“I’m thinking of leaving an unhappy relationship, but I’m worried about the financial implications. What should I do?”

Women are more likely to instigate divorce – despite being potentially at a financial disadvantage

The ONS has published the most recent statistics to confirm that in 2021, there were 111,934 opposite-sex divorces – a huge increase of 9.3% in just two years and the highest number we’ve seen since 2013. In the last year, 63.1% of opposite-sex divorces were petitioned by females, with only 36.9% petitioned by males.

It can be said though, from what we’re seeing with clients, that although females are more likely to petition for divorce than males, the financial risk for them to do so is far greater. For example:

• She may end up having to live on less money than she had when she was married. This can be for many reasons, such as being the primary carer for children, having sacrificed a career to do so, which has a long-term impact on earning capacity
• If the wife has taken the traditional home maker role, then usually, the husband has had control of the family finances, and the wife commonly has little understanding about the structure of their assets; where money is, mortgage details for the family home or even what bank accounts are held
• If the wife is paid a salary through her husband’s business for tax reasons, this can be stopped, leaving her vulnerable. If she is paid with dividends, she could end up with her own tax liability

However, unlike cohabiting couples, married women have the certainty of financial protection that the law provides. The starting point for division of the assets is 50/50, so the court will look to ensure that she (and any dependent children from the marriage) have as much financial security as possible, in light of what is in the ‘matrimonial pot’. The Court have the discretion to reallocate property, assume that husbands have access to funds that it is clear they have even if they have attempted to hide them and will ensure that as a minimum the wife and children’s needs are met.

How is the situation different if you are not married?

If a couple aren’t married, this can leave the financially weaker party in a very vulnerable position. Contrary to a still widely held belief, ‘common law marriage’ does not exist. It is simply not true that if you cohabit for a certain period, you will automatically gain the same financial protection as though you were married. In short, any financial provision that may be available depends quite strictly on the financial contributions made by each party, any clear joint intention and whether there are minor children. It follows therefore that a female who has been in a long unmarried relationship who has made no financial contribution and has no children will received little, if any, financial provision on separation.

~Novel Serialisation: Heavens Fire~

Further statistics have revealed that there has been a significant increase in both single-family households and cohabiting couples with non-dependent children. The number of these relationships rose by 56.1% across the past decade, from 115,000 (0.5%) in 2011 to 180,000 (0.7%) in 2021.

There has been pressure on the Government for some time to consider updating the rights of cohabitees in relationship breakdown to reflect the changes in modern families. In early November 2022, the Government rejected any call to update the laws to the disappointment of all of those who have been campaigning hard for a move towards equality.

This means that the current position remains and those in cohabiting couples are at significant financial risk if their relationship ends or their partner passes away. Current cohabitation laws have the effect of putting families in dire financial hardship. The law intervenes to protect financially weaker people in many other areas yet those in cohabiting couples still have a limited safety net.

When a relationship breaks down, how can the financially weaker party make plans to manage their money and create a strategy towards financial independence?

Making the decision to end your relationship is huge and should not be done without putting plans in place first. Get some early legal advice so you are aware of where you stand and what entitlement you have based on whether you are married or unmarried.

If you are unmarried, then collate all evidence that you have about your financial contributions and discussions between you about the intended ownership of any properties.

If you are married, then be ready to explain what you know about the family assets. Do not try and access any confidential information as this may compromise the use of any information that you find out. Your solicitor will be able to help guide you as to what you need and where information can be found.

Separating a household means that both parties’ standard of living will be affected as two households will need to be created from the same resources (think two sets of bills for mortgage/rent, energy, council tax, food etc.). There are some things you can do in the short term to try and prepare, and plan as follows:

• Prepare a comprehensive list of your household expenditure to see how much comes in and goes out each month. This can later be used to discuss how income can be shared in the short term and if there is a surplus to assist if you have a shortfall
• Don’t make any immediate changes to your spending habits but start to think if there are any luxuries that could be removed or reduced
• Revisit your direct debits and check that you know what is being paid out
• Revisit utility tariffs to see if better rates can be obtained
• Apply for single person’s discount on the council tax (it gives 25%) if you have already separated
• Contact your mortgage provider to see if you can have a payment holiday or have the option of switching to interest only (do not do this without financial advice as it may affect your credit rating)
• Have a consultation with a financial adviser to see how your assets look, consider if you have a mortgage capacity and to start to look at your mid-long term income needs
• Consider your own earning capacity and whether you can increase your hours at work or return to employment. Again, do not do so without having considered your overall position. If it is disproportionate for you to return to work due to childcare costs for example, there may be another short-term option in terms of maintenance as part of your financial settlement. Your solicitor can guide you
• If you are on a low income, look at your eligibility for tax credits

As part of your financial settlement, the Court has the power to transfer properties, make orders for lump sum payments, share pensions and order that maintenance be paid by one party to the other.

Initially, we would advise you seek legal advice so that you can make informed decisions. It will also be helpful to have other professionals on board throughout the process such as mortgage advisers, financial advisers and tax and pensions experts, depending on your assets. Your family solicitor should be able to help you navigate this and ensure that there is a joined-up approach that does not feel overwhelming. If things are done carefully, no female should feel that they must remain in an unhappy relationship simply due to the financial implications. Perhaps, ultimately due to the good work of the professionals out there, women are more likely to initiate separations.

By Nikki Aston, Family Law Director at Freeths

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