Financial settlements and divorce
The financial repercussions from the Covid-19 pandemic will be felt for many years to come and if you are in the process of getting divorced, your future ability to agree a financial settlement might also be impacted.
With stock markets taking a tumble, currency markets fluctuating, uncertainty about house prices and a rise in unemployment, many people will have to adjust their expectations of what might be available in the matrimonial ‘pot’ to be divided up.
But what can you do if you have already agreed a financial settlement and are paying a regular maintenance or child support contribution and you are concerned about whether you can continue to afford your current obligations?
Where there has been a material change in circumstances you can make an application to court to reduce or end spousal maintenance payments. A successful appeal would depend on whether a judge views the current pandemic as an unforeseen and unforeseeable event.
In 2009 this principle was put to the test when a husband appealed after the 21-day period of a final settlement being agreed when his share portfolio lost 90% of its value in the year after the divorce. In this particular case his appeal was unsuccessful as the courts found that the event of a global financial crisis was not unforeseeable or unforeseen.
With courts currently operating on a greatly reduced programme due to the ongoing lockdown, it may take some weeks/months until any application for a financial review to be heard. Court proceedings are time consuming and require a full disclosure of finances therefore the cost can be prohibitive for some people, especially those genuinely affected and suffering financial hardship.
In some circumstances it might be possible to agree a temporary reduction in payments with your former spouse, but it will be up to their discretion as to whether they accept this or not.
Julie Hobson, Partner at Gullands comments: “It could mean many former spouses will have to moderate their lifestyle significantly in the future in order to continue to make agreed payments. There are likely to be a number of applications of this nature made once the current restrictions are lifted and we will watch with interest to see how this is likely to be concluded.”