Managing the legal costs of divorce and separation

In the midst of a cost of living crisis, we’re all doing what we can to tighten the purse strings. But at what cost?

The media has been reporting recently on separating couples increasingly deciding to manage their own separations and divorces without the benefit of legal advice. And we can understand why doing so might seem appealing. The focus for separating couples is often on the here and now. And rightly so. Transforming a family from one household with two incomes to two separate households, each with only one income can seem daunting. Cost-cutting and budgeting often become a must. But what might be the ultimate cost of short-circuiting legal advice?

The financial breakdown of both a marriage and a civil partnership in Scotland is regulated by the Family Law (Scotland) Act 1985. The Act aims to achieve financial fairness on separation. Much in the way that everyone’s financial picture differs from person to person, so does their financial picture on separation. Typically, financial separations are not comparable from one couple to another. Incomes differ, assets and their values differ, and outgoings differ. So how, therefore, is fairness achieved?

Two routes can be followed to reach a financial separation. The first is what is referred to as “full disclosure”. The second is to proceed without full disclosure. Full disclosure is the exchange of financial information between couples to establish the total net value of matrimonial property that is available for sharing, fairly.

Often, when separating couples manage their own financial separation and divorce, they will do so without the benefit of full disclosure. The risk however in agreeing to a financial separation without that information is, how can either person be confident that they are sharing matrimonial property fairly when they don’t have available to them the value of what exists for sharing. One aspect which is often overlooked, or failed to be considered altogether, is the value of a pension. Only the pension interests accrued during the period of marriage forms matrimonial property. Any amount accrued prior to marriage, or after separation, would be excluded.

A family set-up which we, as family lawyers, come across frequently and which provides us with a helpful example to highlight the importance of obtaining legal advice, is a household with children where one party is the main earner and the other spends more time, or indeed sometimes all of their time, looking after house and home. On some occasions, this may mean that the ‘stay-at-home’ parent may have no source of income whatsoever and is entirely dependent upon the earnings of the other person. Would it be fair in a situation such as this, in the event of that couple separating, that the main earner who has built up a steady and progressing career, savings, pension interests etc leaves the relationship with all of that intact, with the ‘stay-at-home’ parent walking away with little to nothing, simply due to the role they chose to take in what was formerly their family unit? The Act referred to the above factors in situations such as these. The Act seeks to establish what was built up during the period of marriage deemed matrimonial, regardless of which person’s name it was in, and for that to be shared fairly between the separating couple. The Act acknowledges that couples often take on very different roles during a marriage and, whilst their contributions may differ in terms of one perhaps being more financial and the other may be more on, say childcare, to achieve fairness is to allow both parties to move forward as financially stable as the situation permits.

The risk therefore in couples arranging their own financial separation without the benefit of legal advice is that it is highly likely that not all information will be made available to enable a fair assessment to be made as to how best to divide up the matrimonial property which exists in a fair way. In some cases, this may result in a financial loss to one party, often to the financial gain of the other. That is not the outcome the Act seeks to achieve as, despite their differing roles, each person contributed to the family unit and each person is entitled to a fair share of matrimonial property.

If individuals are unsure, we recommend that they should at least consult with a Solicitor on one occasion at the outset of their separation. At a first meeting, a discussion may be had as to the possible extent of matrimonial property and what information could or should be obtained to inform how best to achieve financial fairness on their separation. There are often various options as to how matrimonial property may be divided, and consulting with a Solicitor about that can enable productive conversations to be had and options to be considered, with a view to achieving financial fairness for both parties. So, whilst we agree that a focus must always be had on the here and now, it is equally important not to lose sight of the future financial security of both parties and taking advice in the early stages of a separation, even just a single meeting with a Solicitor, may just make all the difference.