Navigating divorce as a stay-at-home spouse
- Describe the role of a stay-at-home spouse and the impact it can have on an individual’s financial security
- Identify the measures that can be taken to ensure financial independence for both parties, particularly in the event of divorce
- Explain the tax advantages of having shared responsibility for family finances
- Describe the role of a stay-at-home spouse and the impact it can have on an individual’s financial security
- Identify the measures that can be taken to ensure financial independence for both parties, particularly in the event of divorce
- Explain the tax advantages of having shared responsibility for family finances
London has long been regarded as the divorce capital of the world, largely due to the perceived generosity of this country’s courts towards the financially weaker spouse.
This dubious honour followed the landmark case of White v White [2000] UKHL 54, in which a farmer’s wife, who had been awarded just a fifth of the marital pot upon divorce, successfully argued that she should be entitled to an equal share.
Their contributions to the marriage – hers in raising their children and his in working on the farm – deserved equal recognition, she said, and the House of Lords agreed. The ruling in 2000 stated: “There should be no bias in favour of the money-earner and against the homemaker and child-carer.”
Lord Donald Nicholls added: “As a general guide, equality should be departed from only if, and to the extent that, there is a good reason for doing so.”
While most of us do not enter into a marriage or civil partnership planning for the day it will end, records show that more than 40 per cent end in divorce, and so it is wise to at least consider what would happen if the relationship breaks down.
This is even more important for clients who take on the responsibility of homemaker and, without proper safeguards in place, may end up putting their own future financial security at risk.
Stay-at-home spouses
Most often, the financially weaker party in a divorce is typically the person who has put their career on hold to fulfil caring responsibilities such as looking after children or elderly relatives.
They may have reduced their hours, responsibilities or even given up work altogether if their spouse was able to support them on a single income.
The contribution made by stay-at-home spouses is often invaluable. However, while the starting point for division of assets upon divorce is 50/50, people tend to forget about the long-term financial implications such a move can have.
It is common for one half of a couple to spend several years out of the workforce, particularly with the spiralling costs of childcare, but individuals who do so may miss out on important opportunities for career advancement, which in turn affect their future earning potential and any savings and/or pension contributions they may have accrued.
The longer they spend out of work, the more difficult they can find it to get back in.
Lack of financial independence and/or oversight of the family finances can leave people feeling powerless and vulnerable.Claims for compensation exist but are rare and tend to be restricted to those matters where the individual sacrificed what would have been an extremely lucrative career.
