Untying the financial knot
Divorce is an unfortunate reality in today's world. It is said that, whereas marriage is about love, divorce is about money. While this may sound too drastic, there is no doubt that very often what makes a divorce more difficult for a couple is the process of trying to untie their financial life. Accordingly, it is important to have legal mechanisms which seek to alleviate the complexities arising from such situations.
Whether or not the couple decide together to put an end to their marriage, one thing is for certain - at some point both the husband and the wife have to move on with their lives and start afresh. In this scenario a 'clean break' settlement, severing all financial ties, would seem to be the perfect solution. Indeed in certain cases it is. However, there are times where such a final division of assets cannot be achieved.
Although most countries make divorce possible, the form of settlement or agreement following divorce will vary depending on where the proceedings take place. We cannot ignore the fact that international marriages are on the rise. Where the husband and the wife are from different member states there is the potential for a choice of jurisdiction, depending on the circumstances of their case. Thus, the outcome of the divorce proceedings could vary substantially depending on where the action is instituted.
While certain European countries adopt an avant-garde approach, others still firmly embrace traditional principles. This distinction becomes all the more apparent when comparing the respective rules regulating financial provision in divorce proceedings. Not all states adopt the clean break principle and maintenance orders for spouses vary widely from life-long support to payments limited to a maximum statutory time frame. Furthermore, in some countries fault is still a relevant factor in determining financial orders. This is the case in Austria for instance where, subject to certain conditions, the party found responsible for the divorce has to provide for the financial support of the innocent party. On the other hand, in Sweden, fault is entirely irrelevant when it comes to the division of the couple's property.
The idea behind a clean break is to allow the parties to be financially independent following a divorce, thus preventing them from making future money claims against one another. However, at times it is not feasible to terminate the parties’ financial relationship, mainly when the assets are limited and the division thereof would not be adequate to allow the parties to be self-sufficient. Consequently, where one of the parties has no earning capacity or can secure less income than the other, a clean break will only be possible if substantial assets may be transferred to such party, or a lump sum is paid which is sufficient for that party to meet his or her needs. In default alternative orders need to made, including decrees for periodical allowance.
In the Republic of Ireland, there is no clean break divorce and the spouses cannot entirely end their financial obligations towards each other. Consequently, a spouse may be entitled to receive long-term maintenance. Furthermore, in certain instances the parties may return to court to seek further provision, even subsequent to a divorce. This would not be possible in legal systems which apply the clean break principle.
"Not all divorces have to end up in court. It is possible to achieve an amicable settlement provided both parties can be put their emotions aside and act rationally"
Understandably, there are arguments pro and against both systems. Adopting a very rigid approach could lead to undesirable consequences. Thus, while prohibiting a clean break divorce in all situations could be unjust and inequitable, it would likewise be unreasonable to impose the principle too rigidly. It is important to analyse each case individually since one technique of problem-solving may not necessarily be applicable to all situations.
Certainly, no system is flawless and lacunae in the law are not uncommon. Particularly when it comes to sensitive matters such as divorce, it is difficult, if not impossible, to have a system which is acceptable to all.
Scottish Law favours the clean break principle while it simultaneously recognises the need for periodical allowance when the former approach is unachievable. In line with this regime, the courts primarily seek to establish the possibility of a final settlement by means of lump sum orders or property transfer orders, where there are sufficient resources to do so. When a clean break is not immediately achievable, courts consider whether this can be attained in the foreseeable future.
Where an order for the payment of a capital sum or for the transfer of property is inappropriate or insufficient in the circumstances, an order for periodical allowance may be made. To encourage a clean break these orders are granted in exceptional circumstances and must be justified in accordance with the applicable legal principles.
Furthermore, when awarded, such orders are generally limited to a maximum period of three years. In deciding whether or not there should be an award for a periodical allowance, the courts must have regard to the age, health and earning capacity of the party claiming the allowance, the duration and extent of the dependence of that parry prior to the divorce, any intention of that party to undertake a course of education or fainting, the needs and resources of the parties and all the other circumstances of the case.
Unmistakably, the key purpose of these financial provisions on divorce is to achieve a clean break and to minimise the inevitable conflicts which often arise as a result of default or delay in the payment of maintenance.
While in some cases the application of this regime is fair, there are instances where a certain degree of flexibility is required to achieve an equitable result. It is not always possible, for instance, for the wife to go back to gainful employment following a divorce, particularly if she has reached a certain age and has been out of employment for a considerable period of time. Conversely, a younger spouse with no dependent children might have more opportunities to engage in training and find suitable employment to attain financial independence from her husband.
This takes us back to the importance of the case-by-case approach. Where there are children their interests are to be given paramount consideration. Accordingly, while the spouses' financial responsibilities towards each other may be dismissed upon attaining divorce, there can be no clean break between parents and children. So while the statutory age of majority may differ from one country to another it is a widely recognised principle that until such time, or until such other age stipulated by law, parents have a continuous legal duty to maintain their children.
Divorce can be a distressing process. But various factors can mitigate the emotional and financial hardships associated with this course of action. Although divorce laws vary across European jurisdictions, there are fundamental objectives which should be at the core of every judicial system. Primarily, divorce laws should facilitate the legal termination of marriages with a minimum of hurt, humiliation and hardship.
Furthermore, from a financial point of view they should seek to promote a fair outlook of the economic consequences of the marriage breakdown. The contribution of the parties themselves is also vital in making the whole process less disturbing and more effective.
Their approach can effectively determine the outcome of their divorce. Not all divorces have to end up in court. It is possible to achieve an amicable settlement, provided both sides can put their emotions aside and act rationally. It is clear that divorce involves more than the physical separation of a family. It also separates a family financial1y. The ultimate goal in eliminating the monetary ties is to create two financially separate households from one. Untying this knot is not always an easy task.
Nonetheless a sound legal system, coupled with the parties' level headed approach, is bound to make the financial separation process less devastating.