Coronavirus has had an incomparable impact on almost every aspect of our lives, with many charities reporting that lockdown restrictions have put a huge strain on relationships and finances.
Couples, families and businesses have faced significant changes over the last 18 months and if you are going through the process of separation or divorce, your financial settlement could be affected by coronavirus. In this article we look at some of the key factors which may affect financial settlement in light of coronavirus and answer common questions divorcing couples may have.
My financial circumstances have changed as a result of coronavirus, how will this affect my financial settlement?
If you are in the process of negotiating a financial settlement, either through your solicitors or via court proceedings, both parties have a duty to provide full financial disclosure.
If you have previously disclosed a much stronger financial position, your disclosure may need to be reviewed. This review is important as a sudden change in income or financial circumstances may affect the arrangements for financial settlement. For example, if your income has dropped dramatically, you may no longer be able to take on the mortgage you previously would have, and you will be unable to ‘buy out’ your former partner from a shared property.
How does furlough affect financial settlement?
Throughout the pandemic, it has been common for parties to look at reducing maintenance payments to a former partner where they have been placed on furlough and as a result, have received a lower income. While many people have spent some time on furlough, the government scheme is coming to an end. You will need to be clear about when any reduction in maintenance payments will come to an end, and you must take into account the industry you work in and when a normal income is likely to return.
What if I have already received a financial order but my circumstances have changed because of coronavirus?
If you have already received a financial order, this order may have been made on the basis of your financial position prior to the coronavirus outbreak. As a result, arrangements made may no longer be viable and the order may need to be reconsidered. For many people, income has disappeared overnight and they may simply no longer be able to pay spousal maintenance or to meet the timetable for the transfer of assets.
What happens if my spouse is declared bankrupt?
If your spouse has not yet been declared bankrupt, you should do all you can to agree a financial settlement or make an application to the court before the bankruptcy process begins. Once bankruptcy proceedings begin, almost all of the assets owned by the person to be made bankrupt are owned by the trustee in bankruptcy.
One of the challenges with such cases is that during financial remedy proceedings in divorce, the court has the power to redistribute income and assets and income between spouses in accordance with their needs, as well as what the court considers to be “fair”. Such redistribution can often lead to conflict between your interests and the interests of the trustee in bankruptcy. A typical example is where your home is owned jointly by you and your spouse. In these circumstances, the property cannot be transferred solely into your name without the consent of the trustee in bankruptcy.
As a result, it is essential to act as quickly as possible and seek specialist legal advice where you believe your spouse may be made bankrupt.
What happens if my spouse has already been made bankrupt?
If the bankruptcy has already taken place, the process can be complex. You must seek legal advice on your specific circumstances. One such complication is that where your spouse is declared bankrupt, money that has already been paid to you may not necessarily be protected. The trustee in bankruptcy can ask that any court order be recalled at any time up to five years from the date the order was granted. When such a recall is granted, the trustee in bankruptcy may be able to recover money paid to you by your former spouse. We can help you to protect your financial position.
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Our top-rated solicitors are experienced in international divorce financial settlement cases with complex proceedings and international elements. Call our UK specialist solicitors to discuss your case today on 0330 107 0107 or request a call back.
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.
F v F - Acted for a German husband in a complex financial remedy matter. He decided to instruct IMD Solicitors after he had lost trust in his previously instructed solicitors and feared that he would not achieve a favourable outcome from the proceedings. The relevant assets were spread across the globe with some located in the UK (including a multi-million pound business), Gibraltar, Spain, Dubai, and Poland. The overall value of assets exceeded £24 million. The husband had been cut off from the matrimonial assets and excluded from control of the business that had been established by his family. The case involved the instruction of numerous experts, for business valuations, Capital Gains Tax reports, and opinions on the enforcement of orders in foreign jurisdictions, and dealing with several applications, including applications for orders to freeze assets, prevent the disposition of assets, for the joinder of parties, and to litigate conduct issues. The final result exceeded the client’s expectations.
L v L - We were instructed by a mother in a complex international children matter. She was required by orders of the UK courts to return the child to the UK from Poland. She had travelled with the child to Poland but, following unsuccessful application to extend her stay there in August 2017, she decided not to return to the UK because the child disclosed sexual abuse by a member of the paternal family and the father. In September 2018, the Polish court dismissed the father’s Hague Convention application for the child's return on the basis of Article 13(b), a decision which the father appealed. In March 2019, the father applied to the UK High Court for an order for the child’s return pursuant to the procedure set out in Article 11(6) – (8) of the Brussels IIA Regulation. Despite the father's unsuccessful Hague Convention application in Poland, the UK court ordered the return of the child. Article 11 does not allow the court of the returning country much discretion. After all of this, the mother instructed IMD Solicitors to apply to discharge the orders of the UK Court for the return of the child. Even in the face of the fact that most applications to discharge such return orders fail, we succeeded. We are currently awaiting a decision in the UK courts on a further application for the transfer of jurisdiction to the Polish courts where the mother resides with the child.
G v P - We represent a Spanish mother in respect of an urgent application for a Child Arrangements Order and Specific Issue Order in the UK seeking the relocation of the child to Spain. This was after the return of the child to the UK under Hague Convection proceedings which this mother lost in Spain.
She was asking for an order for the relocation of the child back to Spain and an urgent interim Child Arrangements Order to allow her to see the child pending the final outcome of the UK proceedings. IMD successfully argued that, regardless of the return of the child to the UK under the Hague Convention, the mother should be allowed unsupervised overnight contact with the child. We were delighted to be able to secure her contact with the child for Christmas and she said that it was the best Christmas gift she could have wished for. The outcome of the application for the relocation is pending.
S v V - We currently represent the father in Child Arrangements Order proceedings issued by the mother in relation to variation of a UK order made in the face of numerous other international proceedings. He is an Italian National who has been living in France for the last 20 years and the mother is a Lithuanian national. The child is now 11 years old and proceedings concerning the child have been ongoing in various jurisdictions for the majority of the child`s life. Contested divorce proceedings including child arrangements took place in Monaco. The French Court and authorities were also involved, and various proceedings had been ongoing between parties since 2013 in France and Monaco.
The parties’ divorce was pronounced in Monaco. Thereafter, in December 2020, the mother submitted an application to relocate to England with the child, and the relocation took place in June 2021. Upon relocation, the she lodged a child arrangement order application, seeking to register a judgment made in Monaco and to vary the same in respect of the contact arrangements between the father and the child. The father seeks for the child’s return to Monaco.
Due to the parties’ mutual allegations and the associated international elements, various authorities and courts that have been involved in the case, the local authority has become involved with the family and a guardian has been instructed to represent the child in the UK proceedings. At present, these proceedings in England are ongoing and the outcome of the professional reports regarding the family are awaited.
P v P - We have acted for the Respondent Husband in relation to the financial remedy proceedings in the UK. The parties had various assets in the UK and Romania consisting mainly of the portfolio of properties but conduct issues were raised by the Wife due to a business of the Husband over which she had lost control and her allegations of dissipation of assets. The value of assets excluding the business were in a region of £3 million.
K v K - We act in financial remedy proceedings for a wife who is a Polish national. The matter's complexity mainly comes from a dispute between the parties around land in Poland. Its value was initially in dispute but was then assessed by a joint expert to be in the region of half a million pounds. The total assets in this case are estimated to be worth over £1 million. The land in Poland is a subject to contract with a third party and is being leased as a photovoltaic (solar) farm. The division of the land to achieve an equal share of the assets is complicated due to the contract in place and plans for the future use of the land. Currently the parties are awaiting a final hearing but efforts are being made to reach a settlement with the aid of alternative dispute resolution and in order to save the parties money and avoid further delays.
R v O - We acted pro bono and worked together with a law firm in Poland to ensure that the Costa Rican Mother regains access to her child. The Mother's only child was abducted from the UK in 2014. The Mother was successful with the abduction case and the UK family courts ordered the return of the child. The orders were recognised in Poland but unfortunately due to various issues with the Mother's immigration status and court's delays in Poland, the orders were never enforced. The Mother was facing removal from the UK and prospects of never seeing her child again. We have corresponded with various courts in Poland dealing with international abduction matters and we decided that an application for contact should be issued rather than any proceedings for further enforcement of the orders, as the Mother had not seen the child for around 7 years. At the same we secured the Mother's stay in the UK making successful outside of immigration rules application to extend her stay. We now receive regular photos from the Mother with her daughter, as face to face contact is taking place. We helped to secure an order of the Polish courts for the Mother to see the child regularly in person, whilst when she instructed us she was facing a prospect of never seeing her child again and being deported to Costa Rica.
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