in a family case where possible as not only is it costly but it will generally polarise parties even further which can have significant and long lasting consequences for them and their children. If we are using the collaborative law negotiation model we will assist the parties to find a solution which best suits the family’s interests as a whole, as opposed to each solicitor simply negotiating for his/her client’s best case scenario positon in law.
Who decides what level of maintenance estranged partners must pay?
Usually this will be negotiated by the parties’ solicitors based on the respective needs and resources of the parties. If one party has been supported by the other party during the marriage the Court will expect this to continue, usually for a limited period, so that the reliant party can adjust to the separation. If the amount cannot be agreed and a reasonable request for maintenance is being made, the spouse requiring the support will be advised to raise court proceedings for an order for aliment.
How are pensions divided on divorce?
It is a common misconception that pensions actually have to be divided on separation. Generally one party will owe the other party a sum of money to ensure that the total value of the matrimonial property is shared fairly between them. However if the paying party is able to pay the balancing sum in another way such as by cash or by agreeing to the other party taking a bigger share of the sale proceeds of any property, for example, that can be agreed and the pensions can be left intact. However, in cases where the pension is the biggest asset and there is little cash or other property it is likely that the pension will need to be shared. Spouses are always advised to take independent financial advice before undertaking a pension share arrangement to ensure that is done in the most financially efficient way possible, especially where there may be more than one pension and therefore potentially more than one pension sharing arrangement. The sharing of pensions can remove benefits connected to those pensions and according it is essential that expert advice is taken.
Who keeps the house?
This will vary from case to case. In Scotland the principle underlying the Family Law (Scotland) Act 1985 is that the matrimonial property should be divided fairly between the spouses and a clean break achieved. Accordingly if neither party can afford to continue to live in the house usually the house will be sold and the net free proceeds of sale divided in such a way to achieve a fair sharing of all of the matrimonial property. If one spouse can afford to remain in the home, perhaps with any children, agreement can be reached for the home to be transferred into that spouse’s name and, if appropriate, to achieve fair sharing of the matrimonial property, a balancing payment can be made in exchange to the other spouse. Sometimes agreement can be reached that one spouse will remain in the home with the children until a set date, such as the end of the youngest child’s primary school education, and the house will then be sold and the proceeds divided at that stage. However this is not a solution that will generally be favoured by a court due to the “clean break” principle and accordingly it will only generally occur when both parties are agreeable.
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