If you are in the middle of getting divorced, or contemplating getting divorced, you may be worried about how the present COVID-19 pandemic will impact on your financial security after separation. If financial arrangements are disputed, how easy will it be to come to an arrangement and move on with your life?
‘Naturally, people have concerns about whether it will be possible to reach an agreement with the various restrictions in place during the lockdown’, says Debra Taylor, Chartered Legal Executive in the family team with Richard Reed Solicitors. ‘And of course, people are worried about declining asset values, reduced incomes and business uncertainty.’
Our family lawyers have embraced online communications
Here at Richard Reed we use all the latest technology to ensure our clients will not be left in financial limbo. It is still possible to achieve a legally binding financial settlement, even during the pandemic. We will consult with you over the phone or by video call and will guide you through the steps and the documentation you will need to provide.
In all matrimonial financial disputes, the first step is to obtain details on all of your assets and liabilities. During the pandemic, you can send this documentation either via post into our office or upload it online securely in order that we can view it digitally. Once the documentation is complete, we will arrange to exchange your documentation with that of your spouse’s solicitor.
Considering your individual circumstances, you will be advised about your entitlements. There is no set formula for how assets are divided, and each case will depend on its own circumstances. A plan of action will be agreed with you, and then settlement discussions can commence between us and your spouse’s solicitor.
Agreeing financial provision
We are alive to the fact that these are very uncertain times, and there is a risk that the value of assets may be reduced from their pre-pandemic level.
Property tends to be one of the biggest assets in a marriage, and it is important that we obtain up to date current valuations in order to provide you with accurate advice. The property market has reopened, and it should not take long to see what impact the lockdown has had on values.
Most shares and investments have been hit hard. We will need to organise current valuations in most other assets, such as pensions, stocks or shares.
More than six million employees have been furloughed during the pandemic, and you may be concerned about your own or your former spouse’s future job security. This potential change in income could have an impact on the division of assets and the resources you require to get through this difficult time. If you are self-employed or running your own business, you may also feel very uncertain about the future. It is likely that most businesses will be impacted, with those involved in leisure and tourism facing the biggest hit. What had been a profitable business could suddenly find itself struggling and potentially facing closure.
This is a new crisis for us all to deal with and no one can say with certainty what economic impact there will be on assets and incomes over the next 12 months. It may be that you would wish to consider delaying any final settlement agreement for this reason. If that is the case then we can still look into setting up an interim arrangement, especially over ongoing maintenance and living arrangements in the meantime.
Entering a final settlement agreement generally means just that, it is final. It is only in exceptional circumstances that a court would look at reopening an agreement. It is unclear yet if COVID-19 will be treated as an exceptional circumstance. We know from the 2008 financial crisis that varying an existing settlement order on the basis of exceptional circumstances is not an easy task. If you agreed a financial settlement just before the COVID-19 crisis there is a possibility that the court may be persuaded to reopen the case, and you should seek urgent advice on this as it is important to act quickly. If you choose to enter a new financial settlement at this time, being aware of the pandemic and potential economic downturn, it is unlikely that a court would be persuaded that exceptional circumstances existed if it later transpires your assets are no longer worth what you thought.
There are differing views on the likely speed of the bounce back in the economy. In many respects the impact on your matrimonial finances are likely to be very individual to your circumstances. It is clear that certain industries will be harder hit, and clients involved in those industries may decide to keep a final agreement under review. Other industries, for example, scientific, medical, and many web-based designers and businesses are able to continue largely without detriment. Whether you choose to proceed with your final settlement discussions now or simply want an interim arrangement in place, we can continue to assist.
Formalising an agreement
In most circumstances, we will be able to reach an agreement out of court by way of negotiating with your spouse’s solicitor. During the pandemic, this process has not changed and an out of court agreement is normally the most cost-effective solution for our clients. If an agreement is reached, we will draft a contract to ensure the settlement terms reflect a full and final binding agreement.
We will consult with you to advise you on the terms, and the contract can be emailed or posted to you for your signature. Once signed by you and your spouse, the agreement can then be formalised by the court to obtain a consent order or a clean break order. This is an application that we can make on your behalf without you having to attend court.
If a dispute persists
If a financial settlement cannot be agreed then we will advise you on what steps you can take, and this will normally include mediation and potentially going to court.
Can mediation take place online?
During the pandemic, mediation (known as MIAM) cannot take place in the normal face-to-face way, but it is still possible to mediate over video calls.
Our mediators have operated this type of service for a number of years (including with international divorce clients) and so you will not be at a disadvantage.
Mediation involves you and your spouse discussing your options with a trained mediator to see if a compromise and agreement can be reached. In most situations it is necessary to attempt this before you take a dispute to court.
If mediation is unsuccessful then we will advise you on issuing court proceedings.
Are family courts operating?
The courts are still open for business during the pandemic, but they are operating in a different manner and respecting social distancing. The guidance from the courts is evolving rapidly and is likely to continue to do so as the lockdown restrictions are eased. It will be possible for us to issue proceedings on your behalf and to represent you during those proceedings. You can rest assured that you will not have to put your financial separation on hold, with the potential hardship that could cause. We can continue to provide you with complete support in this area.