Whilst the answer to this question is often dependent on the individual circumstances of the relationship breakdown, common themes are likely to apply to most divorces/dissolutions. It is very easy for extended family members to become embroiled in arguments regarding financial issues, particularly if they have a financial interest themselves.
Whilst the answer to this question is often dependent on the individual circumstances of the relationship breakdown, common themes are likely to apply to most divorces/dissolutions. It is very easy for extended family members to become embroiled in arguments regarding financial issues, particularly if they have a financial interest themselves.
If you have a family law issue and require legal advice to understand your options, contact specialist divorce solicitor Jemma Slavin of Stowe Family Law. Regional Director at this well-respected specialist family law firm, she is committed to offering a bespoke service to her clients which focuses on their specific needs and objectives.
Knowing how divorce can impact family dynamics helps couples anticipate the surge of changes, protect their child’s interests, and preserve as many familial bonds as possible.
How do extended family members become involved in financial issues arising on divorce/dissolution?
This can happen if one party to the marriage argues that one of their family members is beneficially entitled to assets. For example, a husband may claim that a property owned in his wife’s parents name, is, in fact, held on trust for the wife. In this scenario, it is likely that the wife and her family would dispute this in order to keep what they view as a family asset out of the matrimonial pot.
In another scenario, a family member of one of the couple claims they have an interest in property held by one or both parties to the marriage. For example, this could happen where the husband’s sister claims to have lent money to him to fund the purchase of shares in a business. Here, the husband would likely support his sister’s claim in order to reduce the assets available in a financial settlement.
In some cases, it may be necessary for the family member to be joined as a third party to the financial proceedings between the divorcing couple. This is so that the family member’s interests are represented. Where third parties are joined in settlement proceedings, there is a high probability it will slow the court process and significantly increase legal costs for everyone involved in the litigation. The risk and stress of such proceedings may increase animosity and damage already strained relationships.
Whether family members should become embroiled in divorce financial proceedings should not be considered lightly. The usual order in family cases is “no order as to costs” but this will not apply to third party involvement. This means that the party who “loses” may face an order to cover the legal costs incurred by the other party/parties. For example, a parent who unsuccessfully intervenes in financial proceedings to argue that an asset in their child’s name beneficially belongs to them, may find themselves responsible for paying their former in-law’s costs.
What about inherited and gifted assets?
Gifts or inheritance received from family members can be a significant factor when deciding on an appropriate division of assets during a divorce. In many cases, division will be determined by the parties needs for housing and income, so the fact that assets were acquired by inheritance or gift is often of little or no consequence for the court. Essentially, if the couple’s needs can be met from the assets available, whether they were inherited or gifted can be significant as it may lead to a departure from equal sharing.
The party from the family where the inherited or gifted assets originated may seek to “ringfence” and exclude them, either entirely or in part, from the matrimonial asset pot. Depending on case specifics, the court may accept this approach, but it can be difficult to trace the exact proportion of the couple’s current wealth that relates to the inheritance or gift. An alternative approach by the court is to apply a percentage departure from equal sharing to recognise the significance of the contribution of the inherited or gifted wealth.
In many circumstances, the inherited or gifted assets have been so combined with other matrimonial assets that the presence of a gift or inheritance will make very little impact on the final outcome. This is particularly true where the assets were received a long time before the divorce.
Inherited assets or gifts are notorious battlegrounds for divorcing couples, and this naturally puts a strain on the extended family. This can be further fuelled by commitments having been made within family units for inherited or gifted assets to be preserved for future generations.
Extended family contribution towards legal costs
During divorce, it is common for there to be a financial imbalance between the parties. One party may have had a successful career, whilst the other assumed the role of homemaker. Following separation, the financially weaker party may therefore have limited access to the legal advice they need to fight their case or meet their everyday outgoings. It is common for individuals to approach their extended family for financial support until a settlement is reached. This may involve a contribution towards household expenses, or funding their legal fees on the basis they will be repaid as part of the financial settlement.
Other financial considerations
Families should also be wary about giving their loved one a lump sum during the divorce because it would need to be disclosed as part of the full and frank disclosure process. This additional funding could either be seen by the court as reducing their “needs” or that it should be added into the matrimonial pot.
If an extended family member has made provision in their will for their ex in-law, they may wish to make a change and remove them as a beneficiary.
Extended family and children
Extended families are critical in maintaining a sense of normalcy in a child’s life during divorce or dissolution with familiar faces and routines comforting children during anxious times. On the other hand, extended families can become estranged from the children who miss out on wider family involvement. Some in-laws cut off ties with the parent who is no longer with their family member; they may even see it as a family obligation to do so.
Divorce and separation is hard on everyone involved reverberating throughout social and family circles. Grandparents, aunts, uncles, and cousins who once had a close relationship with the children may now feel uncertain about their role and the extent of their involvement with the divorcing couple.
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