The majority of people getting divorced in the South West are not formalising their financial settlement. This leaves them open to potentially expensive financial claims from their ex. Leading Cornish divorce lawyer, Sarah Atkinson from Stephens Scown LLP discusses the issues and how farming families can protect themselves from future financial claims.
Divorce. Sounds pretty final doesn’t it? However, a divorce is just the legal end of a marriage. It doesn’t set out what will happen to a former couple’s finances; that requires a separate financial settlement.
For farming families, where there may be property, land and business interests involved, the certainty of finalising the financial aspects of divorce are even more pressing.
Figures from the Ministry for Justice, which my firm, Stephens Scown obtained through a Freedom of Information request, show that in 61% of divorces in the South West there was no financial court order at the time of divorce. Unless a financial remedy order is obtained at a later date, this means that financial claims can be made by an ex-spouse, no matter how long ago the divorce took place.
£1.9 million claim 20 years after divorce
The most high-profile example is of “eco-millionaire” Dale Vince who made his fortune by building up his business Ecotricity after his divorce. Twenty five years after they separated and 20 years after their divorce, his ex-wife made a claim for £1.9 million.
The couple met as students and got married in their early 20s, living a new age traveller lifestyle. They separated in the mid-80s and divorced in 1992. In the mid-90s Vince began a business career and launched green energy business Ecotricity, which is reported to be worth at least £57 million. Even although his fortune had been built up after the divorce the court agreed Mr Vince should pay his ex-wife £300,000.
The Vince case took place in 2016, but the latest figures we’ve obtained from the Ministry for Justice are for 2018, so it seems that the message is not getting through that people should make sure they sort out the financial aspects of divorce.
Divorce only ends a marriage
I was taken aback by the figures. I suspected that a small minority of cases might slip through the net, but nothing like this level. Although the South West is slightly less than the national figure of 65% of divorces not featuring a financial settlement, it is still shockingly high. This could be a product of an increasing number of people doing their own divorce online without the advice of a specialist family lawyer, but that only covers half of the picture.
Some people may assume that a divorce will also draw a line under their finances, but that is simply not the case. Getting divorced ends your marriage, but to conclude the financial side you need to agree a Consent Order as well or seek an order from the Court, not just divide the assets by agreement. We always advise our clients to get a Consent Order, which sets out what will happen with finances after a divorce.
If you are already divorced and have not done this already, you can still apply for a Consent Order, with the assistance of a family lawyer. This sets out what you’ve agreed to do with your finances and how you’ll split everything up. Once agreed and drawn up, it will go to a Judge in the Family Court who will review it, make sure it’s fair and grant the Order.
A consent order can take as little as an hour to put in place, which is worth it for the certainty and finality it will buy you.
Avoid a nasty surprise – agree your finances at time of divorce
One of my clients, Doug Davie, knows first-hand how stressful the situation can be if finances are not agreed at the time of divorce. He was married and divorced when he was young. At the time he had very little money so didn’t see the need to reach an agreement about finances.
Thirty years later his ex-wife came back to make a claim against the money he’d built up. Doug says: “It was a shock. I didn’t realise that could happen. Thankfully the judge found in my favour, but it was still an incredibly stressful time.”
Mr Davie’s case happened before the Vince case and it is likely that the outcome would be less favourable now. His advice to others is clear.
“I’d urge anyone who is getting divorced to come to an agreement about their finances. If they don’t, they could end up with a nasty surprise.”