Divorce — what happens to my business in a financial settlement?

We explore the process of valuing a business and reaching a financial settlement upon divorce or dissolution.
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Since the introduction of ‘no fault’ divorce in England and Wales in April 2022, the court’s approach to dealing with the costs of a divorce have changed significantly.
Under the old system you could include a claim for costs in your divorce petition. The court had the ability to determine who should pay the costs of the divorce (made up of the court fee and any solicitors costs). The judge would consider all the circumstances, including the reason for the breakdown of the marriage. Typically, you would find that the court tended to make a costs order against the person ‘at fault’ in the divorce where that divorce was based on adultery, unreasonable behaviour or desertion.
However, the new divorce regime is not based on any element of fault. One or both parties simply apply to the court for a divorce stating that the marriage has irretrievably broken down. So, who pays the costs?
Guidance has been provided by the President of the Family Division on this issue. He noted that as a result of the change in the law the great majority of cases will now be undisputed. Consequently, although the court has maintained the discretion to make a costs order, the circumstances in which a court would now order someone to pay their spouse’s costs are likely to be very limited.
We are therefore only likely to see costs orders in the following types of case:-
Even then, a separate application would have to be made to the court and a hearing would have to take place to decide this issue, rather than it being dealt with on paper as it commonly was in the past.
As a result, if you wish to start the divorce you are likely to have to pay the costs associated with making the application. This includes the court fee, which is currently £593, and the costs of solicitors if you instruct them. You can agree with your spouse that the costs will be shared, but you are unlikely to be able to compel them to pay.
If you already have a costs order in your favour from a divorce, or one has been made against you, because the divorce pre-dates the 6th April 2022 then this remains legally binding and should be complied with. If a payment is not made under such an order, enforcement action is available.
If you have any questions about divorce and costs please contact our specialist family law team.

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