Divorce for British Expats: How the English Courts Deal with Financial Matters
In England, an infamous report by the Office for National Statistics concluded that 42% of all English marriages eventually end in divorce., It is a commonly held perception amongst British expatriates (i.e. UK citizens residing overseas, also referred to as “expats”) that divorce is far more common within the expat community than for those still living back home.
The cause of the higher rates of divorce amongst expats might be related to the physical and psychological disconnection from their home, or perhaps there are challenges for the “trailing spouse” whose role within the marriage changes abruptly.
Or maybe, expats are by definition people who are willing to embrace change to their lives, and are therefore less squeamish about making significant changes to their personal lives.
Regardless of the reason, whenever the issue of divorce arises amongst British expats, one of the first questions they will need to ask themselves is: in which jurisdiction should the divorce take place?
Must a British Expat Divorce in the Foreign Country He’s Residing in?
For British expats worldwide, divorce and the financial matters arising can usually be dealt with through the English courts. This is because proceedings can be initiated in England based on the parties’ “domicile of origin” even for those who have lived abroad for years.
Contrary to popular belief, it is not necessary to divorce in the country in which the couple were married or in which they live now.
Although the financial matters in the vast majority of divorce cases are settled via negotiations, the choice of jurisdiction sets the framework against which those financial negotiations take place.
In that context, this article provides a broad overview of how the English courts approach financial matters, i.e. division of assets and maintenance, during a divorce.
How does the English Court Deal with Financial Matters in an Expat’s Divorce?
The English court has wide-ranging powers to re-allocate capital and pension funds between the separating couple regardless of strict legal ownership or source of funds.
Future income can also be shared by way of spousal and child maintenance and also a school fees order.
The English courts do not take a structured approach or apply a standard formula for calculating the division of assets and income on divorce.
The court has a duty to consider all the circumstances of the case and take into account the factors set out in section 25 of the Matrimonial Causes Act 1973 (referred to as “the section 25 factors”).
The section 25 factors are as follows:
- Capital and income resources available to the parties, either existing or reasonably foreseeable;
- Details of the financial needs of parties, including:
- Standard of living;
- Age of parties and length of the marriage; and
- Any disabilities suffered by parties
- The court also considers any of the following additional factors:
- Contributions made by each party;
- Conduct of each party (only to be considered in exceptional cases); and
- Any benefit either party will lose as a result of the divorce (e.g. spouse’s pension).
In considering the section 25 factors when calculating the division of assets and income, the first and paramount consideration, however, is the housing and income needs of any children below the age of 18 (and therefore the needs of the primary carer).
The section 25 factors are therefore subject to the needs of any children.
The principles that apply when considering the above factors are found in a vast body of case law. The most commonly encountered issues are:
1) The definition of “matrimonial” assets
The starting point is that assets acquired during a marriage (known as matrimonial assets) are divided equally. This usually includes the equal division of the matrimonial home, even if it was owned by one of the parties before the marriage.
2) The definition of “non-matrimonial” assets and how they should be shared
Non-matrimonial assets are those acquired or brought into the marriage by one party before the relationship or received during the relationship by way of an inheritance or gift.
When considering how non-matrimonial assets are to be shared, the needs of the parties, the duration of the marriage and the treatment of those assets during the marriage are relevant. In a long marriage, it is likely that non-matrimonial property will have become merged with or treated as matrimonial and will therefore be more likely to be shared equally.
By contrast, in short marriages, the non-matrimonial assets are unlikely to be shared, unless the basic needs of the other party or the children cannot be met without “invading” the non-matrimonial assets.
3) The amount and duration of maintenance to be paid
When deciding how much maintenance should be paid and for how long, the court will consider the needs specified by the payee in a budget, any earning capacity they have, the standard of living during the marriage and the payer’s ability to pay.
The amount and duration of maintenance tends to be more generous where there are young children or after a long marriage. Where the payee has been the primary carer of children and the trailing spouse, the duration of maintenance also tends to be more generous.
What if You Can’t Afford to Pay Your Legal Fees?
A relatively recent development in English law is that a party to a divorce can make an interim application to require the other party to pay their legal fees.
This is usually considered when the applicant does not have their own income or savings and cannot access a commercial loan, while the other party has complete control of the couple’s finances. The idea is to ensure “equality of arms” before the court so that both parties can benefit from legal representation.
Financial Relief for British Expats Who Choose to Divorce in Singapore
If a British expat residing in Singapore makes a strategic decision to divorce there, they should be aware that subsequent financial claims could be made through the English courts by their spouse under Part III Matrimonial & Family Proceedings Act 1984 after the Singapore divorce has been finalised. Any settlement proposals should therefore take into account the likely outcome if the divorce had proceeded in England.
The English courts can grant such financial relief to alleviate adverse consequences where the provision made by the Singapore court is deemed to be inadequate.
The decisions made prior to a divorce can have far-reaching implications for both parties and their children. It is essential that British expats considering a divorce take early advice from an English lawyer and a Singaporean lawyer so that they can compare and contrast the differences and likely outcomes of their divorce, in both jurisdictions.
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