If you and your spouse are not legally separated but are living apart, this is referred to as an ‘informal separation’. It is important to be aware that informal separation can harm your divorce financial settlement, e.g. if your circumstances, or those of your spouse, change during this period. One solution to protect your interests is to enter into a Separation Agreement with your spouse. While not legally binding, a Separation Agreement drafted in a way that is fair and reasonable to both parties can protect your financial interests in the event of an informal separation.
Benefits of a Separation Agreement
Separation Agreements provide greater certainty regarding financial arrangements for spouses during an informal separation. A Separation Agreement is an agreement between individuals who are considering imminent separation or have already separated but have not yet gone through the process of divorce. Most couples who enter into a Separation Agreement are married or in a civil partnership. It is also possible for cohabiting couples to enter into a separation agreement.
The Separation Agreement normally sets out financial arrangements during the period of separation. They normally set out how the separating couple’s finances will be divided in the event of divorce or dissolution. A Separation Agreement may include:
- How shared matrimonial assets will be divided in the event of a divorce
- Any maintenance payment (i.e. for a separate accommodation)
- Any day-to-day care arrangements for children
Separation Agreements are often used by couples who have not yet been married for 12 months and cannot legally divorce. They are also used by couples who do not want to divorce for religious, cultural, or personal reasons.
Issues with being separated but still legally married
There are several legal issues associated with being separated but not divorced, some of which may result in you not receiving a fair divorce financial settlement:
- Financial uncertainty on the shared assets and debt
- Provides a window of time for your partner to hide assets
- Reduction in spousal maintenance
- Changes in the circumstances of your spouse
- Inability to remarry
Financial uncertainty regarding shared assets and debt
Separating without divorcing can lead to considerable financial uncertainty. It is important to understand that separating without divorcing means that you are still liable for any debts. In addition, you may have less visibility on how your shared matrimonial assets are being handled by your spouse, which may reduce the overall matrimonial pot. If you own a property with your spouse, getting a Matrimonial Home Rights Notice will help to protect your shared home from being sold without you knowing.
Provides a window of time for your partner to hide assets
Another issue with separating but remaining legally married is that it allows more time for your spouse to hide assets in a divorce. Some spouses may use this window of time between informal separation and divorce to dispose of assets or otherwise put them out of reach. If your partner hides assets, this may result in you receiving an unfair divorce financial settlement when you decide to divorce or dissolve your civil partnership.
While the courts require 12 months of financial statements (i.e. financial disclosure) when deciding on a divorce financial settlement if you have been informally separated for longer than this, not all transactions will be shown. This may result in assets going ‘missing’.
Reduction in spousal maintenance
One of the reasons to be wary of informal separations is that if your living standards fall during this time, for example, if you have to move into a smaller property, this may negatively affect your spousal maintenance. This is because the court may take the view that your needs are now less than before, potentially resulting in reduced or no spousal maintenance being awarded.
Spouse circumstance changes
Another common occurrence during informal separation is that your spouse’s circumstances may change, resulting in a smaller divorce financial settlement. For example, if your ex-spouse loses their job or falls ill during your informal separation, a judge may decide that they need a larger divorce financial settlement.
Your partner may also decide to move abroad, making it much harder to keep track of your marital assets and to process your divorce. Likewise, any assets that you acquire during your informal separation period could potentially have a negative impact on your final divorce settlement, again because this may alter the court’s view of your needs.
Inability to remarry
Remember, by separating informally, you will not be able to get married or enter into a new civil partnership. Starting the process of legal separation means you will be able to remarry once you receive your Final Order.
All of the issues outlined in this article above apply whether you are formally or informally separated. The difference is that being informally separated allows more time for these issues to arise. In either scenario, a Separation Agreement can help to protect your interests, ensuring that you receive a fair financial settlement when you do decide to divorce.
To ensure that your financial interests are protected in the event of an informal separation, please speak to our family law solicitors for advice and guidance. Having listened to the details of your situation, we will do all we can to ensure that your marital assets are protected and you receive the best possible financial settlement if you later divorce.
