Getting divorced is a life-changing event. You may face an uncertain future and it may be financially challenging. There will be issues surrounding children and decisions about where you will live. In the midst of all of this is the need to sort out the finances.
When a couple divorce in Scotland, the principle is that matrimonial property should be divided fairly. This gives us three problems. The first is what is the relevant date on which the matrimonial property should be valued. The second is what actually constituted matrimonial property and the third is a fair division does not necessarily mean an equal division!
Understanding the relevant date
The law defines the relevant date of separation as either the date when you and your spouse ceased to cohabit as husband and wife or the date of service of the summons in an action of divorce. The earlier of these dates will be considered the relevant date.
If it important to establish this when dealing with matrimonial property because that is the date on which matrimonial property will be valued.
What is matrimonial property?
Matrimonial property consists of all property, assets and investments built up during the marriage. This can become particularly contentious when a business is involved or when one party already owned what became the family home.
There can be issues of pension valuations and valuations of any investments which change from time to time. For instance, the valuation of a pension fund or a share portfolio on the relevant date might be very different on the date the division of these is finally agreed. The value might just as easily have gone down as well as up.
There are also issues of property belonging to one party becoming matrimonial property. For example, if one party has an inheritance, it is not, at that time matrimonial property. However, if this is used to buy something for the benefit of the marriage, whatever is purchased becomes matrimonial property.
Calculating the value of matrimonial property involves identifying all property, assets and investments, totalling them up and then deducting any matrimonial debts. This will provide the net value of the matrimonial property. This then needs to be divided fairly.
What constitutes a fair division of matrimonial property?
Whilst the legislation provides that matrimonial property should be divided fairly between the parties, that does not necessarily mean it should be divided equally.
To determine what a fair division should be, you must consider whether one party has been financially advantaged whilst the other party has been financially disadvantaged. The classic explanation of this is when a wife stays at home to bring up the family whilst the husband builds a successful business. When the parties separate, the wife may argue that she has been financially disadvantaged because she stayed at home looking after the children which allowed her husband the time and space to build the successful business. Without her contribution, he might not have had the time to build the successful business. That argument suggests that the husband has been financially advantaged to the wife’s financial disadvantage.
There may then be disagreements about the value of certain matrimonial property and the need to engage with independent experts to provide the necessary valuation information. Unfortunately, not all experts agree and this can lead to lengthy negotiations to attempt to reach agreement.
In circumstances where one party wishes an unequal division of matrimonial property, they need to make the case either through negotiation, mediation or arbitration. Should those methods fail, the final arbiter will be the courts. The court will weigh up the evidence presented by the parties and make an award based on that evidence. This will be more expensive and time consuming than reaching a negotiated settlement.
What is the situation with Civil Partners?
Those who are in a civil partnership will find themselves in precisely the same situation and face the same problems as a married couple on separation. The same rules apply regarding the relevant date, the assessment of matrimonial property and their fair division.
Reaching agreement versus proceedings in court
There is an overwhelming argument that suggests entering into a separation agreement is more effective than raising court proceedings. Indeed, a negotiated settlement tends to be quicker and less expensive than going to court. You can find out more about separation agreements in our article entitled “Understanding the need for a separation agreement: a simplified guide”.
Divorce and Separation Solicitors, Wishaw, Lanarkshire
Our solicitors have a wide range of experience in dealing with divorce and separation, dealing with children in divorce and financial provision. They deal not only with cases in Lanarkshire but across Scotland. If you would like to discuss how divorce will affect your financial situation, please get in touch with us today.
