Family Law Collaborative Divorce Blog : Bath Divorce Solicitors : Sharp Family Law : UK Collaborative Law & Family Mediation : Bristol, Swindon & Southern England

"A Collaborative Family Law approach allows separating couples and their lawyers to sit down together to reach an agreement face to face in a much quicker, less traumatic process, that can provide a more satisfactory conclusion for all involved." so said Lord Bach, the justice minister in charge of legal aid, earlier this week.

The support from the Minister, for Collaborative Law, comes with the announcement from the Legal Services Commission (LSC) that it is to consult for the first time on whether legal aid funds should be made available to separating and divorcing clients who choose to use the collaborative law dispute resolution process.

In addition to the benefits voiced by the Minister, Collaborative Law is seen by him as a process that will help settle a divorce without going to court. "The breakdown of a family is an extremely distressing time for all involved, particularly children, which is why I am determined that courts should be the last resort. Sadly that is currently not the case, with only one in five legal aid clients experiencing a family dispute opting for the benefits that mediation can bring”.

It will still be 1st October 2010 before collaborative law is added to the range of process options funded by the LSC. But it would then give all families, whatever their financial means, access to the same range of dispute resolution options offered by family law solicitors, when faced with separation or divorce. With the extended range that is affordable to more couples, Lord Bach will be further towards ensuring that the divorce courts are the last resort for many more families working through divorce.

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Collaborative Law is proving to be successful when used by divorcing couples said one of the UK’s most senior judges last week at a meeting of 200 of London's family lawyers (....yes including me)

Lord Kerr of Tonaghmore, a justice in the UK’s new Supreme Court, in giving his backing to collaborative law highlighted that:

"one of the most inspiring facts about it was that 85 per cent of couples who used the collaborative approach had been able to agree an amicable settlement. On any view no further testament to the success of the system is required” (statistics from family lawyers’ group, Resolution).

Lord Kerr went on to tell all of us present that he thought that the collaborative approach – recently used by comedian Robin Williams - was now having a profound impact on matrimonial law. As the Times Online reported, Lord Kerr explained that the essence of the new approach was conciliation, not “victory by one side over the other” or "the vindication of one viewpoint at the expense of an opponent's. Rather the fundamental purpose is to shape a solution to the problems experienced by the parties that not only resolves the immediate dispute, but which will endure to sustain a relationship after the parties have left the stage."

This goal was not just "an incidental side effect of civilised negotiations", he added. "It reflects its centrality to the entire process. It required more than civility and courtesy; it required the mindset that asks: how can we fashion an outcome that was best for all those affected, such as the children, in the dispute.”

Comprehensive information on Collaborative Law can be read on the website of The International Academy of Collaborative Professionals (IACP). In brief, Collaborative Law (sometimes called Collaborative Practice) helps separating and divorcing couples to resolve their differences respectfully, in private and without the threat of court action. The Collaborative process differs from a divorce Court process by retaining control of it with the divorcing couple and not with a judge.

The aim of a Collaborative process is to help separating and divorcing couples to:

- Focus on what are their most important issues, especially children;
- Communicate more effectively throughout the process;
- Lay the foundations for a healthier relationship during and after, the separation or divorce.

At the end of this coming week, some of those same family lawyers from London and other parts of the World (....yes including me) will be attending the 10th Annual Forum of The IACP in Minneapolis, USA.

As the legal profession learns to focus on settlement rather than trial and the Judiciary continues to back out of court processes like Collaborative Law, many more divorcing couples will be able to get through their divorce with their dignity intact, do what is best for their children, come up with fair financial settlements and move on with their lives. 

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Those amongst us who are divorced or widowed could suffer 20% more chronic health conditions such as heart disease, diabetes or cancer than those who are married. This statistic comes from research published in the September 2009 issue of the Journal of Health & Social Behaviour.

The research of 8,652 men and women in their 50s and early 60s in the US, found that the physical stress of marital loss continues long after the emotional wounds have healed. While this does not mean that people should stay married at all costs, it does show that the soon to be and newly divorced need to be especially vigilant about stress management and exercise.

In my practice as a family and divorce solicitor in Bath and Bristol, UK, I witness the enormous stress clients suffer as their broken marriages come to an end. Aside from the many negative emotions surrounding the breakup like fear and anger that cause stress, there is the alternative accommodation that has to be found, the finances resources that must be stretched, the contact with friends and families that is strained or lost, and the disturbed sleep, poor diet and reduced exercise that creates the unhealthy lifestyle, all adding to stress levels. Divorce is one of the most intense stressors.

To try and reduce that stress, I encourage clients to consider choosing a non-adversarial approach to divorce, like Collaborative Practice or Family Mediation. Not only might that approach help them achieve reasoned settlements but it could be healthier for them, than a positional, adversarial Divorce Court hearing.

But away from the divorce court clients still need to be good to themselves by developing habits that reduce their stress. In her Nine Tips for Dealing with Divorce Stress Cathy Meyer relationship coach and divorce mediator suggests ways in which, during the process of divorce, stress can be handled. They include:

• Making sure you pay attention to your emotional needs
• Keeping yourself physically fit
• Participating in activities that will nurture you emotionally and physically
• Letting go of problems that are beyond your control
• Giving yourself permission to feel
• Charging your expectations
• Giving yourself time to make decisions
• Making time for fun
• And letting go

Her article Nine Tips for Taking Care of Yourself During and After Divorce also contains some useful information.

As the research above highlights a divorce can be bad for your health. But by taking care of oneself, by focusing on keeping active, healthy and moving forward and not stuck in the past, by choosing a process like collaborative practice that focuses on settlement and reduces conflict , it is possible to minimize the damaging effects of divorce and move on with life.

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For many people facing divorce, the value of their pension fund may be their biggest asset. The most common way to factor the value of that fund into a divorce financial settlement is for the value of another asset held, such as cash or property, to be offset against the value of the pension fund.

However, It is common practice for the value of the pension fund to be reduced, but why and by how much?

Why the Value of a Pension fund is Reduced when Offsetting

An existing pension has already enjoyed tax relief on the contributions made into it. This means for example, that if Spouse A had a £10,000 pension and Spouse B had £6,000 in cash and was a higher rate (40%) tax payer, the £6,000 could be turned into a £10,000 pension fund through tax relief on the contribution. That would then equalise the value of the pension funds.

In addition, Spouse B with £6,000 in cash has the choice to use that money today whereas Spouse A must wait until retirement age before he has use of it and even then only 25% of the fund can be paid as a lump sum with the rest as an income for life; where the payment term is uncertain and where there is often no value on death.

One of the leading court cases on pension offsetting is Maskell v Maskell where Lord Justice Thorpe established that the value of pensions and the value of other liquid assets should not be compared on a like-for-like basis. The Judge directed Maskell and Maskell back to mediation to sort out the right value for offsetting rather than provide guidelines. As a result, it is not uncommon in a contested divorce for the lawyer acting on behalf of the spouse with the pension to argue, incorrectly in my opinion, that no value should be apportioned to pensions.

The Reduction Factor

In terms of how much should be offset, it seems that in practice values apportioned have ranged between 25% and 80% of the pension. So if one spouse holds £100,000 more in a pension fund than the other, the range of potential cash offset could be between £25,000 and £80,000. That’s quite some spread and not particularly helpful for divorcing couples.

Solutions to Potential Arguments over the Value of Pensions when Offsetting

This leads me to two points.

First, I was pleased to see that Bradshaw Dixon Moore, a firm specialising in actuarial reports for divorcing couples, announced on 30th September 2009 that they now have a Pension Offset Report service available. The report factors in both the tax issues and the importance of cash. They use actuarial principles and utility theory in reaching an adjusted value for the pension and the report can be used in Court. It costs £200 + VAT and for any party who feels very concerned about how the value of pension funds have been offset, this could be a useful solution.

Secondly, the variation in offsetting values highlights that there is great potential for a raging argument over how to fairly separate assets on divorce. If you are at the stage of wondering what type of divorce may suit you best, it is worth noting that one of the key attractions of a collaborative divorce is that both parties can work with a highly qualified and experienced Financial Neutral to work out how to split assets fairly and make a joint and informed decision on what value to apportion to pensions. A Financial Neutral can also help you decide whether pension offsetting is the best option, explaining the relative advantages and disadvantages of pension sharing for your circumstances.

Miles Hendy is a Chartered Financial Planner and Resolution accredited Divorce Specialist at Fraser Heath Financial Management.

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