It is no surprise that the increase in the costs of living is creating a huge strain on families. In March 2022, the ONS found that 83% of adults reported an increase in their cost of living. As interest rates continue to be increased by the Bank of England, I would not be surprised if that figure is now higher.
It is those who have a lower income who are likely to be impacted most of all and particularly those who have dependent children. It was also reported by the ONS that 48% of adults who were divorced or separated could not afford an unexpected expense compared to those who were in a relationship or were widowed.
Regardless of the above figures, it was already tough for families having just gone through the Covid pandemic. The rise in the costs of living could create or exacerbate several issues including child poverty, the tension between parents, and potentially separation. There may be many families who are unsure as to how their finances will be impacted which leads to a further negative impact on families. For those who are already in abusive relationships, it may lead to an increase in domestic abuse.
Financial worries which may have come about from the cost of living crisis could also have an impact on divorce settlements. Those persons who may have been hoping to retain the family home for the benefit of the children, now may not be able to afford to do so with the increase in mortgage rates. Those who are higher earners may have agreed to take on higher mortgages to provide a lump sum as part of the settlement and may be worried as to future affordability. It is possible to vary a financial settlement which can be done by way of an agreement. However, if the parties cannot agree on a variation then it is for the court to determine the issue. It is a high bar for the court to be persuaded that a financial settlement should be varied and usually only relate to significant financial changes. It seems unlikely that the change in costs of living would be successful.
If you are considering whether to separate from your partner or spouse at this stage, you may want to consider the following:-
- Fully review your outgoings and consider whether any of these need to be adjusted to accommodate future expenses so far as they are known.
- Consider whether the value of any assets may fluctuate for example the value of properties.
- Should you consider delaying resolving finances at this stage Whilst it is possible to delay reaching a financial agreement until the cost-of-living crisis has eased, there is no guarantee how long that will take and the risks may outweigh the benefits.
You should remember that once a financial settlement is approved by the court, it becomes final and therefore it is important that consideration is given to the impact any potential settlement will have on you in the future at an early stage. This is likely to include you seeking advice from an independent financial advisor.
If you would like to speak to someone in the Family Law team about issues relating to this article, please telephone 01642 356500/0191 2322574.
