During a divorce or civil partnership dissolution, financial matters also need to be considered. For Gen Z couples, money can look very different to previous generations, and so does the way the courts approach it.
The court looks at factors set out in section 25 of the Matrimonial Causes Act 1973 when making financial orders. The first consideration being the welfare of any minor children, followed by financial resources of each party, financial needs and obligations, standard of living enjoyed during the marriage, age and duration of the marriage, disability, contributions to family welfare and conduct.
Spousal maintenance has changed
There was a time when the court would make automatic “joint lives” spousal maintenance orders where the financially stronger party is required to pay the other spouse monthly payments for the rest of their lives, or until the other party remarries or the court issues a further order.
However, it is now rare for the court to make a joint lives order. This is because the financial position of married couples has now changed. The reality now is that most households have dual income, women are increasingly the higher earners and career paths are becoming more flexible.
Due to the change in the work culture, the spousal maintenance orders made today, if any, are time limited (not indefinite) and designed to support transition and not long term dependency on an ex-spouse. They are also based on realistic earning capacity of both individuals.
The courts also take into consideration any side income or irregular income such as freelancing, content creation, gig economy platforms, multiple income streams. Spousal maintenance is no longer about gender roles and more so about the financial reality of the parties.
“Strings attached” finance such as bank of mum and dad, property deposit gifts, loans, school fees, trusts
It is often the case that family financial support is given when purchasing the first home.
However, this can cause complications particularly if the recipients are married and as such, on divorce. Often, parents will sign a letter to say that the deposit given to their child to purchase a property is a ‘Gift’. This is indeed required by most mortgage companies who are cautious to lend when there may be other lenders.
When considering assets that are to be divided during a divorce, the ‘family home’ is often the main one. Provided both parties have been residing in that property during the course of their marriage, the starting point is an equal division of that asset. However, if evidence can be produced of any monies loaned by parents, then the courts can take that into consideration. Such evidence should include written agreements setting out the amount of money loaned, set out repayment schedules and the intention behind the loan. The court will also consider whether the parties acted upon the written agreement, by making the agreed repayments for example.
Similar considerations need to be made when parents agree to pay private school fees or living costs or are funding legal fees. Parents that set up Trusts should also take into consideration whether the trusts are established for tax purposes or for asset-protection reasons.
Undocumented family support often becomes a major point of dispute.
Student loans
Student loans are a reality for many couples and they are treated differently from most other debts. In most cases, student debt remains the responsibility of the individual, it is not usually shared like a joint loan or a credit card.
However, these debts can still affect the overall affordability of an individual, mortgage capacity, income assessments and lifestyle expectations during a marriage.
If one party supported the household while the other studied, that contribution may be relevant in financial negotiations, even if the debt itself stays personal.
Digital assets – Crypto, online investments & app-based wealth
Digital assets are no longer niche, and these are now accounted for properly.
Digital assets include, but are not limited to, cryptocurrency, NFTs, app-based trading accounts, online investment platforms, digital wallets and exchanges, tokens linked to games or platforms.
The key risks in divorce usually include non-disclosure of these assets, the volatility in value of the assets, the difficulty in tracing ownership and assets held across multiple platforms.
Courts expect parties to provide full and frank financial disclosure, regardless of whether the assets are digital or traditional. Failure to disclose crypto can have serious legal consequences. Transparency is essential.
Trusts and business interests in divorce
Some individuals will have complex financial portfolios, including trusts and business interests. Legal advice is required, as well as advice from accountants and wealth advisors, to help you determine the right structure for you, and understand the implications, both financial and personal. Read about the recent case of Standish v Standish.
Owners of a family business especially need to give careful consideration to the structure of their enterprise.
In divorce or dissolution proceedings, these assets require careful evaluation to determine their inclusion in marital property and result in an equitable outcome.
Inheritance and divorce
Inherited assets can be a point of contention in divorce and dissolution settlements. How they are treated can vary based on factors like co-mingling with matrimonial assets. Understanding how inheritance is dealt with in divorce is crucial for effective estate planning and asset protection.
Prenuptial and postnuptial agreements
If you’re planning to marry or enter into a civil partnership, or indeed have already tied the knot, a tailored prenuptial or postnuptial agreement can clarify financial arrangements and protect your assets in case of divorce or dissolution. These agreements provide transparency and reduce the potential for conflict should your relationship breakdown.
For more information see: Safeguarding your personal & financial future.
What to consider
Today’s divorces involve more than salaries and savings accounts. They involve digital assets, flexible careers, family funding and wealth, and financial arrangements that do not come with a ‘rule book’.
Taking early legal advice can help you understand your position, protect what matters and make informed decisions about the next chapter of your life. Our family law team advises with modern relationships and modern finances in mind.
For further information on the developments in family law, please contact our expert family solicitors.
Family law
Social media monetisation – When your content is an asset
More people are moving away from a 9-5 job. However, it doesn’t matter where your income is received from, it will be taken into consideration by the courts. The ways in which people earn is becoming more diverse, such as YouTube, TikTok, Instagram, affiliate marketing, brand partnerships, paid subscriptions, digital products or courses.
The courts will take into consideration the regularity of the income, the growth potential, sponsorship contracts, business expenses and whether the account is a personal brand or a business.
In some cases, a monetised platform can be treated similarly to a business asset, particularly where it generates consistent revenue.
Divorce for content creators