Richard Kershaw, partner at law firm Hunters Law, considers this area. The editors are pleased to share these insights; the usual editorial disclaimers apply to views of guest writers. To comment, email tom.burroughes@wealthbriefing.com and amanda.cheesley@clearviewpublishing.com

On 2 July, the Office for National Statistics released information about the number of divorces in England and Wales. In 2023 there were 102,678 divorces ; of those, the Ministry of Justice tell us that 40,873 financial arrangements were litigated to an outcome through the court, which means that the remainder were sorted out by the parties around the kitchen table, left unaddressed or through recognised non-court dispute resolution .

NCDR is, rightly, increasingly popular as it gives the parties greater autonomy in how they separate their finances. At a time when the court system is teetering on the brink of collapse, NCDR is invariably a swifter process. And it is typically less costly.

But it is not universally appropriate.

There are some aspects of matrimonial finances which require prompt, sometimes urgent unilateral advice to one of the parties so that their position is not prejudiced.

One such area is that of “forum” – essentially, where there is a choice of which country deals with the divorce and finances.

This is potentially a critical issue because:
1. The jurisdiction which deals with the divorce invariably then has power to make financial orders;  
2. Different jurisdictions have widely varying powers about what financial orders they can make; 
3. Different jurisdictions take different matters into account when exercising their powers to make financial orders; 
4. The consequences of choosing the “wrong” jurisdiction can be prejudicial and long-lasting; and 
5. Two examples of the prejudice which can be suffered/advantage gained, one capital in nature and one income related.

Capital
The recent Supreme Court case of Standish UKSC 26) endorsed the jurisprudential trend first articulated 20 years ago in Miller and McFarlane UKHL 24) that matrimonial assets should be “shared.” In HNW and UNHW cases, that’s usually the beginning and end of the calculation.  

An asset is matrimonial if it has been created by the parties, or one of them, during the marriage or is an asset brought to the marriage which has been “matrimonialised” – an unwieldy term the use of which has been blessed by the Supremes.

Uniquely, the courts in England & Wales add periods of cohabitation which pass seamlessly to the martial state to the duration of marriage and, in so doing, extend the scope for assets being matrimonial.

To take an extreme, albeit perfectly orthodox, example; a couple meet in London in 2002, start to cohabit in 2004, marry in 2023 and start divorce proceedings in 2024. The court will, without demur, treat this as a 20 year “marriage” even though the legal status of marriage subsisted for a mere 12 months. This is a practice borne out of the courts recognising that 24.3 per cent of couples now cohabit as compared with the early 1970s when the governing legislation was enacted, when living together outside marriage was extremely rare. All wealth created during that period will be shared.

This is not so in many other countries or states.

In California, for example, the concept of sharing also applies, but is confined to the duration of the actual legal marriage. 

In the above example, that would mean a division of that element of the marital pot which related to the period 2023-2024.

And in England and Wales, pension sharing orders can be made which divide a party’s pensions to make retirement provision for the recipient party. This is a power which is not available in every jurisdiction. There is also a further issue that pension sharing orders in this jurisdiction can only be made against pensions held here, and so not against “foreign” pensions. Where the pension is substantial and overseas, there is likely to be significant prejudice if proceedings are brought in the pension-less jurisdiction.

Income
On the income front there is yet more strategic advantage to be gained by the party who has a choice of jurisdictions and who issues first.

In England & Wales, a party’s income is not “shareable.” EWCA Civ 727).

The court may only make an order that one party pay another maintenance based on an assessment of both parties’ “needs.”

Quantification of spousal maintenance is not formulaic and revolves around the interplay of:
1. The payer’s income; 
2. The payee’s income budget ; 
3. The payee’s ability to generate an income for themselves; and 
4. The payer’s ability to bridge the shortfall between and .

There are then issues of for how long the maintenance should be paid, which brings into the equation such questions as for how long the marriage lasted, what sort of income or profession the payee might have foregone for family reasons and whether the maintenance should be “capitalised.”

It will be evident that there is significant room for argument, both as to quantum and term. 

There is no such room in most comparable jurisdictions, even those most geographically proximate.

In Scotland, spousal maintenance is time limited, typically for up to three years post-divorce, unless that will cause undue hardship. Protracted periods of dependency are atypical. The same, time limited, approach applies in many other European nations, e.g. Luxembourg, Sweden and Norway where spousal maintenance is the exception with a strong focus on financial independence.

Summary
It is no surprise that London is known as the divorce capital of the world; that epithet is often, rightly, ascribed to the big ticket UHNW cases the High Court handles; but it applies equally to the English courts’ generous approach to the elasticity of a marriage and its paternalistic view of the financial commitment of marriage enduring for many years after its legal dissolution.