Can I change my divorce financial settlement because of coronavirus?
Online family law solicitors
As online family law solicitors the expert team of specialist family lawyers at OTS Solicitors can advise you on your legal options if you want to change a financial settlement or financial court order because of the impact of the Covid 19 outbreak. For financial settlement and family law advice call us on 0203 959 9123 or complete our online enquiry form so we can arrange a Skype, video conference or telephone appointment.
When can you change a divorce financial settlement?
If just before the seriousness of coronavirus became apparent you reached a divorce financial settlement you may want to renegotiate it to reflect the new economic realities. Examples of situations in which you may want to negotiate a new financial settlement include:
An agreement or court order to pay spousal maintenance and you are now at risk of losing your job or being furloughed or not receiving an anticipated bonus payment
An agreement or court order that you would keep the house and pay your husband, wife or civil partner a fixed amount for their share in the family home but you now think that property values have decreased and will fall further if the UK goes into recession
An agreement or court order that one spouse keeps the family business and the other keeps cash or the family home. If your business is in a sector that has been massively affected by coronavirus (such as a restaurant, beauty industry, pub or retail shop) then you may now have an asset that has plummeted in value and isn’t likely to recover because of your cash flow or other issues such as threats of bankruptcy
An agreement or court order that one spouse would keep the listed shares and investment portfolio and the other would keep the London family home. Your investment portfolio may have halved in value whereas the family home value may have dipped but not lost the same value as the shares and investment portfolio.
Negotiating a divorce financial settlement is never easy. Often divorce lawyers like to ‘’share the risk’’ by ensuring that any financial settlement has the husband and wife sharing the potential that the housing market or stock market may fall or one spouse being left with worthless shares or a failed business whilst the other spouse keeps the family home or all the cash.
However, the reality is that many couples don’t want to split all their assets, so that they each keep shares and investments, each retain an interest in the family business or family home. The reality is that normally one spouse is either desperate to keep the family home, the family business or the pension and doesn’t want to share the risk by achieving a financial settlement that equally splits all the assets.
What can I do about an unfair divorce financial settlement?
If you think that your divorce financial settlement is unfair because of the impact of coronavirus then the best and most important thing to do is to take expert family law legal advice. That is because you may only have a short period of time to raise the unfairness of the situation, and if there is a financial court order in place about capital or the family home, to apply to change the order.
The advice you will receive from a family law solicitor will depend on your personal and financial circumstances. That means it is vital to get bespoke advice rather than either assuming you can change the agreement or financial court order or thinking that there is nothing that you can do.
If you think that your divorce financial settlement is unfair because of Covid 19 then your legal options will depend on what you want to change about your financial settlement, why, and the status and timing of your financial settlement or family court order. For example:
Is your financial settlement agreement contained in solicitor correspondence, a separation agreement or a financial court order? Was the financial court order made by agreement or after a contested court hearing?
If the aspect of the agreement or the court order that you are unhappy about is the amount of spousal maintenance you were ordered or agreed to pay and there has been a change in your income then you may be able to renegotiate the amount of, or the principle of, paying spousal maintenance either through solicitor negotiations or applying back to court to vary the financial court order
If you can no longer afford to pay school fees or top up child support for your children and these matters were included in the financial court order as part of your ongoing financial responsibility then you can apply back to court to vary the court order if there has been a significant change in your circumstances. If the situation is temporary, such as a furlough with reduced pay, it is best to try to negotiate and agree a temporary change in the court order, without having to make a court application. However, if you can't reach an agreement you may need to apply to court to vary the financial court order to avoid a claim for arrears of child support or payment of school fees
If you are paying child support for your children under a Child Maintenance Service assessment then you may need to ask for a re-assessment from the Child Maintenance Service. If you are making the child support payments voluntarily then it is best to talk to your ex-partner and to try to reach an agreement (after you have taken legal advice on the amount of child support you should be paying in light of the changes to your income). If you can't reach an agreement then your ex-partner could apply to the Child Maintenance Service for an assessment. That is why it is best to take advice on the new likely child support figure taking into account your change in income
If you have negotiated a financial settlement, that includes what should happen to the family home, the pensions, the family business and investments then, if the financial agreement is contained in solicitor correspondence or a separation agreement, your husband, wife or civil partner may be willing to renegotiate the agreement in light of the new asset values. If they are not willing to change the financial agreement then your husband, wife or civil partner could apply to a family court for a financial court order in the terms of the solicitor correspondence or separation agreement that you originally agreed to. You could argue in the court proceedings that it would be unfair to make the previously agreed financial settlement into a financial court order because of Covid 19 and its impact on the fairness of the financial settlement. Whether you would succeed in that argument depends on your personal and financial circumstances and the precise terms of the financial agreement so it is best to take early legal advice on your legal options
If there is a financial court order (made by a judge by agreement or after a contested court hearing) the normal rule is that you can only apply to change or vary the clauses in the financial court order that relate to things like the mechanics for the sale of the family home (such as the sale price or choice of estate agents), the amount and length of time that you should pay spousal maintenance for, asking the court to capitalise the spousal maintenance payment into a one off lump sum payment rather than continuing to make monthly spousal maintenance payments, the amount of child support payable under a court order or payment of school fees under a school fees order. It isn’t normally possible to change or vary the capital elements of the financial court order (such as the amount you will get when the family home is transferred or sold or whether you should keep all the shares in the family business or the investment portfolio and your husband , wife or civil partner should keep all the cash). You can only change the capital elements of a financial court order if there is what is known as a ‘’barder event’’.
Is Covid 19 a barder event?
The question ‘’is Covid 19 a barder event?’’ is one that a lot of people want to know the answer to as if coronavirus is a barder event then the family court may make an order to change the capital elements of the financial court order such as:
The amount of any lump sum payment
The percentage of a pension sharing order
The amount received on the sale or transfer of the family home
The asset distribution so instead of you, for example, keeping all the shares in your investment portfolio or all the shares in the family business, you each get a share of the illiquid assets that can't easily be sold (such as shares that have plummeted in value or a family business that is now worth very little in comparison to its value at the time that the financial court order was made) and a share of what are called the ‘’copper bottomed assets’’ such as cash or gold.
For an event to be classed as a ‘’barder event’’ it has to be an unforeseen event that invalidates the fundamental assumption on which the financial court order was based, and the event has to take place relatively soon after the financial court order was made.
The court has previously said that if a husband, wife or civil partner didn’t want to spread the risk and get a share of the illiquid and the copper bottom assets but instead put their faith in their business or share portfolio outperforming the value of cash or the equity in the family home then a fall in share prices or a fall in the value of a family business isn’t a barder event because falls in assets values are foreseeable.
By way of example, in 2008, the Court of Appeal said the global financial crisis and market crash was not an unforeseen event. However, some economists are predicting that the financial impact of Covid 19 will be far more extreme than the 2008 stock market falls. Therefore COVID-19 may potentially be treated as a barder event depending on the circumstances that led to the financial court order.
Remember, that if you want to reopen a financial court order then one of the criteria to a successful barder application is the timing of your court application. You can't just leave matters and wait until you feel like trying to reopen your financial court order. Therefore, if you think that you may be able to bring a barder event claim it is best to take legal advice as soon as you can. Don’t wait until the end of the coronavirus lockdown as many family law solicitors are able to give advice through video conferencing, Skype or telephone appointments.
Online family law services
The specialist family lawyers at OTS Solicitors have lots of experience of working remotely using the latest secure technology. If you need advice on whether you can change a financial settlement made prior to the coronavirus outbreak , need help with a separation or divorce or need advice on any other aspect of family law call OTS Solicitors on 0203 959 9123 or complete our online enquiry form. We will set up a video conference, Skype or telephone appointment for you with a friendly and experienced family law solicitor.