Financial advice on divorce matters

Many people are aware that, on 6 April 2022, the process to get divorced in England and Wales changed. The Divorce, Dissolution and Separation Act 2020 reformed the legal requirements and process for divorce. The Act aimed to reduce the potential for conflict amongst divorcing couples by:

• removing the ability to make allegations about the conduct of a spouse
• allowing couples to end their marriage jointly

The Act also introduced a minimum period of 20 weeks between the start of proceedings and application for conditional order. This provides couples with a meaningful period of reflection and the chance to reconsider. Where divorce is inevitable, it enables couples to cooperate and plan for the future. It is no longer be possible to contest a divorce, except on limited grounds.

Due to these changes and the fact that it has not been possible to get public funding (legal aid) for divorce for some time, many couples decide to deal with their divorce without asking a lawyer to help them.

The trap that many divorcing couples fall into is to think that bringing the marriage to an end is the end of the story – but often, it is not. One of the most important aspects to deal with when a couple is splitting up is to ensure that appropriate advice is taken in relation to property and finances. This includes agreeing on how to divide property, savings and investments.

Often, one of the most valuable assets is a pension pot held by one of the parties. A law firm recently had a judgment made against it for failing to give proper advice about a matrimonial split, where the main asset was the husband's pension. In the case, a wife succeeded in a claim for negligence against the firm that advised her in relation to the financial settlement reached with her former husband on divorce.

The wife instructed the firm but chose to deal directly with her former husband in relation to financial matters in which she agreed a settlement of £62,000. The firm later became aware that the former husband had a valuable pension pot which had not been taken into account when the wife agreed the settlement – but the firm took the view that they were not obliged to advise their client on the finances as she had signed their disclaimer and agreed to deal with the finances herself.

Sometime after the divorce, the wife found out that the pension pot should have been taken into account – and her claim against her former firm was upheld and she was awarded £400,000.

The moral of the story for those getting divorced is to consider getting specialist legal advice in relation to a divorce settlement and the resulting split of the finances. And look very closely at any disclaimer.

To discuss this or any other family matter, contact us.