In part 1 of this blog series, I looked at what rights you have if your child divorces. We explored how complications can arise if you have provided your child with money to help them purchase their home and they are married (or later gets married) and then the marriage breaks down.
As explained in part 1, there are preventive measures that can be taken to stop problems arising, but what happens if these steps haven’t been taken and your child and the spouse they are separating from end up in court?
Below we look at what happens if you need to become involved with court proceedings to resolve financial issues in your child’s divorce.
Being joined as a party to the financial remedy court proceedings
There are a range of situations when the interests you may have as a parent will be relevant to the financial matters being sorted out between your child and the spouse they are separating from.
For example, if a parent of someone who is divorcing has an interest in property or assets to be divided within the divorce settlement. Or, there may be complex issues arising from trust assets, or complex business assets in which a parent has an interest.
The degree to which a parent with a financial interest will become involved in their child’s financial proceedings relating to their divorce will vary from case to case, but any potential interests should be identified at an early stage.
A judge may order that you be added as a party to court proceedings if you need to be part of the proceedings to resolve the issue in dispute.
Alternatively, you could also be added as a party to the proceedings if you, your child or their spouse makes an application for you to become involved.
If the application for you to become involved in the proceedings is made by you, your child or their spouse, the application must be made in Form D11 in accordance with the Family Procedure Rules part 18 procedure. Unless the court orders otherwise, the application must be supported by evidence setting out your proposed interest in the proceedings. In some circumstances though, adding you to the proceedings may be dealt with at what is called an ‘interlocutory hearing’ without a separate application.
Do you have to join the proceedings?
If you have been invited to join the proceedings but choose not to take part you will be bound by the court’s findings. This means any decision the court makes is final, and done so without your involvement.
Guidance if you are joined as a party to your child’s divorce proceedings
Previous cases have helped set out some best practice and useful guidance.
- You should be joined to the proceedings at the earliest opportunity if you have a relevant financial interest that needs to be determined before the divorce financial settlement can be worked out.
- The court should order for the issue that needs to be determined in relation to your financial interest to be set out by a) you filing a document setting out your case known as ‘points of claim’ and b) for your child and/or their spouse to set out their response in a document known as ‘points of defence’ if they are contesting your financial interest.
- The court should also order for you, your child and their spouse to file a full statement so you can each clearly set out your respective positions in relation to the issues in dispute.
- The dispute in relation to your interest should be arranged by the court to be heard separately, as a preliminary issue, before your child and their spouse get to the stage in the divorce that is known as a ‘financial dispute resolution hearing’.
- The court will determine the dispute in relation to your financial interest in accordance with property law; this is very different to the discretionary exercise it undertakes when working out the terms of a divorce financial settlement.
Joining or becoming joined as a party to proceedings is an important issue that demands careful thought. Getting it wrong can result in serious costs consequences. The presumption that each party within the divorce financial remedy proceedings pays their own costs does not apply.
Who is liable to pay the costs of the application will be within the courts discretion to decide. You should therefore ensure your case has a strong chance of success before pursuing it within proceedings. If you are successful you maybe able to recover some or all of your costs from the party who was contesting your position.
Alternatives to court?
Dealing with these types of disputes through the court is often not the most efficient or cost-effective way of resolving matters.
Even if court proceedings are already underway, you should still consider and encourage your child and the spouse they are separating from to look at other dispute resolution methods (including mediation, hybrid-mediation, solicitor led round table negotiations, early neutral evaluation or arbitration) to at least try and determine the discreet issue of your interest in the assets. These process options compared to court are likely to save time, stress and costs.
What to do if you get served with notice of proceedings?
Due to the complex nature and the financial risks involved it is advisable to seek legal advice from a specialist family law solicitor as soon as possible. If your child is getting divorced and there is a dispute about your financial interest please get in touch with a member of our team to see how we can help.
Have you lent your child money and want to know what happens if they divorce?
Contact us for a confidential chat with one of our expert divorce solicitors