I am delighted to have been involved in the Fair Shares project. What is it about?
Around 100,000 couples divorce annually in England and Wales and the financial arrangements they make can determine the future standard of living that they and their children will have for many years to come. Only a third of them use the legal system to sort out their finances, with the rest negotiating their own arrangements or, worse, reaching no settlement at all. Very little is known about the detailed financial arrangements couples make, or how they work out. This study aims to fill this gap to help shape the law and provide practical guidance to couples going through divorce in the future.
The report is fascinating and well worth a read. It is focussed on the ‘every day’ type of family; the issues that the majority of solicitors will deal with, or where couples are dealing with matters themselves. It is not a repetition of the ‘big money’/’red top newspaper’ cases. It is focussing on what arrangements are made – whether with or without solicitors and with or without court or court orders; how couples are reaching agreement over arrangements and, lastly, the effect in the short term, of the arrangements made circa 5 years later.
From the executive summary:
The financial context for the ‘everyday’ divorce
The picture of couples’ financial position at the point of divorce is quite contrary to the impression given by the media’s reporting of divorces. Most divorcees had relatively modest amounts of wealth to divide at the end of their marriage. The median value of divorcees’ total asset pool, including those with debts and no assets to divide, was £135,000. Nearly one in five (17 per cent) divorcees had no assets to divide and nearly two-thirds (63 per cent) had total assets (including home and pension) worth under £500,000. Although two-thirds of divorcees had been living in owner-occupied matrimonial homes, once mortgages were taken into account, a third of these had homes with an equity worth less than £100,000, with only seven per cent reporting an equity above £500,000. Nearly a third of divorcees were in rented properties, the majority in private tenancies, with the consequential insecurity of tenure that accompanies these.
The study reflected well-established findings that wives, and particularly mothers, were in more precarious financial positions at the point of divorce than men. They were more likely to have part-time employment during the marriage and to earn less than husbands, with nearly three in ten having take-home pay of under £1,000 per month compared to only one in ten men. Relatedly, women had accumulated poorer pension provision. Although women were as likely as men to have a pension, men were more likely to have paid into it for longer, and their pensions were worth more than those of women. This financial vulnerability impacted on many women’s ability to achieve a standard of living post-divorce comparable to that which they had enjoyed during the marriage, particularly when they were taking the main responsibility for children.
Lack of financial and legal knowledge
Worryingly, there was a lack of awareness of family finances amongst a significant proportion of divorcees. Over a third (37 per cent) of divorcees did not know the value of their own (let alone their ex-spouse’s) pension pot and nearly a quarter had no awareness of what kind of employer pension scheme they were enrolled in, whether defined benefit or defined contribution. Furthermore, one in ten homeowners with a mortgage did not know what the equity in their home had been at the point of divorce and four in ten divorcees felt their knowledge of their ex-spouse’s finances during the marriage was not good. Our qualitative interviews suggested that such lack of knowledge may have had significant impacts on how, and how well, they negotiated any arrangements with their ex-spouse.
While lawyers were the ‘obvious’ and most common source of advice about the divorce – used by four in ten divorcees – there was a rather chaotic picture of where divorcees obtained advice and support. Government websites and signposting did an important job, with nearly a third of divorcees saying they had used them. But there was also a mass of undifferentiated sources of varying authority and clarity, particularly on the internet, and only a limited supply of free advice services. It was therefore not surprising that one in eight divorcees said they had sought no advice or information about their divorce.
It is well worth a read. Have a look HERE.