DIVORCE RATE ON THE RISE FOLLOWING INTRODUCTION OF ‘NO-FAULT’ DIVORCE
Released On 25th Feb 2023
According to recent figures, the Divorce Dissolution and Separation Act 2022 – more commonly known as the ‘no-fault divorce’ act – has resulted in a rise in applications for divorce.
Under the Act, introduced in April last year, the process to obtain a divorce or dissolution has become much more straightforward.
Unlike the previous legislation, no grounds need to be given to commence divorce proceedings, and the parties can apply separately or jointly.
However, despite a simplification of the divorce process, the financial settlements tied to these ‘no-fault’ divorces can still be complex – particularly if a business is involved.
Most business interests, be they an interest in a partnership or shares in a family company are likely to constitute matrimonial assets, which will usually need to be valued to ensure an equitable division of assets between the parties.
If the business began before the marriage, it may be necessary to value it both now and as at the start of the parties’ relationship so that any increase in value can be shared.
The English and Welsh courts do not necessarily assume that there will be a 50-50 split of all assets because some (like a share in a family business) are riskier than others (such as a share in the family home).
Even if the business is relatively small, a valuation by a jointly appointed forensic accountant may well be needed.
This can help to identify not only the value of the matrimonial asset but also the future annual salary or income that the business is likely to generate and its ability to raise funds for the divorce settlement.
Often home-makers are entitled to both a share of the capital value of a family business and a share of ongoing profits in the form of maintenance.
Forensic accountants have extensive experience of assisting the family courts and are increasingly being instructed in private arbitrations and mediations.
Roger Isaacs, Forensic Partner at Milsted Langdon, said: “Divorce finances can be complex, especially when a business is involved or when there are substantial assets overseas.
“Splitting a couple’s assets is never easy but before the task can even be started it is necessary to calculate how much tax would be payable if they were to be sold.
“For this reason, forensic accountants are often instructed to undertake tax calculations as well as business valuations.”
