In today’s economic climate, financial market volatility is (unfortunately) no longer the exception, it is the norm. Rising interest rates, inflationary pressures, fluctuating property values, and unpredictable investment returns are now the backdrop against which divorce settlements must be negotiated. For separating couples, this reality introduces an added layer of complexity to an already emotionally and legally challenging process. Courts, legal advisers, and clients alike must consider how economic uncertainty impacts both the fairness and sustainability of financial arrangements.
The Importance of Up-to-Date Valuations
One of the most immediate challenges during periods of market volatility is ensuring that asset valuations are current. Property prices can fluctuate significantly over a matter of months; pensions and other retirement funds are often subject to market performance; and privately owned businesses may be affected by shifts in demand, supply chain issues, or investment sentiment.
Courts increasingly require evidence that reflects the most recent market conditions. Outdated valuations in proceedings risk producing settlements that are unfair to one party and may later require variation or enforcement action. Expert reports from chartered surveyors, actuaries, and forensic accountants are now essential tools in ensuring that valuations are accurate and defensible. Where there is significant time between the valuations and any later hearing, parties engaged in proceedings should anticipate updating valuations to reflect economic realities at the point of decision.
Structuring Payments in Volatile Times
Economic uncertainty can also influence the structure of financial settlements. Traditionally, divorcing couples may agree to lump sum payments to achieve an immediate division of assets. However, in periods of volatility, liquidity constraints can make large, upfront payments difficult or impractical. Courts and advisers are increasingly considering staged or instalment-based arrangements as a pragmatic solution.
Staged payments provide a dual benefit. They protect the paying party from the risk of insolvency or sudden financial difficulty while ensuring the receiving party ultimately receives the amount to which they are entitled. These arrangements may be structured over a period of time, linked to future financial events, or contingent on the sale of property or realisation of investments. While instalments can introduce administrative complexity, they often offer a more sustainable path to fulfilling financial obligations in uncertain times.
Reassessing Maintenance Obligations
Maintenance, whether spousal or child, is another area directly affected by economic volatility. Courts have long recognised that maintenance orders are not fixed indefinitely and can be varied if circumstances change materially. Significant shifts in income, increased living costs, or unexpected financial obligations can all justify applications to adjust previously agreed or ordered payments.
For spousal maintenance, changes in employment, business income, or investment returns may necessitate reconsideration of the amount or duration of payments. For child maintenance, a substantial alteration in either parent’s financial circumstances can similarly trigger the need for variation. Parties should be proactive in reviewing their financial obligations regularly and seeking early legal advice if circumstances change materially. By doing so, they can avoid disputes escalating and reduce the risk of enforcement proceedings.
Balancing Caution with Pragmatism
Advising clients during periods of market volatility requires a delicate balance between caution and pragmatism. On one hand, settlements must be robust enough to withstand financial uncertainty; on the other hand, overly rigid arrangements can create unnecessary conflict or fail to reflect changing realities.
One approach increasingly used by legal advisers is the inclusion of flexibility within agreements. For example, instead of specifying fixed sums for investment portfolios, parties may agree to percentage-based divisions. This ensures that both parties share in the benefits (or bear the burdens) of market fluctuations, reducing the need for later adjustment. Similarly, provisions for adjustment based on specific financial triggers, such as the sale of a property or realisation of a business asset, can make settlements more durable and fair.
The Role of Expert Advice
Expert input is particularly valuable during periods of economic volatility. Financial advisers, actuaries, and accountants can provide scenario modelling, risk assessment, and projections that help parties understand potential outcomes under different market conditions. Courts are likely to place significant weight on expert evidence that demonstrates careful and reasonable consideration of current and anticipated economic circumstances.
Legal advisers also play a critical role in guiding clients through the emotional and strategic dimensions of financial negotiations. Maintaining objectivity, assessing risk, and advising on pragmatic solutions, rather than insisting on ideal outcomes, can help achieve settlements that are both fair and achievable.
Looking Ahead: Durable Solutions in an Unpredictable Economy
The underlying principle for courts and advisers in 2025 remains clear: settlements must serve the long-term interests of both parties while being responsive to changing financial conditions. A settlement that appears fair today may be unsustainable tomorrow if market volatility is not adequately accounted for.
Parties who embrace flexibility whether through staged payments, percentage-based divisions, or review clauses, are often best positioned to achieve outcomes that withstand economic uncertainty. Proactive planning, combined with up-to-date valuations and expert evidence, can mitigate the risk of future disputes and ensure that financial arrangements remain equitable.
In summary, navigating divorce settlements during economic volatility requires careful attention to valuations, payment structures, and maintenance obligations. By adopting a pragmatic and forward-looking approach, supported by expert advice and flexible legal drafting, parties can reduce risk, safeguard their financial interests, and achieve settlements that are durable, fair, and reflective of both current and anticipated circumstances.
If you’d like to explore your options or discuss these issues in further detail, contact our experienced matrimonial department today on 0161 928 3201.
