You got your divorce award. Will you have to give it back?
In a landmark case, divorcees could find that creditors try to claim their assets if their ex-partner goes bankrupt. By Paula Hawkins
Sunday 02 December 2007
If you think divorce signals the end of your financial relationship with your spouse, think again. Depending on the outcome of a current Court of Appeal case, ex-partners may find that assets awarded to them during a divorce could be taken away if their former spouse goes bankrupt within five years of the split.
Wendy Haines was awarded the proceeds of her matrimonial home in a divorce settlement in 2003. When her ex-husband went bankrupt two years later, the bankruptcy trustees sought to set aside the divorce order and recover the money from the sale of the home. Their initial attempt failed, but in May this year a court ruled Mrs Haines could be forced to hand over the assets awarded to her. She appealed and is now awaiting a decision, which should be made before the new year.
If Ms Haines loses, it could open the way for other divorcees to lose assets. "There is a period of vulnerability," explains Ann Thomas, a solicitor at Boodle Hatfield. "If the individual is insolvent at the time a settlement is made, there is a five-year period in which assets are at risk. If not, the period of vulnerability is shortened to two years."
Ms Thomas says the case could lead to situations in which disgruntled spouses deliberately incur debts in order to overturn an award. "There is a chance that a particularly malicious husband who has had to give part or all of the family home to his wife could live a reckless life which would lead to bankruptcy. The ex-spouse could then be pursued by the creditors."
But she adds that even if Ms Haines loses, it would not necessarily put all recent divorcees at risk. "In this case, the bankruptcy was foreseeable at the time of the divorce. I think this case belongs in a different bracket from one in which there is no prospective disaster looming. I think it is unlikely we will see that a spouse is vulnerable every time there is a bankruptcy within five years."
The result of the case will coincide with what family lawyers call divorce season. "There are always a very high number of petitions in the new year. People are thinking about starting afresh," says Ms Thomas.
If you are contemplating a split, she has some advice: choose a solicitor who is a member of Resolution an organisation set up to promote a non-confrontational approach to divorce.
Also, do not expect everything to be divided equally. There a number of factors at play, such as what assets each party brought to the marriage, whether there are children, and the needs of the divorcing parties. What's more, conduct during the marriage has little influence on the nature of the financial settlement. In other words, even if one spouse is unfaithful or violent, their actions do not automatically translate into a more beneficial settlement for the other spouse.
Divorcing women, in particular, are urged to consider future pension provision.
- 1 Woman falls to her death as she celebrates marriage proposal at the edge of Ibiza cliff
- 2 Venezuela Expo Tattoo 2015: Extreme body art from 'Vampire Woman' to 109mm earlobes
- 3 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 4 Dad attempts revenge on teenage daughter, plan backfires spectacularly
- 5 Ball pool for adults opens in London
9 reasons Greece's experiment with the radical left is doomed to failure
Have we reached 'peak food'? Shortages loom as global production rates slow
Greece elections: Syriza and EU on collision course after election win for left-wing party
British grandmother Lindsay Sandiford faces execution by firing squad in Indonesia
Liberal Democrat minister defends comments suggesting immigration causes pub closures
King Abdullah dead: We can't afford not to hold Saudi Arabia's royals to account
iJobs Money & Business
£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...
£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...
£13000 per annum: Recruitment Genius: This Pension Specialist was established ...
£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...
Day In a Page
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion