1. Not getting an order
it is vitally important that a financial consent order is obtained from the court reflecting any agreement reached between the spouses as part of their divorce. This is something which is often overlooked by people who handle their own divorces. Drafting a financial consent order is a technical and difficult task which very few non-lawyers will be able to manage properly. If there is no financial consent order from the court, the agreement reached between the spouses may not be legally binding, nor can it be enforced if one party will not comply. The absence of a clean break order means that further financial claims can be made in the future.
2. Forgetting about tax
There can be tax consequences as a result of a divorce, particularly if matters are delayed.
For example, normally if one spouse transfers his or her interest in the house to the other spouse or if the matrimonial home is sold and the proceeds divided between the spouses, there is no capital gains tax (CGT) payable. This is because the owners of the property can rely on the primary residence exemption from capital gains tax.
However, once an occupant of the property has not lived in it for a period of 18 months, he or she will lose the exemption. It is not unusual for couples to separate and not to take steps sorting out what is going to happen about the house for a year or two. The party who has moved out may therefore end up with a capital gains tax bill in the event that it is sold or if he or she then transfers his or her interest to a spouse.
This problem is going to get even more common after April 2020 when the grace period falls to only nine months and I anticipate it will start to affect almost every divorce whether as a house.
There can also be a CGT bill in relation to other assets if they are not transferred during the tax year in which the parties separate. This can be very problematic if a couple separates on 4 April as they onky have until midnight the following day to transfer the asset without any CGT.
3. Moving on too soon
Many people who divorce are keen to move on as soon as possible. They may form new relationships before the divorce becomes final. Moving on too quickly can cause problems.
If you remarry without first making an application to the court for a financial order, you may lose the right to do so. This is because you will have fallen into the “remarriage trap”. This means that you cannot seek a fair share of the assets using the Matrimonial Causes Act 1973 (which is the act of Parliament used by divorcing couples to resolve financial disputes in a divorce). This rule probably makes no sense in the modern age, but it still exists. For some reason, it does not prevent a former spouse who has remarried from making a claim for pension sharing order, (which I suspect is because it was overlooked when pension sharing legislation was introduced in 2000).
The remarriage trap can lead to terrible problems in resolving a case and while it is possible to make a claim under the Trusts of Land and Appointment of Trustees Act 1996, this is less than ideal as that act is designed to be used by unmarried cohabitants and the court has far less discretion about how to deal with matters.
Another problem is that you may decide to cohabit with your new partner. Living together is fraught with legal difficulties because of the relative informality of such arrangements and also the inadequate state of the law applying to cohabiting couples. It is very important that if you decide to cohabit, you should have a written Living Together Agreement (also known as a cohabitation agreement) which makes it very clear what happens if you separate and about who owns what.
Similarly, if you decide to remarry, it is prudent to have a prenuptial agreement.
4. Agreeing to a child maintenance “clean break”
it is common in divorce proceedings for a husband to agree to accept less of the assets in return for a clean break order so that he does not have to pay spousal maintenance to his former wife. However, you should never agree to receive less of the assets in return for not having to pay child maintenance. This is because it is impossible in law to have a clean break in relation to child maintenance.
I have seen a number of cases over the years where a husband, without the benefit of legal advice, has agreed with his wife that he will not pay child maintenance and that in return the wife will receive more of the assets then she would otherwise receive. A clean break order is then made by the court, which makes it impossible for the husband make any further financial claim against an assessment against the husband for him to pay child maintenance and he can do absolutely nothing about it.
5. Thinking nothing can be done
Clients often tell me that their spouse has said that they will defend the divorce. I reply “Clients often tell me that their spouse says that they will contest it, but they very rarely do.” The client then grimaces and says “You don’t know my ex”. I reply “That’s the next thing that clients tell me.”
It is not unusual in divorce proceedings to face somebody who is not prepared to be cooperative. In those circumstances, some people lose the will to fight. However, while the court does not provide a solution to every problem, it is very used to dealing with people who are not being cooperative. Ignoring divorce proceedings when they arrive or failing to provide financial disclosure may have expensive and serious legal consequences for them. The court can take steps to ensure compliance with orders. Often something can be done, and most people will co-operate eventually – or pay the price.
6. Discussing the case with their children
If you are going to divorce and have children, then obviously at some point you will need to talk to the children about what is happening. However, what you should never do under any circumstances is embroil your children in your legal difficulties. Unless your children are adults, they are unlikely to have the emotional maturity to enable them to understand the issues.
I see far too many very depressing cases where one parent insists on discussing inappropriate matters with the children, and quite often it is done with the malicious intent of alienating the child from the other parent. Some parents say that they think it is important that the child knows “the truth” about whose fault it is. This is deeply damaging. The reality is that most marriages break down because of a failure by both parties to a greater or lesser extent and I have seen very few divorces over the years where I was satisfied that it was entirely one person’s fault. However difficult it is, parents should always attempt to maintain a civil relationship so that they can communicate effectively about their children and parents should resist the temptation to badmouth their ex.
7. Getting legal advice from friends
It is entirely normal to get emotional support from your friends if you divorce, but you should be wary of relying on them for legal advice. They are highly unlikely to know what they are talking about. They may have been divorced themselves and that probably makes an expert on their divorce but that does not make them an expert on divorce in general. They may not have been divorced and have got their knowledge of what happens from unrealistic TV dramas. They may have completely unrealistic idea about what is involved and what is likely to happen.
I usually find that non-lawyers adopt a moralistic approach to what they think the court should do, but legal disputes are not decided in a court of morals, they are decided in a court of law. The outcome may not be the same.
The only person from whom you should obtain legal advice is a qualified lawyer.
8. Using a paid McKenzie Friend
Some people who represent themselves are accompanied to court by what is known as a McKenzie Friend. These are supposed to be friends or relatives who can provide support at a court hearing and who can prompt you to ask the right question at the right time or help you with managing the papers or just be there to hold your hand.
However, increasingly people who struggle to afford solicitors are tempted to use “professional” paid McKenzie Friends. These types of McKenzie Friends market themselves as being a cheap alternative to using a solicitor and like to pretend they are just as good. They simply are not. They are usually charlatans and are best avoided. They are untrained, inexperienced, unregulated and uninsured. In my view, they should be illegal. Avoid them like the plague.
9. Wanting your day in court
Far too many people think that the only way that a dispute should be resolved is by having their day in court. It is tempting to think that if you go to court, truth will out, justice will be done and that evil duplicitous as so-and-so to whom you were married will get their just desserts. People expect what I call “Perry Mason moments” where suddenly something dramatic happens and they will win.
The reality is that going to court is expensive, risky and stressful. There are many far better ways to resolve matters including constructive negotiation, mediation, collaborative process and arbitration. These methods are all far cheaper than going to court, less stressful and far more likely to result in both of you to feeling at the end of the case that you have a fair outcome. Court proceedings should be the last resort.
10. Going it alone
Going it alone is rarely good if you are divorcing. Getting divorced is a complex and technical process where you need legal advice and you need a solicitor to handle the paperwork on your behalf.
If you cannot afford to instruct a solicitor to represent you in divorce proceedings, then one alternative is to represent yourself and to also to use a solicitor as and when necessary on a pay-as-you-go basis. This would involve you using a solicitor for limited amounts of work such as advice sessions or drafting documentation, but you would otherwise represent yourself. This can be a more affordable way to divorce, but it is not as good as the option of a solicitor fully representing you in divorce proceedings. However, is still better than completely going it alone.
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13 May 2019