The majority of what we see in the media about divorce cases involve either the uber-rich, or stories which could feature on the Jeremy Kyle Show (RIP). It is therefore refreshing – and indeed enlightening – to read the results of a recent Nuffield-funded research study, led by Professor Emma Hitchings at the University of Bristol. The report, called “Fair Shares? Sorting out money and property on divorce” provides details of the financial and property arrangements which divorcing couples make, and is very much rooted in the everyday, i.e. the 100,000 couples or more who divorce each year.
The average value of the “asset pot” (which included the home and pensions) was just £135,000, with 63% of divorcees having total assets worth under £500,000, and 17% having no assets at all. Although 2/3rds of divorcees had owned their homes, the net equity was less than £100,000 in 34% of cases. In terms of outcome, this meant that half of divorcees received less than £50,000 of the total assets, with 23% ending up with nothing or only debts. 21% received less than £25,000, whilst 9% emerged with £500,000 or more. 38% of divorcees felt that their knowledge of their ex-spouse’s finances during the marriage was “ not good” with 37% being unaware of the value of their own pension, let alone their former spouse’s. Whilst lawyers were the most common source of advice about the divorce process (40%), the report confirmed that there was “confusion between different forms of dispute resolution and the forms of legal support available.” This included confusion about what mediation was, and its purpose, and about the effects of a consent order.
Of the c.100,000 couples who divorce each year, only around one third exit the marriage with a court order, although it is encouraging that the vast majority of those orders are by consent. Over one third of those questioned (36%) made no financial arrangements at all when they divorced. 32% of divorcees used legal services for their financial arrangements, with 42% of those who did not do so saying that they were deterred by concern about costs. However, outcomes were different where solicitors and court orders were involved, particularly for wives as the use of lawyers made it more likely that pensions would be shared, ongoing spousal support would be provided, homes would be transferred to the wife, and the wife would receive a higher percentage of the sale proceeds.
In terms of specific assets, family homes were more often transferred (46%) than sold (29%), and pensions were rarely shared (11% of pensions yet to be drawn). Where pensions were shared, there was an equal split in only 22% of cases. The reasons cited for not sharing were “general lack of interest” and “a strong sense that it should remain with the spouse who has been contributing to it.”
Given the statutory encouragement it is unsurprising that the study confirmed that couples favoured a clean break, with 40% of men and women having “no financial ties” as their primary objective. Only 22% ended up with ongoing spousal maintenance provision, although nearly always for fixed terms tied mainly to childcare responsibilities, and adjustment to post-divorce living arrangements.
Child maintenance was more common between those parents who were financially better off, with informal arrangements being adopted by over one quarter of all divorcing parents with children. Despite the CMS not requiring parents to support their children in early adulthood, it is heartening that 84% of divorced parents who had non-dependent children continued to support them financially, and through provision of a home, after divorce.
Equal sharing of assets was not the norm. Only 28% reported receiving approximately one half of the assets (although one half was broadly defined as between 40 – 59%).
Although costs were cited as a deterrent factor in deciding to use legal services, the reality of costs was that they were not inevitably high. 20% of divorcees with assets between £500,000 – £999,999 and 18% of those with assets of £1m or more incurred costs of at least £10,000, compared to only 5% of those with assets under £100,000.
Perhaps unsurprisingly, wives, and particularly mothers, were found to be in “more precarious financial positions at the point of divorce than husbands.” With lower earnings, less pension provision, and child care commitments, many women were unable to enjoy a standard of living post-divorce commensurate with that which they enjoyed during their marriage. They were more likely to be working part-time and in receipt of Universal and Child Tax Credit. Older wives without children also had incomes that were significantly lower than men’s. The only group to achieve parity in terms of their living standards after divorce were women and men under 50 without children.
Finally, although there are those who would say “never again” after a divorce, it is worth noting that approximately one third of parents of dependent children had “re-partnered” by the time of the survey.
[Note that the information for this study was collected through a YouGov survey of 2,415 recent divorcees, with 53 in-depth interviews]
