Monday, 9 September 2013

Breaking down the finances of breaking up

Dr Jane Mair on new research on separation agreements in Scotland. Private settlements have increased but public money should ensure everyone has access to legal advice.

Scots family law has a long history of contracts being used to regulate relationships – ante-nuptial (that’s what the English call pre-nups), post-nuptial, marriage settlements, separation agreements – there are examples of all of these being used widely and legally recognised going back centuries. 

In the 19th century, no wealthy couple – except the most foolish or reckless – would have considered getting married without a carefully drafted marriage contract. 

In the days when divorce was much more difficult, expensive and less socially acceptable than it is now many married couples would have formalised the end of their life together by means of a separation agreement. That way, without the final, costly, step of legal divorce, they would have been able to sort out their debts, make provision for maintenance of the wife and children and agree how to share the furniture – not to mention signaling to the outside world that they were no longer a couple. That was important because in those days a wife could “pledge her husband’s credit for necessaries” – ie buy food at the corner shop on her husband’s slate.

Marriage, family life and law have changed a lot since then, but far from being out of date, contracts and private settlements are still big news in Scots family law. 

Separations agreements doubled in a decade
We have just published a report into the use of separation agreements and, as expected, they are being used to a significant extent. Our study looked at a sample of 600 written agreements from 2010 and from that sample we estimated that, in relation to divorce statistics for that year, there is the equivalent of roughly one agreement to every two divorces. That’s almost twice as many as were being made in 1992 – the last year there was any research into these agreements in Scotland.

Separation agreements are no longer used as an alternative to divorce in the way they were in previous centuries. They are used now in conjunction with divorce actions. You still need to apply to court for the divorce itself but everything else can be sorted out privately, by agreement - property, money and children. Assuming, of course, that you can agree!

One of our findings was that in coming to agreement, women are in danger of losing out financially later in life. Women’s decision about whether to retain the family home or renounce their entitlement to a partner’s pension might make sense in the here and now, but may have a long-term negative impact on their income.
While the majority of women still take on the care of children, there appeared to be little recognition of the financial cost that such care brings and a significant number of women said they were struggling financially following separation.

Separation agreements have grown in popularity and appear to serve families well. The number of separation agreements has doubled since 1992 and the majority of agreements we looked at were being stuck to. A key factor highlighted by many was the need for access to good, affordable legal advice. To make sure that everyone benefits from this way of arranging post-separation life, we need to make sure it’s not just the wealthy who can afford to make the best arrangements.

Media coverage in The Herald  9 August 2013
Contact: Jane Mair 

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