Published: 12 January 2017
Area of Law: Family Mediation, Family Wealth Preservation & Planning
How to fund your divorce as a stay-at-home parent
It goes without saying that going through a divorce can be a difficult and daunting experience and it is little wonder that the prospect of proceedings, coupled with the cost of funding a divorce , can leave people feeling trapped.
Aside from the heartache and stress, one of the biggest issues for people seeking a divorce is being able to fund it. The law states that each person in a marriage breakdown must fund their own divorce proceedings and if you are the stay-at-home party – no matter whether you’re a parent who has been looking after the children or the spouse of a millionaire – the ‘working party’ is not expected to foot the bill, in the first instance. Not having your own income or access to income, perhaps because it is tied up in assets such as property or a business, can cause significant financial and emotional distress.
Exploring what your funding options are can help to level the playing field and arm those who do not have the cash reserves, with the means to compete with the ‘earning’ party – making divorce no longer a cash-rich game. Stay-at-home parents should not be penalised in divorce proceedings or feel trapped in a marriage because of their financial status or earning potential.
For most families, wealth is tied up in the family home, another property or company assets and more often than not, this wealth cannot be realised until the end of the divorce case without the consent from both parties. For example, you may be living in a property with equity, but with no liquid cash; or you could be the party with significant shareholdings who cannot, due to corporate realities, immediately realise assets to access funding.
In reality, those with liquid capital and income are able to fund divorce proceedings far more easily than those who have capital tied up in assets, such as property. This has an even larger impact on those who have no other source of income and have agreed that they will be the stay-at-home party – looking after the children, for example.
Despite this, there have been attempts to redress this uneasy reality. Creative funding methods have been developed to bridge the gap to ensure there is equality of bargaining power when it is required most.
Litigation loan funding is now widely available through a number of providers for all levels of cases and can be a useful tool in easing cash flow issues for the client . Some providers specialise in giving individuals access to justice by lending products to individuals needing to purchase legal services, which are later recouped on settlement.
As a final resort, applications can now also be made to Court for a Legal Fees Order; a specific application for the wealthier spouse to pay the ‘poorer’ spouse’s legal fees. The Judiciary also has powers to order interim sales of property to fund Legal Fees Orders – which can be beneficial in cases where both parties are capital rich, but income poor.
In reality, cash is king and that applies to whether you have modest earnings or have £millions held in assets. Without accessible income, help must be found through alternative means to ensure that you don’t feel trapped, no matter what your financial position is.