The recent recession which started in 2008 had an impact on families in many ways, including the unfortunate breakdown of marriages and civil partnerships.  With external pressures such as risk of redundancy, loss of income and inability to manage mortgage rates and borrowing it is understandable that for many the strain on their relationship was too great.

Statistics released from the Office of National Statics (ONS) illustrate this. There had been a downward trend in divorces in the years leading up to the beginning of the recession. The number of divorces was at 153,065 in 2003 and dropped to 113,949 in 2009. From 2009 there was a gradual increase. The number of divorces in 2012 rose by half a per cent from 2011 to 118,140.   This has led the ONS to speculate that the rise, after a number of years of divorce decline, was due to the financial strain of the recession. In fact, statistics followed not just the latest recession, but the peaks in 1980, 1990 and 2000 all coincide with an economic downturn.

The statistics also appear to indicate that as the job market improves and the property market remains buoyant many may seem more confident or financially secure to address their separation formally. What is not clear is, of those who did proceed with a divorce, how many addressed their financial claims arising from their separation at the same time. As was illustrated by the recent decision of the  Supreme Court in Wyatt v Vince to allow an appeal where the application for a financial order was made 19 years after the couple divorced and 27 years after they had separated, there is no time limit by which a financial claim can be brought after a separation or divorce, even where the wealth had accrued after separation and divorce.

It is vital for divorcing couples to record any financial arrangements reached in an enforceable legal agreement, preferably a court order made in divorce proceedings, regardless of how little they have between them at the time. If they intend there to be a financial clean break, bringing to an end the financial claims which each of them have against the other arising out of their marriage, there is a well tried procedure which enables them to obtain a court order to this effect by consent.

Some of the most difficult cases which solicitors can be asked to deal with are where couples decide to resolve financial matters a number of years after separation. Not only is there the emotional strain of having to relive the events relating to the breakdown of their relationship, but there is also the difficulty of identifying what changes have taken place in the parties’ financial circumstances over the years since separation and what impact this might have on the eventual outcome. Another key consideration is Capital Gains Tax. In situations where financial matters are determined after the tax year of separation, CGT may be another issue that needs to be taken into account.

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