Divorce When A Couple Is Funded By Family

It is becoming increasingly common for parents to cover the gap between the earnings and household spending of a couple or provide a home that neither spouse could otherwise afford. However, when that relationship ends, uncertainty about whether that help will continue can make it difficult to work out what a fair financial settlement should provide.

At Laurus, we help clients understand how family funding may affect divorce settlements, including where the spouses have very different expectations about future support. Contact our family law team today to arrange a consultation about your circumstances.

Understanding the support behind the family lifestyle

When untangling family finances, the starting point is to establish how the couple’s finances actually worked during the marriage. A household budget based only on salaries may give a misleading impression if relatives have been transferring money every month or paying bills directly.

Regular payments towards living costs are likely to be relevant because they show how the household met its ordinary day-to-day expenditure. Where grandparents have paid school fees, it is important to establish whether they committed to funding the child’s education over the long term or provided help on a more ad hoc basis as financial circumstances demanded.

Family generosity and dependable financial resources

Family assistance can be relevant to the couple’s resources and what is likely to be available to either or both parties in the immediate future. The court does not view voluntary support from a family member as equivalent to earnings from employment or capable of enforcement if the payments stop.

There must be a realistic basis for expecting continued support; a settled arrangement may carry more weight than a vague suggestion that relatives will help if necessary. Even where assistance is likely to continue, the court needs to consider its purpose and expected duration before deciding how much reliance can reasonably be placed on it.

A long history of payments

If parents have transferred the same monthly amount throughout the marriage and continued after separation, that pattern may support an argument that further payments are likely. However, it is important to investigate whether the arrangement is open-ended or linked to a particular situation.

For example, parents may have supported their daughter while she completed professional training, with an understanding that payments would end once she qualified and gained employment. That history has a different significance from an allowance paid over many years with no stated end date.

At Laurus, we help clients assess whether an expectation of future funding is supported by the evidence. This can prevent negotiations becoming dominated by assumptions about what a family ought to provide.

Support intended primarily for one spouse

Relatives sometimes describe their assistance as being for their own child, even though it helped support the entire household. An allowance paid into one spouse’s personal account may have covered the family mortgage, leaving the other spouse to meet everyday expenses. In those circumstances, it would be wrong to suggest that only the recipient benefited during the marriage. However, shared benefit does not necessarily give the other spouse an automatic right to future payments.

If support will continue for one spouse alone, that may affect the assessment of their needs or available resources required in the future.

Statements that family funding will stop

A parent may decide to stop providing support following separation, and there may be genuine reasons for this, not merely the end of the relationship; for example, retirement may have reduced the money available. These circumstances need to be considered as a whole rather than dismissed because the timing is inconvenient.

That said, a blanket statement that funding has ended may be capable of being challenged if the surrounding evidence says otherwise. Payments may continue through another account, or a parent may begin paying bills directly instead of transferring cash. This can usually be picked up during financial disclosure where transfers to and from different accounts are likely to become apparent. The court can then examine the substance of what is happening when deciding whether support remains available.

Family-funded housing and future accommodation

Before considering the financial settlement, it is necessary to establish who owns the home and the basis on which the couple occupies it. Living there for many years does not, without more, establish that either spouse owns a share.

Reliable accommodation available to one spouse after separation may affect their immediate housing needs. Nevertheless, permission to stay temporarily is different from a secure right to occupy a suitable home over the longer term. The court will need to understand any conditions attached to the arrangement and whether it provides realistic accommodation for children spending time with that parent.

The other spouse may need to rent or buy elsewhere, despite having had few housing costs during the marriage. That difference can matter when assessing how available capital should be used, but it does not make the parents’ property part of the matrimonial assets. If ownership is genuinely disputed, relatives may need independent advice and, may need to become involved in the proceedings so that their rights can be determined.

Disclosure of family assistance

Relevant family funding must be explained during the full and frank financial disclosure process. This includes assistance paid directly to others where it affects the spouse’s financial position, rather than only money appearing as income in their own bank account. A budget showing substantial school fees would be incomplete if it failed to explain that grandparents currently pay them.

Disclosure should separate what is happening now from what is expected to happen later. If parents have confirmed they will continue meeting a particular expense, that assurance should be stated, including the limitations of it. Where future support is uncertain, the uncertainty should also be made clear rather than presented as either guaranteed funding or a definite absence of help.

The effect on maintenance and the overall settlement

Likely family assistance may influence a maintenance assessment by affecting the recipient’s unmet needs or the payer’s available resources. However, there is no rule that voluntary payments must replace spousal maintenance, and an order should not be based on speculation about relatives’ future generosity.

Family funding may also affect the overall distribution of assets where it changes the spouses’ respective needs. The matrimonial standard of living provides a background for the court, but should also consider maintaining that lifestyle across two households may be impossible if it depended heavily on voluntary family help.

As a highly rated law firm, Laurus can help you assess your particular circumstances and how they affect your position. 

Contact us now to request a free consultation with one of our specialist family solicitors.