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Business News/ Money / Personal Finance/  Focus on financial aspects, not animus during divorce

Focus on financial aspects, not animus during divorce

It is better to focus on rebuilding lives after separation than fighting over assets, say lawyers

Photo: iStockPremium
Photo: iStock

Not all divorces end amicably, as it’s happening in the case of Bill and Melinda Gates. Some can turn bitter, really bitter.

Bharat Chugh, a Supreme Court advocate and a former judge, saw it first-hand when a man approached him for divorce after things got out of hand.

“Besides the divorce, the couple also filed multiple other cases against each other. There was one related to property, criminal cases of theft and sexual assault and they had accused each other of ‘kidnapping’ their three-year-old child," recalled Chugh.

The couple wanted separation primarily because of their differences—no one had committed adultery.

“Such allegations can lead to people getting arrested on serious criminal charges (however frivolous), there is usually no going back and all chances of an amicable settlement are lost. It becomes an ego battle and such battles destroy both the parties and everything that comes in between," said Chugh.

When a couple is seeking separation, it’s best to settle amicably. “Both parties should focus on rebuilding their lives and avoid bitterness and greed. If a wife is seeking alimony, she should take whatever is reasonable then and move on," said Vandana Shah, a divorce lawyer, who herself went through a separation more than two decades ago.

That’s the advice most lawyers offer: focus on the financial aspect instead of letting your ego get the better of you.

The alimony or maintenance a wife can claim depends on many factors, including years of marriage, children, assets and liabilities of the husband, inheritance, bank statements and foreign trips, said Rajat Kumar, managing associate, Sarthak Advocates and Solicitors. Courts don’t go by income alone. In many business families, the husband’s stake in the company could be much more than his salary.

“An earning wife, too, can get alimony. Examples of these include a wife who is maintaining children or her income is inadequate to live the lifestyle she had during the marriage. The alimony amount is usually determined by the lifestyle spouses had when they were married," said Kumar.

There is no fixed percentage of what the wife should get. “In a Supreme Court judgment, it did say that the wife should get at least 25% of the money or net worth. But it does not define the net worth criteria, which has raised questions. For example, if a husband’s firm is worth 100 crore, does that mean he should raise 25 crore and give it to the wife as alimony?" said Shah.

She advises that a wife seeking alimony or maintenance should take a reasonable settlement amount. If both parties fight, years will pass before the court delivers a judgment. The husband can challenge a lower court’s order in a high court, then in the Supreme Court and file a review petition later. “If the woman loses the best years of her life fighting a court battle seeking a higher amount, it will mean little in the end," said Shah.

In recent cases, husbands have asked courts to lower the alimony amount as covid impacted their incomes.

While religious laws govern marriage, there are provisions in the law for a woman of any religion to seek alimony. In some religions, even husbands can seek alimony from the wife, but such cases are rare. “Section 24 of the Hindu Marriage Act allows any spouse to claim maintenance, and that will include a husband. Parsi law also permits a husband to seek maintenance or alimony from the wife if he is incapacitated and the wife has the means to maintain him," said Chugh.

Shah said it’s best to get a one-time settlement instead of seeking maintenance. Every time a husband stops paying maintenance, the wife must approach the court to force him to pay. With inflation, if the wife wants higher maintenance, she will need to approach a court again. If the wife remarries, the husband can approach a court to discontinue the alimony.

Lump sum payment works out to be better from a tax point of view, too. The income tax department considers lump sum alimony a capital receipt, and it’s not taxable. Regular maintenance, however, is taxed as income.

Joint assets can get complicated. There is a possibility that the husband paid for the flat but purchased it in his wife’s name, or the wife had deposited her jewellery in a locker that is in the husband’s name. Such joint assets become contentious in most cases.

Only when things land in court, each party puts in efforts to prove their contribution. Practically, the spouse who withdraws money from a joint account or takes possession of assets is in a better position. The only possible way to avoid the situation is to maintain segregation all the time.


Prenups are invalid here

Indian law and courts believe that a prenuptial agreement is against public policy as it leads to a party giving up his or her future legal rights.

“Indian law, in all probability, won’t give effect to something like this and won’t recognize it. Reason: A woman should not be allowed to waive or give up her legal rights," said Bharat Chugh, a Supreme Court advocate.

“In India, even though rare, it is still more likely that business families enter into such agreements. These families want to retain control and would not want to see a split in a marriage having an impact on their family-run business," Chugh added.

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Published: 27 May 2021, 09:33 PM IST
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