Family Law update: January 2018

Family Law update: January 2018

Aviva Survey Shows Costs of Divorce Increasing Rapidly

Aviva have recently announced their family finances report on "the hidden cost of divorce and separation". Their figures suggest that UK couples are spending on average £14,561 when they divorce or separate which has risen 17% since 2014. Perhaps a little remarkably they suggest that whilst legal fees for a couple have increased on average during that period the vast majority of the increase is attributable to the longer term costs of having to start a new life including setting up a new home and dealing with post-divorce "fallout". Their survey suggests that the average legal costs associated with a divorce and separation is now £2,679 per person whilst the average cost per person for a child custody "battle" is now £5,671.

The longer term and wider impact of divorce are also illustrated. For example 51% of those surveyed who had moved out of their former home because of divorce had had to move into rented accommodation whilst the average time spent as a tenant post separation was 4.7 years and 19% of the people surveyed went on to rent for more than ten years. 16% of those that went through divorce effectively separated but carried on living in the same house because they could not afford to move and perhaps most significantly the figure is highest for those in London where 28% continued to do this although property prices there are far higher than the national average.

Perhaps not surprisingly the research suggested that it was very prevalent post-divorce for people to have to work longer hours, change jobs to a higher paid role or adopt flexible working. 35% reported that they had to take annual leave as a result of their split. Many asked employers for a pay rise although it is not clear how many were successful! Longer-term results included 31% having to spend savings to fund their divorce, 26% used additional credit cards, 23% borrowed from friends or family, 12% took out personal loans and 6% either cancelled protection cover (life insurance) or cut back on the level of cover or went as far as cancelling pension contributions. Perhaps most scarily for family lawyers is that 19% reported that they had made no claim on their former partner's pension and it was not included in a divorce settlement. 15% of those in the survey thought that they would be significantly worse off in retirement as a result of their divorce or separation.

The Aviva results do need to be looked at in context. Only people aged between 18 and 55 years of age were interviewed. Those post 55 are in the group where divorce rates are rapidly increasing with "Saga divorce" becoming much more common. The background to the Aviva research is more looking at those in work and the effect on them for the future and whilst the general trends may not be too surprising the figures can be quite staggering as to the long-term effect of divorce and separation. At least lawyers are proportionately not taking the blame for this in most cases!

Trying to be Too Crafty?

It is becoming more common for people to try to hide assets or to invest them in a way to try to avoid claims being made on a divorce. The Family Court often struggles with how to deal with trusts that have become one of these ways of trying to "ring-fence" assets. Sometimes however it can backfire.

The High Court has been dealing with a recent case in which a businessman transferred jointly held property assets into the name of his friend apparently so the assets would not be included in any application made by the businessman's wife on divorce. When he tried to reclaim possession of the assets back after a period of six years in Pakistan a dispute arose with his "former" friend over who owned what and how much the assets were worth. A salutary lesson that once given assets cannot be automatically brought back and returned. A similar situation with parents making provision for their children because once money is given a gift is not repayable and that can sometimes be forgotten.

Commentary by Neale Grearson, Head of Family Department.

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