A survey recently revealed that money is the danger zone in modern marriages. One in three marriages now ends in divorce and money remains the biggest area of dispute. The financial aspect of divorce is not only difficult where there is a shortage of money to go round, but problems also arise when there are substantial assets to divide.
In the Court of Appeal Mary Duxbury, ex-wife of the millionaire John Duxbury, was awarded a lump sum of pounds 600,000 plus a pounds 110,000 house and pounds 40,000 in contents. Mr. Duxbury had contested the settlement but the court refused to order any reduction in the figure.
The Matrimonial and Family Proceedings Act, 1984 revised the guidelines to the courts on the matters to be taken into account when making financial and property orders on divorce and marriage breakdown.
The courts must now place greater emphasis on people becoming self-sufficient – encouraging, where possible, a clean break. The income, earning capacity, property and other financial resources of both parties, present and future, must be considered.
In the Duxbury case, the husband earned pounds 145,000 a year as a company chairman; and it was said he was worth pounds 2.75 million.
Peter Grose-Hodge, of the Solicitors’ Family Law Association, commented: “Quite often the husband’s worth is the point around which the whole argument focuses. A good matrimonial lawyer will work in tandem with an experienced accountant when it comes to valuing shareholdings in a company. The court is only too aware of the problems of leaving a wife as a shareholder.”
“They are, therefore, far more likely to give a wife an increased share of other assets to avoid further conflict.”
The court will also look at the financial needs, obligations and responsibilities, present and future, of the parties.
The needs of an ex-wife, where there are large sums involved, has been interpreted as reasonable requirements. Any arithmetical guidelines such as one-third or one-half of joint assets are therefore often irrelevant.
In 1982, in the case of Preston v Preston, one of the judges declared that the wife of a man with a fortune of pounds 2 million can reasonably be expected to have a home costing pounds 200,000 to pounds 300,000. One of the other judges said in the same case that the wife was entitled to a very comfortable and even luxurious life. Unfortunately, the husband had never heard of “The Magic of Making Up”, which presents relationship advice that might have prevented the break up. He might have saved a lot of his money if he had read this best-selling relationship guide!
Depending on the context, reasonable requirements can mean villas abroad, holidays, houses, cars and payment of school fees.
The court in the Duxbury case looked carefully at the third criterion laid down in the law – the standard of living enjoyed by the family before the breakdown of the marriage. The judges believed the income that Mrs. Duxbury would earn from the pounds 600,000 lump sum she had been awarded would keep her in the proper style.
Jill Trelfa, a matrimonial lawyer, commented: “In these cases the courts will try to maintain the standard of living as far as possible. However, while a husband may be extremely wealthy on paper, if his capital is mainly tied up in his business, the courts are reluctant to make any order which would jeopardize the future of the business.” Again, it might be a good idea to try out the strategies and techniques for resolving marriage problems in “The Magic of Making Up.”
The other factors the court will consider include the age of the parties, and the length of the marriage, any physical or mental disability, the contribution which each of the parties has made or is likely to make to the welfare of the family, the parties’ conduct if it would be inequitable to disregard it, and any loss of pension rights.
In the Duxbury case, Mrs. Duxbury had argued that the court should also take into account that Mrs. Duxbury could spend the money she received on another man with whom she was living and who, it was said, was earning pounds 90 per week.
The court disagreed. As far as the court was concerned, the fact that Mrs. Duxbury could spend money on her live-in lover was no more relevant than if she had an elderly relative living with her.
Mr. Grose-Hodge said: ‘The court is not concerned with any moral aspect. If a live-in lover, however, is a pop star or someone else with considerable wealth, then the situation may be different.’
The judges were also not prepared to accept Mr. Duxbury’s argument that the lump sum should be reduced and maintenance payments awarded instead, because Mrs. Duxbury might one day remarry.
Where a lump sum is ordered to be paid in a divorce settlement, it is a once-and-for-all payment. It usually cannot be varied and it cannot be asked for a second time.
Therefore, if an ex-wife marries again only a few months after receiving a substantial lump sum, the ex-husband would usually have no redress unless he could show that the wife had a settled intention to marry and had concealed the fact.
In 1982 a case was reopened when a wife, who had concealed her intention to remarry, received the matrimonial home as part of her divorce settlement and transferred it to her and her new husband a day later.
If Mrs. Duxbury had been awarded periodical maintenance payments as Mr. Duxbury had asked for, he could go back to the court if there were any change in the circumstances. Furthermore, if she actually remarried, any periodical payments would cease.
Where there are substantial sums of money involved, Mr. Crose-Hodge had one final piece of advice: ‘First, try not to get divorced! If that doesn’t work, then a matrimonial lawyer has got to know when to accept an offer of settlement – otherwise his client may lose out in the long run.