Financial Outcomes

Some countries operate a system informally known as community of property.­ In its basic form, the assets accruing during the marriage up until the date of separation are divided equally.­ Premarital and post separation assets and all inheritances and gifts are taken out of account.­ This inflexibility can sometimes produce, to English perceptions, quite unfair outcomes.­ It gives no account to commitments made within a marriage often to one spouse’s prejudice e.g. giving up a career for child raising or moving countries to be with the other spouse.­ It gives no account of the needs of the parent, often not the primary earner, who has responsibility for day-to-day care of the children as an ongoing prejudice to their own career and earning.

Some countries have an additional discretionary lump sum on top to produce a more just outcome.­ Often however this adjustment is quite a small amount.

Spousal Maintenance may be in addition to this division.­ However an increasing number of countries do not grant spousal maintenance for more than a few years after the divorce.­ This can be irrespective of the length of the marriage, the disparity in the financial circumstances of the spouses, and the inability of one spouse post separation to recover earning capacity and after the commitments to the marriage.­ This can seem very unfair.

Some countries apply not their own domestic law but the law of the country with which the couple have the closest connection, known as 'choice of law' or 'applicable law'.­ England only ever applies English law.­ Most English lawyers consider applying the law of other countries makes settlements harder to achieve and more costly, even more uncertain and slower.­ Moreover continental European countries using applicable law do not do so consistently or comprehensively; applying their own domestic law to procedural matters and anecdotally applying their own domestic law if they find it difficult to ascertain or understand the foreign law.­

Some countries have binding pre-marriage agreements as a cultural and legal norm.­ Sometimes these are entered into without separate independent legal advice, without disclosure and without any opportunity of reviewing what is fair.­ Nevertheless these countries very rarely deviate from these sorts of agreements at a time of subsequent divorce, irrespective of the changes that may have subsequently occurred and however unfair the agreement may now appear with changing circumstances.­

Ascertaining the assets to be divided in some countries, even if to be divided equally, can be hard work, very frustrating and often simply impossible.­ Some countries rely on self disclosure without any opportunity of corroboration or investigation.­ Some countries have minimal investigation powers.­ Some countries ignore assets put within trusts or companies, even if done so to evade marital responsibilities.­ Some countries ignore offshore assets i.e. resources outside the country.­ In short, ascertaining disclosure reliably in some countries is impossible, leading to much frustration and injustice.

Many international spouses have to balance the predictability, certainty, low legal costs and possibly inadequate disclosure of some countries, with the more flexible fairness-discretion, more tailor-made, yet uncertain outcomes, the greater likelihood of full disclosure, higher legal costs and possibly greater financial settlements in countries such as England.

In countries with any significant Islamic influence, the division of marital assets is often based on mahr, dowry or similar arrangements reached at the time of the marriage and with reference to the Qur’an.­ Whilst to some observers the arrangements can seem very unfair especially to the woman, Muslims including some female Muslims argue its fairness.­ Nevertheless it is a feature that has to be taken into account in comparing financial outcomes between countries with which international families have a connection and choosing where a divorce will take place.

Generally England is perceived as a very generous country with applicant wives obtaining substantial orders.­ London is described as 'the divorce capital of the world', in part because of its very multinational population but in part due to the very substantial settlements redistributing assets and making orders against assets held behind trusts, companies and otherwise hidden.­ With many international families having some connections with England, it has been a forum for many big money divorces in recent years.­ There are much lower divorce settlements abroad.

England does not have an automatic percentage division of assets on divorce.­ It seeks to produce a just and fair outcome in each case.­ It takes into account a number of factors.­ It is discretionary.­ This has the considerable advantage of flexibility and individual justice.­ However it has the significant disadvantage of uncertainty and lack of predictability of outcome and so potentially increasing costs.­

The objective is to produce a fair outcome, taking account of needs, compensation, sharing and any agreement.­ Although there is no automatic division of assets, the courts have stated that the principle of English divorce financial provision law is equality of sharing.­ Assets acquired during the marriage ('marital acquests') will be divided equally unless the needs of the parties, especially reasonable accommodation for any children, are greater.­ In these circumstances, and inevitably many cases come into this category, the courts will look to provide for needs.­ This will dominate ('trump') any equality sharing.­ In relation to non-maritally acquired assets, these cannot be shared although again reasonable needs will dominate.­ Non-maritally acquired assets includes pre-marriage assets, inherited assets, some post separation assets and also has regard to length of marriage, particular contributions, the mixing of non-marital with marital assets, illiquid assets and other special factors to produce a fair outcome.

Spousal maintenance, also known as alimony, may be in addition to this division of capital.­ It takes the form of monthly or other periodical payments.­ It may continue for a term of years e.g., to allow opportunities to retrain and become self-sufficient, or it may be for life, although this is increasingly rare.­ Alimony ends on remarriage.­ It may be reduced or suspended during cohabitation.­ Sometimes alimony can be capitalised to produce a clean break.­ England does not have automatic short term alimony orders as found in some countries.­ In addition there is child support.­ England has a Child Support Agency (now CChild Maintenance Service) but it does not apply if one parent or a child is abroad.­ It has fixed calculations based on the income of the paying party.

If the financial resources are limited, the priority tends to be provision of accommodation for children for their minority with the primary residential parent.­ This may be the former family home.­ Sometimes this may involve the other parent receiving their 'interest' in property many years later when the child has reached 18 or ceased full time education.

The English family court can make orders sharing pensions including transferring part of a pension to the other spouse.­ However this can only be against pension companies in England.­ This is relevant to an international family if the pension is abroad, when advice from the pension company or a foreign lawyer should always be taken in advance of the settlement to make sure an effective order can be made and implemented.­ Similarly, if the pension is in England and the divorce is abroad, a separate English order may often be needed to give effect to any foreign family court pension sharing arrangement.­ English legal advice should be taken before the foreign final financial settlement is made abroad to make sure it is in fact enforceable against the English pension fund.

There is an obligation on each spouse to give full and complete disclosure of all their resources worldwide.­ However this applies in most countries!­ In our international experience, England is a leading country in its intensive and effective investigation of disclosure, with very wide international powers to obtain documents and information.­ England requires, and often obtains, disclosure of personal assets held in the name of trusts, companies, other family members or in other ways designed to conceal true ownership and wealth.­ England’s leading family court judges and lawyers are very used to dealing with international spouses who hide assets behind offshore trusts and companies, who give dishonest disclosure or who simply will not answer questions.­ Ultimately, the court will infer a level of wealth and make financial orders accordingly.

An important aspect is to make sure that any asset against which it is intended to seek a family court order stays in place until the final settlement and is not transferred out of reach including to another country.­ Freezing injunctions against bank accounts, real properties etc and similar precautionary steps are crucial.­ They are often made if there is any risk of dissipation or disposal of assets.

English lawyers and English judges frequently work closely with lawyers, judges and others abroad to ascertain details of worldwide financial resources in a case.­

The English family courts make worldwide freezing orders against assets abroad.­ The orders are invariably made without notice, very quickly and enforced in a matter of hours.­ The English courts ask other country’s courts to investigate disclosure including to undertake a cross examination of a spouse or third parties to ascertain the truth of ownership of assets, particularly if the spouse or third party will not travel to England or cooperate.

Yes.­ Although the English court is not bound by any agreement, in practice a couple who, post separation, reach an agreement or settle after legal advice and disclosure will invariably have that agreement embodied into a final court order.­ This significantly saves costs and time, and reduces distress to children.

We strongly recommend the use of mediation and other forms of dispute resolution (DR), once forum for the proceedings has been established, as a preferable means of settling cases.

First, the English family court has power to make an order in respect of assets abroad including real properties abroad.­

Enforcement depends on the order and where it is going to be enforced.­ Many international enforcement arrangements distinguish between maintenance and other financial obligations.­ Maintenance is interpreted widely, beyond pure alimony, spousal maintenance provision.­ It is interpreted often as 'needs'.­ However it does not cover division of assets based on fairness sharing rather than providing for needs.­ Enforcing such fairness-sharing division of property arrangements against foreign assets can be more difficult.

There is some international co-operation with many reciprocal arrangements on recovery of maintenance obligations.­ Some reciprocal arrangements are rather historic, outmoded and only occasionally exercised.­

In contrast there are reciprocal arrangements across Europe (the EU Maintenance Regulation) although only for a maintenance (needs) order made before 1 January 2022.­ For maintenance (needs) orders made after that date there is the 2007 Hague Convention on the international recovery of child support and other forms of family maintenance which applies to all EU member states and some other countries including the USA.   

Between some countries, it is possible to pursue claims quickly in the country in which the payer is working.­ Between some other countries, there can be a relatively complicated procedure involving the government organisations of the two countries.­ Good legal advice needs to be taken, including in advance of the final settlement if possible.­ It is important to be conscious of the costs of the exercise in relation to the likely recovery.­ There is a very good Government Department, known as REMO, which gives assistance on reciprocal enforcement abroad.

Many countries cooperate on orders regarding the transfer of real property.­ In practice, this is made much easier if, in advance of the final financial order, any dealings with the real property have been prevented or frozen.

Within Europe, cross-border laws have made it relatively easier directly to enforce consent lump sum orders in the country in which relevant assets are situated.

Although the English Child Support Agency (now Child Maintenance Service) rarely deals with international families, there is co-operation between such agencies in other countries.

Whilst there is increasing international co-operation on enforcement, there is still no substitute for freezing assets in advance and/or seeking orders against onshore assets.­ Planning implementation and any enforcement before the final settlement is very wise.

Not at all.­ It is quite likely England will consider what would have been the outcome if the case had gone ahead abroad and take this into account in deciding a fair English settlement.­ The court has the discretion to take foreign aspects into account such as foreign marital agreements, and will do so if circumstances show that this is fair.­ The law in respect of marital agreements applies equally to foreign marital agreements.­

A nominal maintenance order is made in favour of one party where they presently have sufficient income to meet their needs and no substantive spousal maintenance is presently required, but it may be needed in the future.

A nominal maintenance order is often granted in favour of a parent who is a primary carer of children as a safeguard against any significant change in circumstance in the future which will render them unable to meet their financial need themselves so they can ask the Courts to vary the nominal order upwards to a substantive amount.

Where care of a child is shared then a nominal maintenance order may be made on a reciprocal basis between each parent. In practice it is rare for a nominal maintenance order to be varied to substantive maintenance.

Either party can apply to the court to vary the maintenance upwards or downwards, or to stop maintenance entirely, if there is a change in their circumstances. For example, the paying party may have a change in income, or the recipient has a legitimate and reasonable change in financial need, or an income so not need any or so much maintenance.

At any time either the recipient or payer can apply to the court for the maintenance to be capitalised, meaning that the payer makes a lump sum payment in lieu of ongoing maintenance.

Where maintenance is for a non-extendable term, it cannot be extended, although it can be varied upwards or downwards during its term.

There is an ongoing duty on both payer and recipient to inform the other of any material change in their financial or other circumstances.

Spousal maintenance arises where one party’s income or assets are insufficient to meet their day to day need, for example if they have a much lower income than the other or have not worked through some or all of the marriage and are unable immediately to become self-sufficient.

'Needs' may be generously interpreted. It is with reference to a number of factors including the assets available for distribution (including capital and income) and the standard of living enjoyed during the marriage. The court’s priority is to ensure the welfare of any children.

The court has a duty to dismiss the financial obligations between the parties as soon as possible. This is known as a clean break.

In some circumstances the court may order maintenance for a short period e.g., of two or five years or as appropriate to enable someone to move toward financial independence, for example by retraining or re-entering the workplace. This is known as a term order, or term maintenance. Some term orders can be extended, whereas with others there is a prohibition on extending the term.

In circumstances where a person has been out of work for many years, for example when raising children, a court may order maintenance on a lifelong basis. This is known as ‘joint lives’ maintenance.

Depending on the parties’ pension provision, maintenance may end on the parties becoming entitled to draw income from their pensions.

There is no set formula for the calculation of spousal maintenance as there is for the calculation of child maintenance.

When determining whether spousal maintenance should be paid, how much should be paid and the length of time for which it will be paid, the court has a wife discretion to consider all of the surrounding circumstances.

In determining the level of maintenance, regard may be had to the parties’ day to day financial commitments including any child maintenance obligations, and how these can be met from the available resources.

The appropriate amount of maintenance varies significantly from case to case, and specialist advice should be sought.

Deciding the amount of spousal maintenance can be difficult though the lack of clear guidance given by the costs.

Spousal maintenance is maintenance that is paid by one spouse or civil partner to their former spouse or civil partner following a divorce or civil partnership dissolution. It is different to child maintenance.

Spousal maintenance is usually paid on a monthly basis and continues either for a defined period (term of years) or for the remainder of the parties’ life known as a 'joint lives order'.

Spousal maintenance ends if the recipient remarries or enters a civil partnership or if either party dies. It may be varied or dismissed by the courts on a change in circumstances.

Maintenance ends automatically if the recipient remarries or enters a civil partnership or if either the payer or recipient dies.

The paying party can apply to court for the maintenance to be reduced or brought to an end if there has been an adverse change in their financial circumstances or an improvement in their financial circumstances of the recipient.

When considering whether maintenance can be terminated the court will consider whether the recipient of the maintenance can adjust without undue hardship to the end of maintenance.

Spousal maintenance does not automatically end on cohabitation of the recipient, although some court orders provide for this. He Courts take the view that cohabitation is more uncertain than marriage. Cohabitants do not have the same financial claims against one another in the event of relationship breakdown.

Whilst maintenance will not automatically end, when a party receiving maintenance begins to cohabit it may be appropriate for the maintenance to be reduced or end in light of their cohabitation and you should take specialist legal advice if this is the case.

The payer of the maintenance should advise their former spouse of their change of circumstances and should then seek to reach an agreement.

In some circumstances it may be necessary to apply to the court for a suspension of the maintenance order whilst the payer remains out of work.

In the event that alternative employment is found with lower or higher remuneration it may be that either party may then apply to the court for a variation of the existing order.

It will depend on the circumstances in which the original order was made and on how this change of circumstance affects the financial position of the recipient. It may be that the party receiving maintenance is now earning sufficient income so that the spousal maintenance may end. It may be that it can be agreed that the maintenance may be reduced or end, or it may be necessary to make an application to the court for a variation application.

The legal test is whether the receiving party can adjust without undue hardship.