Family Law Articles & Advice

Pension claims on divorce are always a tricky issue because pensions are not the same as any other kind of asset. This is because a pension cannot be fully accessed straight away, whereas all other assets usually can. One way of dealing with them is to split the pension in two (called 'pension sharing'). However, this kind of solution has never been very popular since it was introduced over 15 years ago, partly because the person with the pension tends to have an emotional attachment to it, partly because the person without the pension wants cash (or another asset) instead of the pension, and partly because to achieve a fair split you need a report from a financial expert, which normally costs £1500-£3000 in extra fees. So most people resolve the pension issue by 'offsetting' the value of the pension against other assets in the matrimonial 'pot'. For expert help with your Divorce and Pension call our team of specialist divorce lawyers or complete our online enquiry form. Comparing the Values of Pensions However, this leads to another problem: How do you compare the value of a pension against the value of another asset? Until now, the way this was done in most cases was to take the cash equivalent value ('CEV') of the pension and then lop off a bit (non-scientific i know!) to reflect the fact that it could not be fully accessed straight away. This approach has a number of difficulties, partly because a CEV can underplay the true value of the pension (particularly with final salary schemes) and partly because the 'lopping off' figure is not scientific. A change of approach is in the case of WS v WS [2015] EWHC 3941 (Fam) 11 December 2015. In this case, the 'offsetting' involved was actually between two different kinds of pension; a money purchase scheme held by the husband, and a much larger final salary scheme held by the wife. The other wrinkle was that the husband and wife were already retired. However, I think the principle could apply to offsetting between a pension and any other kind of asset. Instead of using the pension CEV, the court looked at the projected future income from the larger pension (always a more reliable indicator of the true value of the pension), worked out what part of that the husband should have, fed that figure into a 'Duxbury' calculation (the calculation usually used by family courts to capitalise spousal maintenance payments) and the resulting capital figure was the value of the cash payment to the husband to offset his claim against the wife's pension. How Do Pensions Claims Work? Applying this guidance to a 'real world' example: Husband and wife are both 50 years old. Matrimonial home with equity of £500k. Husband has pension with a CEV of £500k and projected future income at age 60 of £20k p.a. Wife has no pension. Husband wants to keep his pension and wife wants more equity in the house to 'offset' the pension. Before any offsetting, wife would otherwise be walking away with £250k from the house. Wife's fair share of the projected pension income is £10k p.a. from age 60. Duxbury calculation says that the capital payment which would produce an income of £10k p.a. from age 60 is £160k. Discount applied for accelerated payment of the £160k (under a pension sharing order wife's share of pension would only start to be paid in 10 years). This is still going to be an arbitrary figure. Say 25% = £40k So the offset figure for the pension is £120k and the wife therefore takes £370k from the house, and the husband takes £130k from the house and keeps his pension. It is going to be interesting to see whether pension liberalisation changes the courts' views of pension offsetting any further. We previously had an indication that the courts will treat pensions more like bank accounts from SJ v RA [2014] EWHC 4054 (Fam) but this is an over-simplification, given the tax consequences of unlimited withdrawals from a pension, but the case of WS v WS demonstrates more enlightened thinking. [related_posts]   For expert help with your Divorce and Pension call our team of specialist divorce lawyers or complete our online enquiry form.

When I first see a client regarding their divorce, one of the questions they will most often ask me as a Manchester divorce solicitor is ‘can my spouse’s bad behaviour impact our financial settlement on divorce?’ Often, the desire to apportion blame for the breakdown of the marriage and divorce can result in a husband or wife wanting the financial settlement to reflect this, for example when a spouse has had an affair, and the affair has involved some level of dishonesty. If you are separating or divorcing and have questions about how your husband or wife's behaviour will affect your financial settlement then the Manchester divorce solicitors at Evolve Family Law in Whitefield can help you. Call us or complete our online enquiry form. Our solicitors are approachable and friendly, providing pragmatic expert divorce and financial settlement solutions.   Divorce proceedings and unreasonable behaviour A spouse’s bad behaviour can be very relevant to the actual divorce proceedings, because under the current law ‘bad’ behaviour always has to be used for a divorce which is started less than two years after separation. The direct financial effect of this ‘bad’ behaviour is usually an order for the ‘bad’ spouse to pay the legal costs of the divorce proceedings (normally about £1,500).   The link between ‘bad’ behaviour and division of finances is less definite, and a spouse will very rarely get less of the family money because they have had an affair. However, a spouse’s behaviour during the marriage must be considered by a court (the court refers to it as ‘conduct’) when it is deciding what would be an appropriate financial settlement.   Is the behaviour gross and obvious? The court’s view is that a spouse’s conduct will only affect the financial settlement if it is ‘gross and obvious’, and so serious that it would be unfair for it to be ignored. Whether a spouse’s conduct has been serious enough to be classed as ‘gross and obvious’ will be a highly subjective decision. From the point of view of an experienced Manchester divorce solicitor, I know it when I see it!   What is classed as bad behaviour? There are a number of forms of bad behaviour or ‘financial conduct’, as it is called in legal terms. It is always easier for the court to change the financial settlement if there is a direct link between a spouse’s conduct and the family’s finances, for example: If a spouse has needlessly stopped working, or recklessly overspent, or gambled away a lot of the family’s money; If a spouse has physically assaulted and injured the other spouse so that their ability to work and earn money has been affected; If a spouse has been found guilty of a financial criminal offence, e.g. fraud. [related_posts] Other types of financial conduct – during the divorce Dragging out the divorce proceedings, or running up needless and excessive legal costs: This isn’t usually reflected in the financial settlement. Instead, the court can order the guilty spouse to pay some or all of the other spouse’s legal costs; Hiding assets or lying about your financial situation and not giving proper financial disclosure: This commonly happens, the most high profile example being the Supreme Court cases for Alison Sharland and Varsha Gohil. Rather than changing the financial settlement, the court can do one or more of the following: Assume, when making a final financial decision, that the guilty spouse is much more wealthy than they say they are; Order the guilty spouse to pay some or all of the other spouse’s legal costs; If the lying is discovered after a final decision, setting aside that decision or financial court order and starting all over again.   Examples of non-financial conduct It is less easy, but not impossible, for the court to change the financial settlement as a result of conduct which does not have a direct financial effect. The fact that one spouse has had an affair, or the usual arguing and name calling that often accompanies marriage breakdown will not normally be considered serious enough to be ‘conduct’.   Examples of non-financial conduct which have changed an award are: violent or sexual assaults on the spouse, children or close family members; refusing to move in with a spouse after marriage; continued serious harassment of spouse’s new partner; Inability to give spouse respect and affection.   How much does conduct change the financial settlement? The impact of the conduct on the financial settlement will vary greatly, and entirely depends upon the particular circumstances of the case. Often, the person guilty of the conduct will already be in a bad position, for example in jail or having lost their job. However, even in those cases, the court can decide to reduce or even ignore that person’s financial needs because of their conduct. Manchester divorce solicitors Manchester divorce solicitors at Evolve Family Law in Whitefield are experts who offer a friendly and solution focused family law service. Call us or complete our online enquiry form.

Taking the decision to separate may mean you want to ‘hunker down’ and not make any decisions about divorce financial settlements and the family home. Others may want to get the family home on the market and sold so they can make a fresh start, unhampered by the memories associated with the property. In this article, divorce financial settlement solicitor, Robin Charrot, looks at the options of selling the family home before or after your divorce. For expert Divorce and Financial Settlement advice call our team of specialist divorce lawyers or complete our online enquiry form. Selling the family home – getting the timing right The important thing is to not rush into making decisions about the family home as whilst your instant view may be that you want to move because of the marriage breakdown, or you want to stay because the children’s school is nearby, feelings and circumstances can change over time. There is no right or wrong answer about whether to sell the family home before or after your divorce. A lot will depend on your circumstances. For example, if you are in a six bed property with grounds and the children have grown up and left home, the separation may be the push to sell the family home and to do it now rather than wait until after the divorce. Your views on the timing of the sale of the family home may be influenced by whether you think the property boom will end or not. If you are in the camp that thinks the UK is heading into a recession and a housing market crash, you may believe it is better to sell up now, rather than wait. Waiting may not be in your best interests if you will end up downsizing in a property slump. A divorce financial settlement solicitor can help you look at your options to try and work out which one suits you best. [related_posts] Things to consider about the timing of the sale of the family home There are loads of things to weigh up when you are debating about whether to sell the family home before or after your divorce. Here are just a few: If you sell up, will you buy another house straight away or rent? Is renting a more expensive option or is it best in your situation as you will then be chain free when you find something else to buy If you get off the property ladder by selling the family home, do you risk pricing yourself out of buying the house you want if property prices continue to rise? Is the family home mortgaged? Is a preferential mortgage rate due to expire? Can you transport an existing mortgage to your new property? Will you be able to get another mortgage if you have recently started a new business or because of other changes in circumstances? Is it too early to sell up until you know the value of all the family assets, such as pensions or the family business? You may prefer to stay in the family home by offsetting the value of other assets Until you have more information about your partner’s income and your earnings capacity you may not know if you can afford to stay in the family home with your anticipated income and the potential for spousal maintenance payments If the family home is owned in joint names, or your sole name, your ex-partner could refuse to cooperate with the sale of the family home until a financial court order is made. If the house is owned by you, your ex-partner could place an objection at the land registry to prevent a sale or remortgage. Alternatively, they may only agree to sign the sale paperwork if you both agree that all or a percentage of the net proceeds of sale are retained in a solicitors account until you have reached a full divorce financial settlement when the sale proceeds will be divided in accordance with the financial court order Sale or delay Sometimes people are anxious to sell up because they cannot cope with continuing to live with their ex-partner at the family home as the divorce financial settlement process is taking too long. A divorce financial settlement solicitor can: Advise on whether you have the grounds to apply for an injunction order so you can stay at the family home until the court decides if the family home should be sold. This is known as an occupation order or ouster injunction Help you understand the range of financial settlement court orders the court could make in financial settlement proceedings to assist you in reaching an agreement in family mediation or by through solicitor negotiations For expert Divorce and Financial Settlement advice call our team of specialist divorce lawyers or complete our online enquiry form