TIPP FM LEGAL SLOT
MARRIAGE BREAKDOWN – PROPER PROVISION PROTECTING YOUR ASSETS
When a couple separate or divorce how is it decided what assets each are entitled to?
This can be done in two ways:
- By the parties agreeing between themselves as to what each will take from the assets available- If no agreement can be reached there are options like mediation may assist;
- If ultimately the parties cannot agree then the matter will be brought before the courts and the Judge will decide (this option takes control away from the parties)
How does a court decide?
In dealing with the breakdown of a marriage the courts will look to make what is deemed to be “proper provision” for the parties involved. There overarching aim is fairness and justice. The court will consider a list of criteria and arrive at the asset or financial split based on this criteria.
These Criteria Include:
- the income, earning capacity, property and other financial resources which each of the spouses concerned has or is likely to have in the foreseeable future
- the financial needs, obligations and responsibilities which each of the spouses had or is likely to have in the foreseeable future (whether in the case of the remarriage of the spouse or otherwise)
- the standard of living enjoyed by the family concerned before the proceedings were instituted or before the spouses separated, as the case may be
- the age of each of the spouses and the length of time during which the spouses lived together
- the physical or mental disability of either of the spouses
- the contributions which each of the spouses has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution made by them to the income, earning capacity, property and financial resources of the other spouse and any contribution made by either of them by looking after the home or caring for the family
- any income or benefits to which either spouse is entitled by or under statute
- the conduct of each of the spouses if that conduct is such that in the opinion of the court it would in all the circumstances of the case be unjust to disregard it
- the accommodation needs of either of the spouses
- the rights of any other person other than the spouses but including a person to whom either spouse is married
Is it better to agree if possible?
The Courts have expressed support for the notion that couples can make agreement between themselves as to how they wish to order their affairs. Any such agreement should be given significant weight should either of the parties later wish to re-visit the matter. This is particularly important if the couple at the time of coming to the agreement had specified that it should be final.
The courts then, should only get involved to alter the situation after this, if such an agreement does not “properly provide” for one party or if the circumstances of one or other of those involved have changed dramatically since this was entered into.
In a similar vein, the courts have indicated that any windfall or wealth which one party gets after the couple’s relationship has formally ended or, very importantly, assets which were inherited by one party should not automatically be open to a claim by the other unless they were involved directly in obtaining same. Any such assets however, may be considered relevant to the “proper provision” criteria.
Does Separation or Divorce Really mean the end?!
While the formalising of Separation will recognise that a couple are no longer living with one another as husband and wife and a divorce will legally end a marriage there are some limited cases where any division of assets that has taken place in doing so can be re-visited and varied. Maintenance is an example of this.
Is Clean Break a reality?
There is no provision for a “clean break” in Irish family law legislation. However, the Courts have accepted that there is a principle of law that supports any effort made by the Courts or parties to arrive at finality or closure, wherever possible. This is particularly true in a breakup where there are ample resources to cater for both parties (and their dependents) needs.
Change in Circumstances
What then, if an agreement or court order is made and one or other of the parties finds themselves in a situation where their financial position after the matter has been finalised changes so that the terms entered into now affect them very differently down the road? (for example, if assets divided were to significantly reduce in value or one party was to earn much less etc) This situation came before the High Court on two occasions recently and the courts have taken the view that unless the change that has occurred makes the previous terms impossible to comply with they will be very reluctant to alter what was intended to be the final settlement.
Criteria to Alter
If a party is looking to re-visit their settlement, as well as the above, they will have to show the court that:
- New events have taken place since the previous court order was made;
- These new events happened relatively soon after the previous order;
- They have not delayed in making their application to alter the old terms;
- No other party who may have an interest in any of the assets involved will be negatively affected if a change to the order is made.
Recent cases provide those who have entered into Judicial Separations and Divorces some certainty, in that the terms which result will seem to stand unless there are exceptional circumstances which would make it unjust and unfair for them to remain.
If you have reached agreement on separation and later apply for a Divorce can the initial agreement be changed?
This is interesting as it was the subject of a landmark Supreme Court decision in 2012 in the case of G v G
Implications of G. v G:
There are a number of matters decided in this case, the most relevant of which appear to me to be the following.
- The first and most important matter is that a Settlement with a “full and final settlement” clause whether by Deed or Consent can only be varied in the most acute circumstances of change;
- Secondly, “second bite cases” brought because there is an increase in the other spouse’s value are effectively ruled out.
- A “clean break” between spouses is not a right in Irish law but is a legitimate aspiration.
- Substantial change (as in illness) needs to exist to justify an application for further provision. If there is no change, there is no new provision.
- While G. v G was a divorce case post a deed of separation, the Court made a general observation as regards inherited assets relevant to cases first before the courts. It stated at page 13 point (xv):-
“Assets which are inherited will not be treated as assets obtained by both parties in a marriage. The distinction in the event of separation or divorce will all depend on circumstances. In one case, where a couple has worked a farm together, which the husband had inherited, the wife on separation sought 50%, however, the order given by a court was 75% to the husband and 25% to the wife. This is a precedent to illustrate an approach, but the circumstances of each case should be considered specifically.”
The decision in G. v G has had major implications in marital family law. It now means a resolution of marital differences can be reached in full and final settlement without fear of further review for the sake of it. Further “second bite” cases are ruled out unless very specific changes in circumstances exist which does not include an increase in wealth per se. The terms of applying for further financial relief in changed circumstances are set out in narrowly and are difficult to achieve. The Court observed that it is not there to “redistribute wealth”
As regards the percentages of division, G. v G will clearly have a sobering effect. In cases post T. v T. , the “yardstick” was followed with variations up or down depending on value and circumstances.
Is it possible to protect your assets in a separation or divorce?
One of the ways people can try to do this is by having a pre nuptial agreement setting out how the parties will divide their assets and deal with their finance upon Divorce or Judicial Separation
While an Irish couple is not prevented from signing a pre-nuptial agreement in Ireland, the Irish courts are not obliged to enforce such agreements if the couple’s relationship later breaks down.
It is a rather a grey area and it remains to be decided as to what impact these agreements have where the parties separate.
While these agreements are not illegal our constitution places great value on the institution of marriage, so some would argue that you cannot enter into an agreement which envisages the break up of the marriage as it is contrary to the whole concept of marriage. Essentially, by drawing up a pre-nuptial agreement a couple is preparing for the future break up before the marriage even begins!