The risks of negotiating a divorce settlement directly with your spouse

This week a case has made headlines which showcases the risks of negotiating a divorce settlement directly with your spouse, referred to as”over the kitchen table”. We look into the problems associated with not taking comprehensive legal advice when dividing matrimonial assets.

Beware of “kitchen table” settlements 

Divorcing couples are very often attracted by the idea of negotiating with their spouse directly to reach an agreement regarding the division of the matrimonial assets. Indeed, courts encourage the parties to try and reach an agreement without embarking on lengthy and costly court proceedings. Not only does this have the advantage of preserving the “pot” as far as possible for the benefit of the parties and any children, but it is also clearly beneficial to try and part company amicably. Usually, an impartial professional third party is involved through a recognised alternative dispute resolution process.

The risks of negotiating splitting matrimonial assets without a third party present

One very recent case illustrates the risk of trying to negotiate directly with your spouse.  A millionaire ex-banker reached an agreement with his wife of 15 years which resulted in her receiving more than £2 million. Although this was less than a 50-50 division of the marital assets, which is generally appropriate in long marriages such as theirs, he subsequently felt that this was £1 million too generous and sought to blame the lawyers who he had consulted in the background, suing them for negligence. He argued that the lawyers had failed to advise him about the distinction between assets brought into the marriage and those built up during the marriage. He said that some of the pension which he had offered to share with his wife accrued before they met and he should not have had to share it. He further stated that he should only have had to pay a lump sum of £100,000.

The lawyers argued that this was a classic case of hindsight in which the husband wished he had done things differently and achieved a better result. The judge agreed, ruling that his lawyers were not to blame as he had thrashed out key parts of the deal himself “over the kitchen table” including agreeing to pay her £1million and signing the agreement without telling them. His solicitors were also unaware of other concessions which he had made in his direct discussions with his wife until after they had been made. The solicitors had not been asked to comment on the concessions and had incomplete information on which to advise.

He was ordered to pay £35,000 in respect of their unpaid fees.

Why you should seek legal advice when dividing matrimonial assets

This case illustrates the danger of taking short cuts in the hope of reducing legal fees. Whilst there is no problem with trying to agree some terms directly with your spouse if you are reasonably amicable, this should always be subject to taking comprehensive legal advice. This can only be given on the basis of complete instructions and full financial disclosure.

Disclaimer
Although correct at the time of publication, the contents of this newsletter/blog are intended for general information purposes only and shall not be deemed to be, or constitute, legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. Please contact us for the latest legal position.