One home into two

Home is where the heart is, but when relationships break down the family home is also usually the largest asset in a divorce. More than half of divorcing couples have children under 16-years-old, so the main consideration is how to keep a roof over their heads and ensure a secure home for the parent with care.

It used to be fairly simple '“ the wife kept the family home for her and the children with the husband making do with whatever resources remained.

However, with more fathers being actively involved in the care of their children, housing the husband in a suitable home for the children to spend at least part of their time with him creates an extra pressure to finance two family homes from one.

Financial arrangements

In the early days following a decision to split up, rather than being a refuge, the family home may be a battleground. It can be difficult for separating couples to keep their distance from each other and this can have implications for not only the ongoing relationship between them, but also their relationships with their children.

If practical, one may find alternative accommodation but this may be difficult before the financial issues have been explored and resolved and it could also impact on future arrangements. It is often a tactical decision whether or not one spouse should leave the family home. It may have the effect that the spouse remaining in the home loses the incentive to negotiate matters, as the stress of 'living apart together' has been removed.

Someone leaving the family property may also find it difficult to successfully argue later that they want to retain the property as part of a final financial settlement, particularly if the children remain at home with the other party. It is often beneficial for parents, and fathers in particular, to remain in the family home as it can establish patterns of co-parenting which can continue into the future when the couple physically separate. Children thrive on routine, structure and stability, and relationships strengthened by remaining in the home while finances are sorted are less likely to be threatened by the impending physical separation.

If one spouse decides to move in with a new partner, this can impact on how finances are resolved as the financial arrangements between the new cohabitees need to be disclosed as part of negotiations. Many new relationships find it difficult to manage this intrusion into, what should otherwise be, a happy beginning. Many do not survive it.

Unless there are issues such as family violence or health concerns, most family lawyers advise their clients to remain in the home, if possible, until a final financial settlement is agreed. The English courts do not allow the family home to be sold before a final financial order is made and accordingly, many couples therefore find themselves 'living apart together' for some time. This may be an area for reform, as some jurisdictions, such as Australia, allow the family home to be sold before a final financial order is made, including partial equity release before final settlement is reached.

While 'living apart together', couples should be advised to be very mindful of the need to protect their privacy. Practical measures such as arranging for mail to be redirected to a family member or friend, ensuring mobile telephones are kept away from prying eyes and deleting internet browsing histories after a 'surfing session', should be considered. Sensitive or confidential material should be password protected on computers. Important documents should be removed from the home and delivered to a safe haven. An aggrieved spouse should think very carefully, if tempted to violate their spouse's privacy, as any resulting documents or information will need to be disclosed as part of financial negotiations in any event and such behaviour risks souring an already acerbic relationship.

Getting divorced

If a 'non-fault' divorce is sought, the most common fact relied on in a divorce petition is that the couple has been separated for two years. They can be 'separated', even though they are living together under the same roof, provided they are living completely separate lives. The courts look at practical issues such as whether or not a bedroom has been shared, whether meals have been taken together, the domestic arrangements such as washing and cleaning and payment of household bills and other expenses.

If a divorce is based on the fact of unreasonable behaviour, the particulars given in the petition will not be negated by the couple carrying on living together so long as the behaviour relied on is continuing at the time the court is asked to grant the divorce. If the unreasonable behaviour is not continuing, then the same practical information, as detailed above, needs to be provided to the court, to prove that the couple are living completely separate lives under the same roof.

Re-housing options

There have been recent reports of some couples deciding that their priority is for the children to stay in the family home so they purchase a smaller second home for the adults to share, with each parent living in the main family home with the children in 'shifts'. Others have been reported to have divided up the house to enable each spouse to have their own living space while remaining under the same roof. While these solutions appear to follow the principle that the children's interests are paramount, as stipulated by the legislation, they are rather unusual and generally only work where the parenting relationship is extremely strong and the children's personalities allow them to adapt easily to the situation.

The potential for ongoing conflict between the parents is very high and these types of solutions often do not recognise the need for each parent to establish a clean break from the other to get on with their lives. A court would be highly unlikely to impose such a solution. In reality, this can only be achieved consensually.

Re-housing options depend significantly on the family's asset and income position. Family lawyers provide advice looking at the total asset pool, including pensions, and each party's respective incomes. However, the three main options are:

• Selling the family home and distributing the proceeds to enable both parties to re-house themselves and the children. The sale price will obviously be affected by the current housing market and there may be mortgage redemption penalties as well as the usual selling costs. The couple will need to agree, taking into account all other assets (including pensions), what equity each will receive. This is usually the solution where neither one can afford to buy out the other's share.
• One spouse transferring his/her share in the home to the other spouse. The transfer can be with or without payment depending on the couple's asset and income positions. It can involve one party indemnifying the other in respect of the mortgage or the transferring party remaining liable for the mortgage. There may be capital gains tax issues for the transferring party if endowments are transferred. This solution can work where there are sufficient other assets in the pool to offset the transferring party's entitlement.
• One spouse retaining the family home until the youngest child completes education and then a deferred sale with a split of the equity. This usually works where there the children are older and have, say, three to five years of school left. The spouse who leaves the property may have to wait a long time for their money from the house and the solution provides no capital for them to re-house themselves in the meantime. This solution merely defers the problem and keeps the couple mutually dependent on each other until the children leave school. It can also lead to 'control' issues between the spouses if, for example, if repairs to the home are needed.

Standard of living

Couples should recognise that their standard of living is likely to change following a divorce. Compromise may be needed on the quality and/or size of new accommodation and a move to a less desirable area may be unavoidable.

However, divorcing couples should try to ensure that their children continue at the same school to minimise the impact of the divorce on them.

If there are insufficient resources, a spouse who has previously stayed at home to care for the children may have to return to work, at least part time, a party may need to maximise his/her income.

Family lawyers generally advise divorcing couples to maintain the financial status quo until financial affairs are finalised. It is very important that mortgage payments are maintained to avoid a damaging credit history. Household bills and expenses such as school fees should be continued to be paid as they were during the marriage.

Child support obligations are separate and in addition to financial matters between the spouses. For example, if a father was to transfer his equity in the family home to the mother, this does not necessarily offset or reduce his child support obligations as calculations are based on income rather than capital.

Suitable solutions

As well as receiving appropriate legal advice, divorce clients also need appropriate financial advice to find the solutions that are right for them. There are several considerations to find the right mortgage for the new home: borrowing capacity, lending criteria, the possible use of guarantors and the crucial question of whether child support payments are be taken into account as income. Expert advice may also be needed on pensions and investments. Specialist mortgage products for divorcing couples, such as Yorkshire Building Society's 'Fresh Start', can assist in this regard. Any possible taxation implications of a proposed financial settlement should also be explored.

A divorcing person should also be advised to contact credit reference agencies to let them know that they are no longer financially linked to their ex-spouse.

Divorcing and moving house are said to be among the most stressful life experiences. When they happen together, they can be even more stressful. But good advice on finding practical solutions to legal and financial problems can help take away some of the uncertainty which causes the greatest anxiety for divorcing couples.