Marriage woes and recession
Nov 25 2008 by Karen Dent, The Journal
BEING in the midst of an economic recession imposes great strains upon us all, but particularly if you are fighting to keep your business afloat.
This may contribute to the fissures in what may be an unhappy and unsupportive marriage widening. However, many married couples may feel that they now have to stay together purely for economic reasons.
They will worry that with falling house prices there may be insufficient equity in the former matrimonial home to enable two alternative properties to be purchased. The credit crunch may also render it difficult to re-mortgage the existing property to fund a buy-out or obtain two mortgages.
The situation may be further complicated by the existence of a business. A husband/wife is entitled to have the value of their spouse’s business interests taken into account in determining what are the assets of the marriage and the financial resources available to the parties.
Thus the value of a party’s interest in a limited company, a partnership or a sole trader enterprise is as relevant as the equity in the former matrimonial home, transfer value of a pension scheme and cash deposits.
In the current economic climate, it is likely that the value of any business interests will be marked down, particularly if asset-based. When the court is considering the financial resources of the parties, it does so primarily based on a current open market value. A spouse cannot be immune from the market reality and only seek the benefits of “cashing in” when the market is high.
One consequence of this is that it is will cost less to buy/offset your spouse’s interest in your business, in which they may even be a partner or shareholder.
In addition, there are obvious advantages in achieving an income “clean break” from your spouse (ie not being liable to pay future maintenance) at this time in the economic cycle.
The reality is, of course, is that there is never a good time to separate and divorce, but now may not necessarily be a bad time. As ever early and proper specialist advice is what is required.
Ian Kennerley is a barrister and head of the Dickinson Dees LLP family law team in Newcastle.
