Brexit & family law - keep calm and carry on
The Brexit vote appears to have sent the whole country into a spin. The Prime Minister has resigned, the Tories are embarking on a leadership battle and most of Jeremy Corbyn’s shadow cabinet has resigned.
However, what does it mean for ordinary families who are separating on a practical basis? There have been a number of articles about international families and jurisdictional issues, but little if anything on the impact on most families.
The initial consequences of Brexit were to send the Stock Market into a tail spin with billions wiped off the values of FTSE 100 and 250 companies. However within a week the FTSE 100 was higher than pre-Referendum. Whilst there is likely to be volatility for the foreseeable future, I wonder if it would have been so different if Britain had voted to remain? Similarly, Sterling fell considerably against the Euro and the Dollar. It has recovered to an extent but remains lower than pre-Referendum. There is more uncertainty in the commercial and residential property markets than pre-Referendum with calls for the Bank of England to prop them up in case prices collapse.
The consequences of all this is to make people who are separating or considering separation to think twice about how to deal with their finances. They are concerned about the values of their investments and pensions and how they can be shared fairly. They are particularly worried about house prices and whether there will be a significant drop in the value of their property, especially in the matrimonial home. Some clients have decided that doing nothing is best – at least for the time being to see how everything will settle down over the next few months. Others will consider whether they should try and revalue their assets if they haven’t already finalised an agreement. One difficulty is that estate agents are very reluctant at the moment to value property. Private company valuations are likely to suffer in the short term unless they are in the export business and/or have a large international base. This is leading to some employees to worry about their jobs and whether they might be made redundant or be obliged to take a lower salary. It has been said that it may make it more difficult to obtain mortgages.
It would be prudent to share assets on a percentage basis rather than agreeing a lump sum so that the couple each take a reduction (or gain) in the value of that asset – probably property. It is not necessarily going to help by doing nothing – property values in particular may drop further in the short term according to leading estate agents and analysts. At the same time, the doom mongers may have exaggerated the Brexit impact. There are risks but people still need to move and there is a shortage of housing. Provided a property is realistically priced, there will be demand. History tells us that their values always rise in the medium to long term.
If a couple are unhappy and wish to separate, they need to consider everything even more carefully than pre-Brexit but its impact may not be as disastrous for the economy and personal finances as some are predicting. Consulting with an experienced family lawyer is essential.
Please contact Richard Phillips or Kirsty Bowers if you would like more information about the issues raised in this article or any aspect of family law.