We live in interesting times. In terms of our way of life, they could prove to be the most ‘interesting’ times in living memory. Yet, life goes on. People continue to make decisions about their marriages and their children and, in some cases, those decisions have been expedited by the circumstances that we currently live in.
Narrative reports from China suggest that there was a surge in divorce applications when lock down restrictions were eased. That is not surprising, enforced isolation with other family members can be a wonderful breeding ground for conflict – and there is nothing like a health crisis to cause us to reflect on our priorities and on our lives.
Experienced family lawyers know to expect an influx of separating clients after the school Christmas and summer holidays. Most of us are expecting to be busy in the coming months. But, what advice will we give our clients in this suddenly uncertain and hazardous world?
Divorce is a big decision and it comes with financial as well as emotional consequences. Even the optimists concede that Covid-19 will have a significant impact on the economy. Couples who are currently in the process or separation or divorce, and those who now embark on that journey, could be facing a very different world. Spouses who are making financial decisions, particularly if they are applying for mortgages or agreeing settlements, should bear that in mind – how sure are they that they are making a good bargain? How safe are they financially? Other spouses who have already divorced may find themselves in a completely different financial position to the one they bargained for. Nobody saw this coming.
In March 2019 Jersey’s Fiscal Policy Panel gave advice to the Government in advance of its 2020-23 Government Plan. The Panel covered a number of potential risks to the economy, including the possible impact of an unexpected structural crisis, but they could not have foreseen global pandemic related pandemonium just one year later. Towards the end of March 2020 the Fiscal Policy Panel updated the economic assumptions of the preceding year. The Panel highlighted extreme uncertainty as to the short term outlook. It seems likely that Jersey will see a fall in average earnings, a fall in profits and a slowdown in the housing market. I am not an economist, but it seems to me very difficult to know how long standing the financial impact will be.
What does that mean for divorcing couples? Think hard about all decisions relating to real property, particularly where the value is important for future security or where a mortgage will be required. It is likely that the current situation will impact on lending criteria as lenders and underwriters adjust. Be realistic about your income – don’t assume that a job, or a certain level of income is guaranteed. The truth is that we should always have some wriggle room in our finances. When financial advisers tell you that the value of your investments may go down as well as up, believe them. In the post coronavirus world, we should expect the unexpected.
This article first appeared in Connect magazine April 2020