Divorce legislation changed on the 6th April 2022 with the Divorce, Dissolution and Separation Act 2020.
This change removed the necessity for any party to be at fault – a monumental update to the process of divorce and to the advice you give your clients.
Since at least 1969, divorce proceedings have centred on one party or the other being at ‘fault’, which campaigners have long argued means someone needs to be blamed even when the decision is mutual.
From April, individuals will be able to unilaterally seek a divorce if the marriage is deemed to have broken down irredeemably.
Currently, there are five grounds for divorce:
Adultery
Unreasonable behaviour
Desertion
Separated for two years and both parties agree to the divorce
Separated for five years and one side petitions for divorce.
After 6th April 2022, the no fault divorce will remove these grounds, making divorce easier to apply for and potentially less expensive for your clients – in the short term.
The no fault divorce update to divorce proceedings will remove the five grounds for divorce and mean there is no need to put the blame on either party for marriage breakups.
Critically, this does not change the need for financial settlement hearings, so advice from experts around this sensitive area will continue to be essential.
No fault divorce legislation came into force on 6th April 2022 through the Divorce, Dissolution and Separation Act 2020.
The UK government states that the aim of no fault divorces is to “reduce the potential for conflict amongst divorcing couples”.
By removing the need to make allegations about a spouse’s behaviour, couples can legally separate in a calmer manner.
The Act does bring in a new 20-week ‘cooling off’ period between the start of proceedings and application for conditional order.
This is intended to give couples a length of time to reflect on the proceedings before going ahead.
The previous process ended completely on 31st March 2022 and applications started before this date will have to be completed by then, or else have to begin the process again on the new system from 6th April.
There will be a period between 31st March and 6th April where there will be no access to online government divorce systems.
The key theme is that divorce will become easier and, in theory, much less complicated.
It does also mean though that clients who previously thought they knew the process will need some extra help and advice to absorb the new way of doing things.
The key consideration of the no fault divorce will remain the division of shared pension pots between spouses. How this is done will not change, but the average time for parties to wait for divorce finalisation is likely to decrease after 6th April.
Hasty divorces may have unintended negative consequences if specialists aren’t consulted, with the subject of pensions requiring particularly expert advice. For example, clients may underestimate the value of their pension pots, leading to unbalanced division of funds post-divorce.
This presents an opportunity for pensions advisers to approach existing clients and talk to new leads about the importance of pensions advice in the divorce process.
Similar to pensions, the new Act makes no specific legal changes to how the financial affairs of both parties are negotiated.
However, the change in speed of divorce will undoubtably create opportunities.
For example, those just beginning the process may have expected to have to wait two to five years for divorce finalisation, but now have just twenty weeks to agree the division of wealth and assets. Financial advice will be critical for divorces done at pace.
Financial advisers should also be mindful that, with blame not playing a part in the divorce itself, the wrangling and conflict may be more likely to occur whilst the finances are being sorted.
Acrimonious divorces may actually become more frequent due to either party being able to instigate proceedings, regardless of the other’s wishes. Astute financial advice will be the key for clients having to negotiate this journey.
Form E will continue to be used in financial settlements with which IFAs can provide much needed expert assistance.
Mortgage brokers may see an upturn post-6th April with potential divorcees no longer having to show that they have lived separately for two or five years.
With the whole process soon to take just 20 weeks, clients may be looking to purchase a new property sooner rather than later.
With interest rates set to continue rising, clients may also wish to act in advance of further rate rises.
Divorce applicants have always been required to submit their accounts and this will not change now that the new act has come into force.
However, financial affairs may need to be deal with more urgently due to the new 20-week timeframe.
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