Financial Provision upon Divorce in Scotland

Financial Provision

Upon Divorce in Scotland the main source of law governing how matrimonial property is to be divided is to be found in the Family Law (Scotland) Act 1985.

The Act provides that the net value of the matrimonial property at the relevant date is to be according to the principles laid down in the Act.

Principle A.

The net value of the matrimonial property should be shared fairly between the parties to the marriage. The net value obviously takes into account the deduction of matrimonial debts. The most prevalent example of this is whatever figure is left outstanding on the mortgage over the matrimonial home.

The concept of matrimonial property itself is a very wide one and generally means property acquired during the marriage and before the date of separation ( the relevant date) and before the marriage for use during the marriage. The definition extends to money savings insurance policies and pensions but does not include inheritances except in exceptional circumstances.

The division is said to be fair when it is an equal division unless an alternative division can be justified by what are known as special circumstances. This means that the court may take into account the terms of any agreement reached between the parties, the source of funds used to purchase an asset, the fact that a spouse may have destroyed or otherwise disposed of an asset, the nature of the asset itself , whether it is reasonable to have an asset realised, and finally account may be taken of the expense involved in the valuation of property itself.

Principle B

Fair account should be made of any economic disadvantage derived by either party from cohabitation with the other and of any economic disadvantage suffered by either party in the interests of the other party or of the family.

The classic example of the use of this principle occurs where after the marriage the wife finds herself in a position where she is earning less than her husband. Where the reason for this that she has taken " time out "to look after the children at home during the marriage and as a result is less employable when returning to work this is the sort of economic disadvantage in the interests of the both the other party and the family which is envisaged by the this part of the Act.

Principle C

Any economic burden of caring for a child of the marriage under 16 years should be shared fairly by the parties.

This is self explanatory and usually can used to the advantage of whichever spouse the children are to live with post Divorce.

Principle D

A party financially dependent on the other during the marriage should be awarded such provision as is reasonable to enable him or her to adjust over a period of no more than three years from the date of Divorce to that loss of support on Divorce.

This can be thought a s a cushioning provision and some attempt being made by the legislation to keep parties as far as is reasonable in the same financial position as was the case before the divorce.

Principle E

Provision may be made to relieve any serious financial hardship which results from the Divorce itself

When a marriage ends in divorce the court, before granting the divorce, must be assured that the parties have achieved a fair and equitable split of the matrimonial assets. Where the parties have been unable to agree on the split, the court can make various orders to ensure the assets are properly redistributed.

The Court is empowers to make 'such order, if any, as it thinks fit, having regard to the respective means of the parties to the marriage and to all the circumstances of the case...'

Scotland has a clean break system of divorce. This means that parties, on divorce should be allowed to get on with their lives. It also means that in general divorced parties should no longer be financially reliant on each other. As with all rules there are exceptions.

Matrimonial property can generally be defined as all the property of the spouses acquired between the date of marriage and the date of separation. some property such as inheritances are excluded from this rule. In general property should be split equally but the court can deviate from this.

The Division of Matrimonial Property

Matrimonial property is split according to the following principals.

1. The property should be shared fairly.

2. Account should be taken of any economic advantage or disadvantage gained or suffered by the parties.

3. The burden of caring for the children should be shared fairly between the parties after divorce.

4. A party who has been dependant on the other party should be awarded such financial provision to allow them to adjust after divorce.

5. A party who suffers financial hardship as a result of the divorce should be compensated.

The orders available are as follows.

Capital Sum payment

This is perhaps the most common order. The court can make an order that one spouse pays a lump sum to the other on divorce. Deferred capital sum orders can be made where assets such as pensions are not readily realisable. Thus a capital sum may be ordered to be paid from any lump sum paid on retirement.

Pensions are often, after the matrimonial home, the largest asset of a marriage. Pensions have to be valued by an actuary and the value of the pension for divorce purposes is that sum accrued from the date of marriage to the date of separation. There are also complex regulations dealing with pensions on divorce and the advice of a Solicitor is always required when pensions are an issue.

Periodic allowance

This is the exception to the clean break principal. A periodic allowance is a regular sum payable for a period after divorce. It is only granted in limited circumstances where a capital sum or transfer of property order is inappropriate or insufficient. Typically, they are granted for a year or so. The maximum period possible is three years.

Ailment of a Spouse

The obligation to ailment a spouse exists up until divorce. Once divorced the obligation is extinguished. The court can make an order for ailment whether or not divorce proceedings are pending. Any existing order for ailment automatically ceases upon divorce. For the financial provision for children see the Child Support Act section.

Property Transfer Orders

The court can make an order transferring property from one spouse to the other. This order can include all types of property but is normally used for the transfer of a house. Additionally, the transfer of a tenancy can be made.

Incidental Orders

In addition to the above, the court can make incidental orders. These include orders for the sale of property, to value property, for the regulation of use of property and to establish the liability for family outgoings. The nature and extent of an incidental order is not limited.

Orders for Disclosure

Where it is suspected that a spouse is concealing assets to minimise their liability the court can order disclosure. Such an order can be served upon a third party such as a Bank or Building Society ordering them to provide the court with information.