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Divorcing in a Recession: Money, Money, Money!

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There has been a great deal of speculation in both the media and amongst we divorce lawyers about the recently reported rise in the divorce rate.

Data published by the Office for National Statistics (ONS) revealed that 119,589 couples got divorced in 2010, an increase of 4.9% since 2009, when there were 113,949 divorces. In other words, 5,640 more couples got divorced.

Yet this spike follows several years of decreases and is the first year there has been an increase since 2003; however, the figures still equate to a rate of 11.1 people divorcing per 1,000 of the married population in 2010. This is up from a rate of 10.5 in 2009, according to the ONS.

What can we read into such statistics? Many have been quick blame the recession, citing money troubles as being a key factor in divorce; in fact I took part in a panel discussion on BBC Radio 5 Live a few days ago on this very subject. But after 14 years of practising family law, I would have to say I am not entirely convinced this is the case.

Not having enough money for one's basic needs is a grinding, deeply depressing and extremely worrying position and for those in that situation, this stress may eventually expose pre-existing fault lines in a marriage. But equally, one could argue that people cling to one another in difficult situations, needing one another's support. It's when one half of a couple fails to provide that emotional bolstering that the other half may take a long, hard look at the relationship.

I would also suggest that as society has changed, and in particular a woman's role in that society, so the dynamics of the family unit has changed too. Earlier this year the ONS released figures that showed some 66.5% of mothers were in work in the final three months of 2010. Obviously, this includes both full and part-time work, but 15 years ago, ONS figures revealed that 23.1% of mothers worked full-time, compared with 29% at the end of last year. In other words, more women are working.

This may well mean that many families are dependent on two, not one, salaries and so economic pressures are more intense, particularly when the parents have decided to divorce.

When a client comes to me wanting to file for divorce, I always remind them that in a divorce solicitor's office, they must remove, insofar as they can, the emotion of the situation and look at the dissolution of their marriage contract as just that - that is, to view it in as business-like a way possible, particularly so when it comes to finances. Divorcing within an economic downturn requires careful though and analysis as fortunes can go up as well as down and future financial needs must be considered.

In fact a business analysis is an incredibly useful way to approach a domestic split. Say a couple both own shares in a business: many people believe a court would order the business to be sold and the profit split equally, but this is extremely unlikely. A restructuring is often the most viable business option in order to enable funds to be released.

The current economic climate means it is of vital importance that the business is valued correctly - a business might be valued at £10M in the initial divorce settlement, so one partner has to buy out the other for £5M (assuming equal shares). But if the value of the company then falls and shares drop dramatically - they'll still have to pay out if that was the original agreement. Rather like a prenup (yes, I'm going back to prenups again and I will never stop advising people about to embark on marriage to get one drawn up).

Of course, one partner might consider he or she has made a more significant contribution to the business, even if they have equal shares. I have dealt with such a situation, where my client insisted: "the original concept was mine and it was my contacts that built up the business" but opposing counsel was adamant her client's was adamant that without her client's business nous and unwavering support the business would never have got off the ground in the first place. So might a stay-at-home mum put her case when divorcing her husband (or vice versa).

Whatever the latest ONS statistics, one thing remains constant. There are thousands of daily pressures on every relationship of which money, or the lack of it, is just one.