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Will No-fault Divorce Affect Financial Settlements?

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    No-fault divorce was introduced in England and Wales on 6th April 2022, in accordance with the Divorce, Dissolution and Separation Act.

    For the most part, the new no-fault divorce rules have generally been welcomed by divorcing couples and lawyers alike, since they tend to remove some of the negativity and acrimony associated with the old system and reduce the likelihood of legal conflict.

    Nevertheless, various questions have been raised regarding the potential consequences of the new legislation.

    One of the concerns relates to the possible impact of no-fault divorce on financial settlements, so we had our family law experts answer the question; Will No-fault Divorce Affect Financial Settlements?

    No-fault divorce key changes

    First of all let’s look at the key changes of the new divorce law. Under the new law, divorcing couples are no longer required to cite a specific reason, or ground, for the irretrievable breakdown of the marriage (i.e. unreasonable behaviour, adultery, desertion or separation).

    5 key changes introduced as part of the new no-fault divorce law

    1. Removal of blame – since there is no longer any need to specify a reason why the divorce has failed, this essentially removes the possibility of either spouse being officially blamed for the irretrievable breakdown of the marriage.
    2. Contested divorce – under the new laws, neither divorcing party can legally argue against the divorce if either spouse applies for divorce. Under the previous rules, where either spouse was accused of being at fault and causing the divorce (i.e. due to adultery or unreasonable behaviour) they were able to contest the relevant accusations, which could result in long protracted court battles.
    3. 26 weeks minimum from filing to completion – The new law lays down a minimum period of 26 weeks between the application and the final order. A minimum 20-week reflection period between the start of divorce proceedings and the application for a conditional order, then another six weeks cooling-off period between the conditional and the final order. That means that the divorce process will now take at least six months to complete, compared to about 4 months under the old process.
    4. Joint application – the divorcing parties are now able to apply for divorce together in a joint application, as opposed to the system before no-fault divorce when there were always two opposing sides in a divorce (an applicant and respondent).
    5. Modernised terminology – the historic terminology used in divorce proceedings has been updated to better reflect modern language – “decree nisi” has been changed to “conditional order” and “decree absolute” is now called “final order”.

    Do grounds for divorce affect financial settlement?

    As we previously mentioned, one of the main concerns relates to the possible impact of no-fault divorce, as an unintended consequence, upon divorce financial settlements.

    But as we will explore below, there is essentially no change to the process of reaching a financial settlement under the new system, and the likelihood of substantially different outcomes is minimal.

    Does the new law affect financial settlements?

    According to a recent survey in IFA Magazine, 43% of Brits erroneously think that, if one spouse is proved to be at fault for the irretrievable breakdown of marriage, this fact will result in a better financial settlement for the other divorcing party.

    For example, under the previous rules, one common misconception was that, where adultery was stated as the reason for the irretrievable breakdown of marriage, this would result in the party accused of adultery being penalised in the financial settlement.

    In fact, the (mis)behaviour of either spouse generally had no bearing upon the terms of a financial settlement. Even where negotiations over finances ended up in court, the judge would rarely place any weight upon the fault of either party for causing the divorce.

    Therefore, since fault for irretrievable breakdown of marriage did not generally affect the terms of a financial settlement prior to the change of the rules, removing the “fault” aspect of divorce under the new no-fault legislation, will not have any discernible effect upon financial settlements.

    How are assets split in no-fault divorce?

    Under the new rules, assets are divided between the divorcing parties in exactly the same way as before no-fault divorce:

    Assets which have been acquired by either party during marriage are all added to the ‘matrimonial pot’ – and even assets which were acquired before marriage are usually also added to the pot in the case of long-term marriages.

    Once the full extent of the matrimonial pot has been calculated, the divorcing parties must decide how to split the assets through negotiation (sometimes mediation will be necessary).

    If the spouses are able to successfully negotiate an agreement, this will be put in writing in the form of a financial settlement.

    The divorcing parties must obtain a consent order from the court in order to make the financial settlement legally binding.

    Can I divorce without a financial settlement?

    It is important to understand that getting divorced doesn’t put an end to your matrimonial finances, it just legally ends your marriage. Therefore, it’s vital that any financial settlement you and your former spouse have reached is converted into a legally binding financial consent order.

    Obtaining a consent order ensures any future financial claims by either party are dismissed.

    Generally, a financial settlement can be negotiated over the same period as the divorce proceedings, but the length of time will depend on the complexity of your marital finances.

    The optimum time for this process is when the court has pronounced a conditional order, previously called decree nisi – you will then have reached the halfway point in the no-fault divorce process. At this point a financial consent order, containing the terms of the financial settlement reached between both divorcing parties can be lodged with the court for approval.

    The consent order may be approved by the court before you obtain your divorce final order, previously called decree absolute – but it will not be legally binding until it has been approved by the court and you have the final order and are fully divorced.

    Frequently Asked Questions

    What is the role of a judge in no-fault divorce?

    Prior to the no-fault rules, contested divorces sometimes ended up going to court, where a judge would need to look at evidence and decide whether the alleged blame could be substantiated. In the case of adultery, for instance, they may need to consider witness statements regarding the alleged adultery.

    Following the introduction of no-fault divorce, the role of the judge in divorce proceedings will no longer involve determining the validity of grounds for divorce. Instead, their focus will be on achieving a fair financial settlement where the divorcing parties are unable to negotiate an agreement between themselves.

    This means that, although the divorce process will be more streamlined, since the reason for divorce cannot be contested, there can still be long delays due to legal arguments over the division of assets.

    NB: The government is currently being lobbied by several parliamentarians to review the laws governing financial provision in divorce, which remain unchanged because of the no-fault changes.

    What are the potential pitfalls of no-fault divorce for divorcing couples in relation to finances?

    The introduction of the aforementioned minimum 26 weeks timeline under the new rules means that the overall divorce process can end up taking a lot more time than before. The resulting delay can mean finances are more likely to change significantly during the waiting periods, for example the value of the family home or a pension fund could rise or fall by several thousand pounds in six months.

    No-fault divorce therefore potentially makes re-calculation and re-negotiation of division of assets during the divorce process more likely.

    Some commentators have warned that the removal of certain time-conditional elements of divorce under the previous regime (e.g., waiting for at least two years to use “separation” as a fact to establish irretrievable breakdown) could lead to more divorces being rushed through and certain assets being overlooked as a result.

    A recent report from Steve Webb, a partner at LCP, and Rhys Taylor, a barrister at The 36 Group, argues that one potential impact of the new no-fault divorce rules could be fewer divorcing couples sharing pensions.

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