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Recession Changing Divorce Trends- 19/10/2009
The current economic crisis is bucking the trend for divorce numbers in a recession, and is changing the nature of divorce settlements themselves, according to a leading West Midlands’ matrimonial solicitor.
Richard Barge, a Partner in the Family Law Department of West Midlands’ law firm FBC Manby Bowdler, says that usually in recessions the divorce rate goes up, but recent experience shows that many couples cannot raise the cash to split up, so are staying together until the economy picks up.
“Because this recession is coupled with a credit crunch and static property market, it makes it difficult for some couples to fund a divorce settlement, so we have not experienced the expected rise in demand for our services which tough economic times would usually bring, when arguments over money lead to the divorce courts,” explains Mr Barge, who is based in FBC Manby Bowdler’s Wolverhampton office.
“With cash tied up in property which is difficult to sell, some couples are having to wait a long time before a divorce settlement is paid and they can move on, and this in turn is putting off some others from embarking at present on divorce proceedings.”
For those who do proceed with a divorce, Mr Barge says that the current recession is also having an impact on the settlements they receive and unintended consequences for the future of a divorcing couple, where a complete split from one another becomes more difficult.
“With the recent fall in the value of a number of assets such as pensions, company shares and property, the courts are now examining carefully the nature of the assets and taking a much more balanced view when it comes to sharing out accumulated wealth, taking into account the riskiness of assets and their liquidity,” explains Mr Barge.
“Before the recession, where possible, the courts tended to favour simple solutions, such as, for example, awarding the house to the wife and company shares to the husband. Now, however, so that couples share in the risk of the future value of assets, we are seeing many more awards of some company shares to the wife and part of the equity in the family home to the husband.
“So, for example, such settlements can make the wife a minority shareholder in her former husband’s company, with little decision making power, but the ability in theory to attend meetings and vote, often to the embarrassment of her former husband and other shareholders. She would also continue to receive dividends without making ann active contribution to the business.
“A husband given, say, a 20% share in the family home, has no control over this investment, and will potentially face negative tax consequences when the house is sold, while the wife will undoubtedly feel unhappy that years in the future the house will have to be sold so her former husband can realise his equity.
“As a result of this move towards these more “blended” settlements, not only are lawyers and the courts having to be more creative, but couples are having to push their boundaries about what they will accept, and realise that although divorced they may still have an on-going involvement in each other’s affairs,” concludes Mr Barge.
With 36 partners, FBC Manby Bowdler is the fourth largest law firm in the West Midlands. It has offices in Wolverhampton, Shrewsbury, Telford, Bridgnorth and Willenhall. The firm has an 11 strong specialist Family Department, one of the largest in the Midlands.