Divorce & Trusts – Will the Pandemic Change Marriage & Family?

With news stories of surges in divorce enquiries, there can be no doubt that Covid has impacted on married couples and family life.

With news stories of surges in divorce enquiries, there can be no doubt that Covid has impacted on married couples and family life.

The implications of life in lockdown have been a strain on many households. Families have found themselves forced into situations where they may be working from home together, bringing work pressures to the family environment, and adding increased tension. This can disrupt the traditional dynamics of a relationship, with both parties at home to share household chores and care of the children.

On the other end of the scale, some families are dealing with the financial pressures of reduced hours, furlough and redundancies. The implications of being confined to our homes have also brought to a head those couples that were already in trouble, without the usual distractions of daily life to hide the cracks in their relationships.

One thing we have found is that couples who are divorcing seem keen to resolve their affairs quickly, and with as little emotional strain as possible. With the weight of a global pandemic on our shoulders, a quick and hassle-free divorce is more attractive than ever. However, while couples may want a quick fix divorce, the importance of resolving their financial affairs with “full and frank financial disclosure” cannot be underestimated.

The Matrimonial Causes Act 1973 governs the types of orders that can be made on a divorce which deal with the parties’ finances. This includes how the family home will be treated, whether any maintenance will be payable by one party to another, and how pensions should be treated.  In considering how to resolve a family’s financial matters, the court will take into account various matters, including the resources of the parties and their financial needs, and the welfare of any children in the family. Not everyone is aware that, unless you obtain a court order dealing with your financial matters, even after a couple has divorced, they still have financial claims available to them.

Even for those families not separating, we have found the pandemic has still had some impact on how couples manage their financial affairs.

It is for this reason that properly concluding finances with the benefit of financial disclosure is so important and not a step to be dismissed. We always encourage separating couples to voluntarily complete a court document called a Form E, which is also used in court proceedings. This is the opportunity for each party to set out their financial position and what they expect their future needs and outgoings to be. However, the emotional pressure of a relationship ending, plus the uncertainty brought about by the pandemic can make financial resolution even trickier.

Some couples are turning to separation agreements where they may not be ready to deal with the emotional or financial implications of divorce proceedings in the midst of a pandemic, but still wish to formally end their relationship and record how they will deal with their financial affairs.

Perhaps not unsurprisingly, Covid has also seen a significant increase in disputes between families who are already separated but who share childcare. The government has confirmed that children can move between households where they have separated parents, however with concerns that one parent may be breaching Covid guidelines and therefore putting the child at risk, there is even more room for fallout. This can lead to problems where one parent may be breaching an existing court order by not making the child available for contact, or not returning a child after contact.

Conversely, where the parties have previously managed to make arrangements for childcare without the need for a court order, they may now consider making an application under section 8 of the Children Act 1989 for a “Child Arrangements Order” to seek the court’s intervention in determining where the child will live, spend time and on what terms.

Even for those families not separating, we have found the pandemic has still had some impact on how couples manage their financial affairs. People are keener to get their affairs in order as they consider their own mortality. In doing so, people have been reviewing their estate and who they may wish to pass their assets on to in a tax efficient manner. This has led to people undertaking more financial planning and consequently setting up trusts to try and protect family assets for the benefit of younger generations. In doing so, they may be able to retain control of the assets they put into trust whilst significantly reducing the size of their estate for inheritance tax purposes.

Covid-19 has had a clear and significant impact on families and relationships. It will be interesting to see how this develops as we begin to move out of the immediate health crisis, and whether long lasting changes have been made.

 

Ann Robinson, Head of Family Law at Blacks Solicitors

If you’re seeking Family Law advice following the impact of COVID-19 on your relationship, or for a general Family Law query, please visit https://www.lawblacks.com/personal/family-law/

 

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