Four myths about the financial side of divorce

Four myths about the financial side of divorce

News headlines tell you little about the realities of divorce for most couples Prostock-studio/Shutterstock

It’s no wonder many people think divorce involves going to court, huge legal fees and decades of spousal payments, considering these are the cases that dominate our headlines. However, the kinds of divorce cases reported in the news involve the very rich, and are far removed from the reality for most couples.

The Law Commission of England and Wales, the body responsible for law reform, recently announced a review of the law of finances on divorce, with a scoping report due in September 2024. Review of this law is much needed, given the legislation governing how couples in England and Wales sort out their financial affairs upon marriage breakdown mainly dates back to the 1970s (the Matrimonial Causes Act 1973).

The problem is that key politicians who have been calling for change still rely on the issues raised in these exceptional, “big money” divorce cases.

We need to correct the misleading narrative about divorce if reform is to address the needs of the 110,000 couples who get divorced in England and Wales each year. Although there is limited research about this issue, we do know enough to challenge the following myths.

1. Spouses are often forced to fund costly legal battles

Family courts grant divorces and the fee is currently £593. However, it is not mandatory for a divorcing couple to get an additional order regarding their finances, and there is no need for expensive court hearings.

In fact, fewer than 40% of those divorcing each year do so. While there is no authoritative data on average legal costs incurred in these cases, it seems that, for many couples, the costs of sorting out their financial arrangements need not be high because the courts are not involved.

And even those couples who do use the courts for their financial matters overwhelmingly settle rather than fight their case, which limits their legal costs. Only 13% of financial orders made in a divorce are actually decided by a judge after contested litigation. The rest are consent orders: orders finalised by the judge on terms that have already been agreed by the divorcing couple.

2. Everything is split 50/50

The law does not lay down a principle of equal sharing of the marital assets on divorce. However, the courts do accept this is a desirable goal if this can be done while meeting both parties’ needs – and those of their children.

Businessman separates stacked coins
Assets aren’t always split 50/50.
Miha Creative/Shutterstock

Research suggests that, rather than rigidly applying a 50/50 split, couples focus on their needs first and particularly those of their children. This can result in an unequal split of the value of the main asset most couples have – the former marital home.

3. Men have to pay lifelong maintenance

Some news media object to the current law as they claim it allows an ex-wife to be supported for the rest of her life by her former husband (or vice versa). The argument is that this casts ex-wives as dependants who cannot look after themselves, and prevents husbands from moving on after their divorce.

In reality, lifelong maintenance is rare, and even limited ongoing financial support is uncommon. The most recent data found that only 16% of court orders involved any kind of ongoing spousal support – of which, two-thirds were for a fixed term. Nearly all such orders involved dependant children, with the order terminating when the youngest child reaches a certain age or stage of education.

4. London is the divorce capital of the world

Some news media report that the courts’ endorsement of the principle of equal sharing has led to some wives, married to oligarchs, sheikhs and tycoons, seeking divorce through an English court due to its “generous” treatment of them. For example in 2021, a High Court judge ordered Sheikh Mohammed bin Rashid al-Maktoum, the emir of Dubai, to pay a £554 million divorce settlement to his former wife, Princess Haya.

By their nature, these cases are atypical – that’s why they make headlines. But why should the fact that English law takes spousal equality seriously be a matter for regret? The 1970s legislation aimed to ensure the non-financial contributions of spouses, such as home-making and caring, should be recognised. Judges have been clear it is discriminatory to assume the breadwinner spouse is making a greater contribution to the relationship and should keep a larger part of the wealth than the other who takes on the role of carer. Surely this is an enlightened position.

That doesn’t mean we shouldn’t update the law, though. Working patterns have changed but women still earn, on average, less than men. They are still more likely to assume the bulk of child care, work part-time , and, in consequence, have smaller pensions compared with men.

The result is that, far from being treated generously, women still come out of divorce financially worse off than men.

But there is still so much we don’t know about how divorced couples divide their assets. Since the norm is for couples to stay out of the courts, there is no official record of how the majority of the divorcing population arranges their finances. That’s why one of us (Emma) is leading the Fair Shares Study, expected to publish in autumn 2023. This will provide the first nationally representative picture of couples’ finances on divorce.

We need a law that meets the needs of all divorcing couples rather than the few wealthy exceptions, and a major corrective to the myths that abound in this area of family law.

The Conversation

Emma Hitchings receives funding from The Nuffield Foundation and previously from the Law Commission, the Bar Council and the Ministry of Justice.

Gillian Douglas receives funding from The Nuffield Foundation as a co-investigator on the project, 'Fair Shares: Sorting out money and property on divorce'. Her previous research on financial and property aspects of family law has been funded by the ESRC and Joseph Rowntree Foundation.