Many of us are distinctly aware of the economic impacts brought about by the Covid-19 pandemic. For clients going through a divorce or dissolution of a civil partnership, their asset valuations may have been affected.
For example, the value of your family home may have decreased. Knight Frank have forecasted a decline of up to 7% in UK property prices through 2020. However, the global real estate consultants went on to acknowledge that much of this decline has already taken place between March and May. Further, since 13 May for England and 1 June for Wales, Estate Agents have been able to re-open meaning that property sales and purchases are now possible again.
In addition, the value of any business interests you or your spouse/civil partner have may be affected. The Office for National Statistics (ONS) reported in April that two-thirds of businesses which were able to continue trading despite the pandemic were not achieving their “normal” financial performance. 93% of these said that turnover was lower than usual. The same could also be said for defined contribution private pension schemes in light of the current position of the stock market.
These are just some examples and other assets may be similarly affected. This could ultimately have an impact on financial arrangements agreed between you and your spouse/civil partner.
Financial consent orders are usually stated to be in full and final settlement, meaning that neither party will have any further claims against the other in the future. The result is that once a final financial settlement is approved by the court, you will not generally be able to apply to vary it because the value of an asset has changed.
This then leaves the question: when do I conclude my financial settlement? One option is to delay negotiations until the economy generally is able to provide more certainty. When this might be, however, is unclear and the knock-on effects are unknown. It is likely that a delay could mean that financial disclosure needs to be updated.
Alternatively, there could be an opportunity to get creative with settlement negotiations. For example, rather than agreeing figures to be apportioned, you could discuss percentages. This way both you and your former spouse/civil partner will share valuation risks.
Because we don’t know how long the economy will be in this position for, this sort of solution could work for you both. Of course, delaying negotiations until things settle may well be just as prejudicial as the reduction in asset values. In family law, there is no one-size-fits all. Each situation is unique and it is about what works best for those involved.
If you wanted to discuss your matter with one of our team we offer a free initial, no-obligation consultation, please call us on 01722 412000 (Salisbury) or 01264 400500 (Andover) to discuss.