Financial Orders

According to the latest research, women face a bigger income drop than men in the year after their divorce. Our family law solicitors look at the latest research and explain how the structure of a financial settlement and childcare arrangements can affect your post-divorce income.   Contact Evolve Family Law for Specialist Family Law Advice.   Research into the impact of divorce on incomes The latest research from Legal & General reveals that on average, women see their income fall by 50% in the year following their divorce.  In contrast, men’s incomes fall by 30% in the year following the divorce. L&G refer to this as the divorce gap. The L&G research goes deeper and reveals that: Nearly a quarter of women (24%) felt financially vulnerable after their divorce. Nearly a fifth (19%) of women struggled to pay their bills. 13% of women are concerned about the financial implications of retiring alone. How about the men? Only 16% of men felt financially vulnerable, and only 10% of men struggled to pay essential bills. 8% of men were more concerned about their retirement plans and retiring alone after their divorce. Some people may think the L&G research shows that women worry more about finances than men, but the data goes beyond the headlines and explains the rationale behind the divorce gap.   Research into the reasons for the divorce gap The L&G research revealed the reasons for the divorce gap as: 63% of women felt the financial impact of stopping sharing finances and outgoings with a partner, compared to only 39% of men. Roughly a quarter of the people surveyed said that the wife was the primary breadwinner before the divorce, and in 22% of marriages, the husband and wife earned about the same amount. After their divorce, around a fifth of women returned to employment.  Women are twice as likely as men to reduce their hours of work after their divorce because of parenting responsibilities. Only 13% of divorcing couples considered pension splitting when reaching a financial settlement. Women tend to prioritise non-pension assets when reaching a financial settlement. 28% of women did not receive pensions as part of their divorce settlement compared to 17% of men.   You might also be interested in [related_posts]   Will a divorce have an impact on my income? When a couple separates, it is common to move from a two-income household to a one-income household, resulting in a reduction in income. Unfortunately, it is often not possible to achieve a corresponding decrease in outgoings across the two households created by the separation. It is crucial that your divorce solicitor looks carefully at the impact of divorce on your income, as that should massively influence the size and structure of the financial settlement. Reaching a divorce settlement is a bit like putting a jigsaw together because the capital settlement (the share of the family home sale proceeds or the split of savings and investments) can influence how much income you need to meet your outgoings or your ability to pay spousal maintenance. For example, if you receive sufficient equity from the sale of the family home, you may be able to buy a new property either mortgage-free or with a modest mortgage. If you are the financially stronger spouse and receive a reduced share of the equity in the family home, you may not be able to afford to pay spousal maintenance and pay your bills.   Income support after a divorce If a divorce will impact your income, then you can consider ways to enhance your income through: Spousal maintenance. Child support. Improving your earnings capacity through increasing your hours of employment or retraining.   Income issues after divorce There can be income issues after divorce because with all three options, problems can arise, such as: The court prefers to achieve a clean break with no spousal maintenance payable in cases where a clean break is appropriate and there is sufficient capital to achieve that type of financial court order. Spousal maintenance stops if you remarry and may end if you cohabit with a new partner or if your former spouse loses their job or their income decreases. A former spouse may not comply with a spousal maintenance order, so you may be forced to apply to the court to enforce the order. Child support is not payable if parents agree or the court orders equal shared parenting under a child arrangement order. This rule applies even if your former spouse earns substantially more than you. You may agree on a financial settlement based on shared parenting, but your ex-partner then says they cannot share care, leaving you with additional childcare responsibilities. It may not be possible to increase your earnings capacity if you are undertaking the lion's share of parenting or if you were out of the job market as a stay-at-home parent during the marriage.   Assessing if you will receive or be ordered to pay spousal maintenance Whether the court will order that you pay spousal maintenance or receive it depends on a range of factors. These include: Whether you have young children to support, and whether the care of the children impacts your earnings capacity. Whether any disability or age impacts your ability to seek employment or increase your income, or your ex-spouse’s ability to do so. Your income and earnings capacity, and those of your former spouse. The extent of your respective reasonable outgoings. The length of the marriage. Other factors, such as the existence of a prenuptial agreement that sets out whether and how long spousal maintenance should be payable after your divorce. Depending on the ages of the children and future earnings capacity, the court may order that a former spouse should pay spousal maintenance on a time-limited basis so that you can adjust to the divorce and reduction in household income. Alternatively, the court may prefer to award you more capital so you can buy a home with an affordable mortgage (compared to your ex’s financial settlement), meaning that you have lower monthly outgoings than your former spouse and therefore no requirement for spousal maintenance.   Talk to a family lawyer   Whatever your priorities, it is best on separation or divorce to take legal advice from a specialist divorce solicitor so you can understand the range of options for your financial settlement and work out which one is best for you and your family.   Contact Evolve Family Law for Specialist Family Law Advice.

If you think your ex-partner is hiding assets in divorce proceedings, it is best to get expert family law advice on your options. Contact Evolve Family Law for expert divorce and financial settlement advice.   The requirement for financial disclosure in divorce financial settlements Divorce solicitors will tell you that husbands and wives are under a duty to provide full and frank financial disclosure of their assets when negotiating a financial settlement. That applies whether you are negotiating a financial settlement through: Direct discussions. Solicitor negotiations. Family mediation. Financial disclosure is also a requirement if a family law judge or an arbiter is deciding the financial settlement in financial court proceedings or through family arbitration.   The extent of financial disclosure  The court has a standard list of financial disclosure requirements, but a husband or wife can request additional information and ask questions. The judge will decide if the extent of the additional questions and the request for extra documents is relevant and proportionate. You may not want to engage in extensive financial disclosure if: Both of your finances are straightforward, and You both had access to bank statements and assets, so you know that money has not been moved from accounts, and You can reach a negotiated financial settlement. Every family situation is different. You probably know if your ex-spouse has hidden financial information and assets from you throughout your marriage. Alternatively, you may suspect that they started doing so when they met someone else, or when the marriage got into difficulties, and the relationship started to drift apart.   Red flags and financial disclosure in financial proceedings If your husband or wife appears keen to reach a clean-break financial settlement without providing financial disclosure, this may raise a red flag for your divorce solicitor. The family lawyer may question why your spouse objects to financial disclosure and why they are pressing you to reach an agreement so quickly. You need some minimum paperwork to check your spouse’s financial settlement proposals and for the court to be with the terms of a proposed financial court order that a family law judge is asked to make. If an estranged spouse is trying to pressure you to agree to a financial settlement without first providing financial disclosure and wanting you to accept their word about the extent of the assets or their current value, then you should consult a financial settlement solicitor. Your ex-partner might be totally honest and want to ‘cut to the chase’ and get a binding court order, but you are entitled to see the required financial disclosure and to take family law legal advice on their financial proposals and the wording of the court order.   You might also be interested in [related_posts]   Reasons why assets are hidden from spouses There are many reasons why an ex-spouse may try to hide assets or minimise their value. Divorce solicitors come across these common excuses: It is inherited or gifted money. It is savings from one spouse’s income. The ex-spouse’s new partner owns their current house, and the ex-spouse says they have no right to any equity in the property.  There is no need to get a business, pension or other asset valued, as your ex thinks you should take their word that the asset either has no value or is not sellable. Money was owed to a family member and was transferred to them to repay a loan rather than to hide assets Cash put into additional bank accounts was forgotten. An ex thinks property owned abroad or owned before marriage is irrelevant to the financial settlement and should therefore not be disclosed. These are all excuses. None of them is a good reason not to provide complete financial disclosure. Sometimes an asset will not be relevant to a financial settlement, but your financial lawyer needs to know about the asset and its current value so they can advise you on its relevance in your family circumstances. For example, a pension accrued before a short marriage with a cash equivalent transfer value of £10,000 may not be of significance. Your ex may waste their time and money by trying to hide an asset that may be of limited relevance because of the duration of your marriage or your ages. However, by failing to disclose the pension, you and the court may be far more sceptical about whether your ex-spouse has fully disclosed the existence of the pension or how honest their other financial disclosures are. For example, you may question the extent of your ex’s declared self-employed income or the reason they have transferred money to a sibling or new partner.   Steps to take if an ex is hiding assets If you are separated or getting divorced and believe your ex is hiding assets, you may need urgent financial settlement advice and help with an injunction application to safeguard and preserve the money until the court makes a financial order. Examples of when a spouse may require a financial injunction include: Your ex is transferring money or property to a third party. Your ex is putting their pension in payment and taking the maximum tax-free cash sum to put the money out of your reach. Your ex is syphoning money out of the family business to make sure the family business has a lower value placed on it, as profits will be reduced. Your ex is buying property overseas or transferring assets abroad. Your ex is moving money out of joint bank accounts and putting it into cryptocurrency or bitcoin.   Financial injunction applications A financial injunction order is a temporary measure to stop your ex-spouse from hiding or disposing of assets. It is best to consider applying for a section 37 injunction rather than assume that, in financial settlement court proceedings, your ex-spouse’s new partner, parent, or sibling can be joined to the financial application to try to unravel the transfer of assets. If you have not already done so, a divorce solicitor will also advise you to start financial court proceedings for a financial court order. Within the financial remedy application, the court can make financial disclosure orders that your ex will need to comply with.   Consequences of noncompliance with financial disclosure rules If your ex does not comply with the financial disclosure orders, then you can ask the judge to enforce the disclosure orders against your ex or ask the court to draw inferences. For example, if the court ordered disclosure of historical bank statements to reveal what happened to the equity of £100,000 after the sale of a buy-to-let property. If your ex flouts the disclosure order, you can ask the court to draw inferences as to why and ask the court to add back in the £100,000 so you get a greater share of the other family assets.   Financial proceedings and ex hiding assets If you have started financial proceedings and you are not satisfied with your ex’s Form E financial disclosure, a specialist family solicitor can review the financial disclosure with you and draw up a list of additional questions and request extra non-standard paperwork. For example, if your ex-spouse is the director and shareholder in a family business and you suspect they have been syphoning money off to their new partner by creative accounting or use of the director's loan account, you can ask for a forensic accountant to value the business and look at the accounting concerns. Alternatively, you can ask the court to make financial disclosure orders to help you investigate if: Your ex is self-employed, and the family lifestyle does not match their declared earnings. Your ex has withdrawn significant sums from a business or personal account, and the withdrawals are not their usual pattern of spending. Your ex previously mentioned an asset that was a rainy-day asset or pension, but there is no mention of the asset in their financial disclosure. There are lots of ways a tenacious divorce solicitor can ‘get to the bottom’ of financial disclosure, through your background information and knowledge of your ex, combined with financial disclosure orders,  valuations and freezing injunctions.   Contact Evolve Family Law for expert divorce and financial settlement advice.

In this blog, our family law solicitors examine what happens if you keep financial secrets during a separation or divorce.   Contact Evolve Family Law Today for Expert Family Law Advice.   Reasons for hiding money during a relationship There are many reasons why someone might hide money or not reveal their financial situation whilst in a relationship, such as: Wanting to build up a safety net of savings that their partner won’t spend, so there is a rainy-day savings fund in case of redundancy or a large unforeseen bill, such as replacing the boiler. Feeling the need to save money so that there is an escape route from an abusive relationship where the partner secreting the money is afraid that without the hidden money if it will be impossible to leave their controlling partner. Hiding credit card debt or loans because you know that your partner will worry about the debts. Feelings of embarrassment about having incurred debt. In some cases, the debt may have been incurred before the new relationship, and it now feels ‘too late’ to mention it. If a couple decides to separate, it can be challenging to reveal financial secrets that were kept during the relationship. However, when negotiating a financial settlement, there is an obligation to provide full financial disclosure.   Financial secrets and separation, and divorce   At Evolve Family Law, our divorce solicitors will ask questions about your finances and those of your spouse to provide the best advice on financial settlement options. Sometimes people are reluctant to mention undisclosed credit card debts or loans, as their husband or wife doesn’t know about them. However, it is essential to do so as the debts may impact your ability to take over the mortgage on the family home or secure another mortgage to purchase a new property. In cases where there is debt, then in financial court proceedings, the court rarely undertakes a forensic exercise into how the debt was incurred and whether, for example, you should have bought the shoes or motorbike. Instead, the court will ask: Is the debt family debt– in other words, although the debt was hidden from a husband or wife, was the loan or credit card money used for the benefit of the family? What impact does the debt have? The court will want to know if the debt will prevent a husband or wife from buying another house, staying in the family home, or meeting their other needs. In addition to debt and divorce, when it comes to financial disclosure on separation or divorce, there is an obligation to provide complete and frank financial disclosure of all your assets. That includes secret bank accounts that your husband or wife doesn’t know anything about, or money given to a family member to ‘hold’ for you, or cash that you keep.   You might also be interested in [related_posts]   The consequences of not providing full financial disclosure Failure to provide full financial disclosure after a separation or divorce may mean: Your spouse will not go to family mediation to reach an agreed financial settlement, or the family mediator may say that mediation is not suitable as full financial disclosure is a requirement for mediation. Your spouse may start financial proceedings so they can get an order requiring you to file a Form E financial disclosure document and supporting paperwork, and can ask additional questions about your finances and transactions. Your spouse could ask the court to make additional disclosure orders, ask for valuations of assets such as the family home or a family business and make Section 37 injunction orders to prevent the sale or transfer of assets to third parties. The court could draw inferences or make findings against you in a financial settlement court hearing. For example, if your family businessgenerates cash but according to your accounts, you receive an income that amounts to less than your essential outgoings (mortgage payments, utility bills or other known expenditure), then the court could make inferences or findings against you. Any financial settlement recorded in a separation agreement or in a financial court order could be overturned later if it is discovered that the agreement or order was made without you having provided full financial disclosure. Therefore, whilst there may be many reasons why you would want to keep things secret during a relationship, when it comes to a separation or divorce, there are many compelling reasons why you should provide full financial disclosure.   Manchester and Cheshire Divorce and Financial Settlement Solicitors Evolve Family Law specialises in family law, divorce and financial settlements. If you need advice on your divorce and financial settlement options, our friendly experts can help.   Contact Evolve Family Law Today for Expert Family Law Advice.

If you are getting divorced, there are reasons why you need a financial court order, regardless of your current financial circumstances. In this blog, our divorce solicitors explain why you need a financial order, the types of court orders and how to obtain one.  For expert family law advice, call our team of specialist divorce lawyers or complete our online enquiry form. Does a divorce end financial ties between a husband and wife? Initiating divorce proceedings does not sever the financial ties between spouses. When you secure a final divorce order, the marriage is legally at an end, but former spouses can apply for a financial court order. There is no time limit to make a financial claim. That’s why you need a financial court order if you don’t want to risk a financial application years after your separation. The consequences of divorcing without a financial court order Getting divorced without a financial court order increases the risk of future complicated court proceedings to determine the value of assets at the date of separation and to argue about the impact of delay on the size of the financial award. If you divorce without a financial court order, your former spouse could claim a share of your assets even if they bring their claim 5,10 or 20 years after the separation. If your assets could increase in value, it is in your interests to ask the court to make a financial court order when you divorce. Assets that may substantially increase in value include: Pensions, especially if you continue to make pension contributions. Shares in a family business. Equity in the family home or other property. These assets can be considered by the court even if they are owned in one spouse’s sole name. Although the court considers delay when determining what constitutes a fair financial settlement, it also takes into account the individual's needs. If there is a small amount of equity in the family home at the date of separation, and you have a pension with a nominal value, that may not be the case in ten years. Alternatively, your former spouse may have had a well-paid job at the date of separation, but five years later, is unable to work due to ill health. Do separation agreements end financial ties between husband and wife? Some couples sign a separation agreement when they split up. The agreement may or may not end financial ties – it depends on what was negotiated at the time of separation. Family lawyers always recommend that a separation agreement is converted into a binding financial consent order. This can be achieved through a consent application. There is no need to attend a court hearing to obtain a consent order. Does a prenuptial agreement stop financial ties between husband and wife? If you signed a prenuptial agreement before your marriage, or a postnuptial agreement after your marriage, you may think you don’t need a financial consent order because your family agreement prevents or limits financial claims. You still need a financial consent order, even if you have an existing family agreement in place. A prenuptial or postnuptial agreement is not legally binding in the UK. It can carry significant weight if safeguards were put in place when it was prepared, and it meets the reasonable needs of your spouse. Ideally, a spouse will agree to convert the terms of the agreement into a binding financial consent order. If they won't do that, it is better to ask the court to make a financial court order in the same terms as the prenuptial or postnuptial agreement, rather than wait and face a financial application by your former spouse at a date chosen by them. For example, when the value of your investments or the shares in a family business has quadrupled in value in ten years. Does death end financial ties between a former husband and wife? The death of a former spouse does not end potential financial claims unless there is a financial court order that says explicitly that all claims are over. Without this type of order, a surviving former spouse can claim a share of the deceased spouse’s estate. This can be complicated and awkward in situations where the deceased spouse had children or had remarried. When you separate or divorce, you also need to review the provisions in your Will and take advice from a Will solicitor on how to avoid a claim against your estate. [related_posts] Does a financial consent order end financial ties between a husband and wife? Whether a financial consent order ends financial ties and stops future financial claims by an ex-husband or wife depends on its contents. There are three types of financial consent orders: Clean break – ending financial ties and claims. Deferred clean break – ending financial ties at a specified future date. Non-clean break. You may question why you should accept a financial consent order that only gives you a deferred clean break or no clean break. Your divorce solicitors will negotiate the best financial settlement possible for you. In your situation, that may involve you paying or receiving spousal maintenance for life or on a time-limited basis. Lawyers and courts always strive to achieve a clean break to provide finality and avoid further court proceedings to increase or terminate spousal maintenance or to capitalise spousal maintenance. This may not be possible where there is a significant income disparity between the husband and wife, justifying the payment of spousal maintenance, but with limited equity in the family home, nominal savings, or small pension funds. Where there are substantial family assets, the spouse with the reduced income can accept more of the capital assets (such as the equity in the family home) in consideration for giving up spousal maintenance claims and agreeing to a financial clean break order. What is a clean break financial order? A full clean break financial court order prevents all future financial claims. A clean break means there is no risk that a former spouse will ask a family judge for more because your financial situation has improved unexpectedly or theirs has worsened. The only exception to this rule is if the financial court order was made without providing complete and frank financial disclosure. For example, saying your business was worth 3 million when you had received an offer for 30 million. In some family situations, it isn’t possible to end financial ties either immediately or in the long term. For example: To provide a home for the children, the family home will remain in joint names until the children have finished school or reached the age of 18. Financial ties will be severed when the family home is sold. If there was a long marriage with substantial income disparity and insufficient capital to buy off the spousal maintenance claim, spousal maintenance may be ordered for the life of the receiving ex-spouse or until their remarriage. What is a deferred clean break financial order? A deferred capital clean break ends financial claims when an event occurs, such as the sale of the jointly owned family home. A deferred income clean break provides an immediate capital clean break, so a spouse cannot request additional funds, such as money from the family home or a larger percentage of a pension. However, the order maintains income ties until, for example, spousal maintenance payments cease. The court order could stipulate that spousal maintenance payments will cease after three years, with the clean break taking effect automatically upon completion of this period, as the court ruled that the spouse receiving spousal maintenance is not entitled to apply for an extension of the maintenance period. Is a financial consent order worthwhile if it does not contain a clean break? It may be impossible to obtain a clean break financial consent order due to your personal or financial circumstances. A financial consent order without an immediate clean break leaves you at risk of further court proceedings. For example, an application to increase spousal maintenance or to capitalise the spousal maintenance payments. However, if you do not have a financial court order, you are at risk of your spouse asking for an order that they get a share of your capital assets. These could include the equity in the property you own, shares in a listed company, your family business, or your pension. Therefore, whilst a deferred clean break financial consent order or a non-clean break financial consent order is not ideal, it is infinitely better than having no financial order. How to end financial ties with an ex-husband or wife To end financial ties with a former spouse, you need a clean break financial court order. If you cannot achieve this, it is still preferable to obtain a financial court order, even if it leaves open the potential for an ex-spouse to make a further court application. Take the example of a restaurant diner. Without a financial court order, the diner can request a three-course meal. With a non-clean break order, the diner may be limited to ordering dessert or after-dinner drinks. How to obtain a financial court order Most financial court orders are obtained by agreement. The court approves a draft order submitted by family law solicitors. There is no need to attend a court hearing. There are several ways you can reach a financial settlement, including: Solicitor negotiations. One lawyer divorce. Family mediation. Family arbitration. If you cannot reach an agreement, either of you can apply to the court for a financial court order. The court will order financial disclosure, and after a series of court hearings, it will hear evidence and make a financial court order to divide the assets. Our divorce solicitors can help you obtain a no-fault divorce and reach an agreed financial settlement or convert an agreement reached in family mediation into a binding court order. If you can't reach an agreement, our financial lawyers can represent you in a financial application to help you achieve a financial court order that meets your needs.   For expert family law advice, call our team of specialist divorce lawyers or complete our online enquiry form.

If a member of the extended family gives money to a husband or wife during their relationship, the money is undoubtedly very welcome at the time of the gift or loan. When a couple splits up, family gifts or loans can complicate things. There may be a dispute over whether the money was a gift or a loan and how the gift or loan should be treated in the divorce and financial proceedings. Our North West divorce solicitors provide specialist advice on the treatment of loans in divorce and financial proceedings. Contact our specialist family lawyers for a consultation on your divorce and financial settlement. What is a family loan in divorce financial proceedings? A family loan is typically an informal loan between a family member and one of the divorcing spouses. It could be verbal or written, but if it is written, it could have been prepared without the benefit of legal advice, and the terms of the agreement may not be clearly defined. Often, the spouse who received money from their side of the family will say it was a loan, while the other spouse will say it was a gift. If agreement cannot be reached on whether the money received was a loan or a gift, the family court can be asked to decide the issue in financial proceedings brought by either the husband or the wife. The person who lent the money can also apply to intervene in the financial proceedings so they can make their case and have legal representation. If the court says the money is a hard loan, it will affect the asset pot available to be distributed between the husband and wife. The size of a loan and its classification could substantially impact the financial court order. In this sequence, the court must decide: Was the family money a gift or a loan? If it was a loan, was it a hard loan or a soft loan? In light of the court's finding on the loan status, what is the extent of the family assets available for distribution by the judge? What is a fair financial settlement for the husband and wife? Family loans and reaching a financial settlement in mediation If you are trying to reach a financial agreement in mediation, you may need specialist legal advice on complex points, such as: Whether the court would be likely to say a loan was hard or soft, and the impact on the financial settlement. The value of complicated assets, such as pensions or shares in a family business. The relevance of specific factors, such as pre-marriage owned property, gifts or inheritances. Family law solicitors can advise you on specific queries to help you reach an agreement in mediation and can provide mediation support to help you convert your mediated agreement into a binding financial court order. Family loans in financial proceedings In divorce financial proceedings, there can be disputes about: Whether money from friends or family members was a gift or a loan. Whether the gift was to the husband or wife or the couple jointly. If the money was a loan, the repayment terms. If the money was a loan, whether the debt should be included as a debt in the asset schedule. If the money has been repaid to the extended family member because of the divorce, whether the funds transferred to the relative should be added back into the asset schedule. Whether the extended family member should intervene in the financial court proceedings. Things can get very acrimonious when family money is in issue, with one party saying the money was a gift and the other a loan. Treatment of family loans in divorce and financial proceedings The case of P v Q (Financial Remedies) [2022] EWFC B9 (10 February 2022) clarified how the court should treat family loans in financial proceedings after a divorce. The case emphasises the importance of extended family members taking legal advice before making a payment to a married family member to ensure it is clear if the money is a loan, a joint gift, or a gift to one spouse, with the money ring-fenced in the case of separation or divorce. The case of P v Q (Financial Remedies) [2022] EWFC B9 The case of P v Q involved an international family based in the UK and Germany. The wife was German, living in England, and the husband was English, living in Germany with the couple’s two children. The case had many unusual points, including the value and liquidity of company shares, as the case was heard when Russian forces were massing at the Ukraine border and there were expectations of share price volatility. Divorce and financial proceedings were started in the UK. The wife said the husband had given his mother £150,000 to reduce the family assets and to reduce the amount the husband would be ordered to pay her as a financial settlement. The husband said he had repaid his mother the £150,000 loan, and the money should not be added to the asset schedule. The husband’s mother had given each of her three children £150,000 to help them with housing. No loan documentation was drawn up, and there was no evidence that the mother had gifted the money as part of an estate planning strategy. No demand was ever made for repayment of the £150,000, and there was no discussion about the circumstances when repayment was required. In evidence, the mother said she hoped the family would repay the money to her if she needed it. The husband repaid the £150,000 to his mother without his mother asking her son for the money. The wife argued the transfer was a device to remove £150,000 from the asset schedule, so she lost £75,000, using the sharing principle of a 50:50 split if £150,000 was added back into the asset schedule. The judge had to consider whether the £150,000 (and other family monies) were gifts or loans. The judge held that for money to amount to a gift, there must be an intention to give away with no expectation of repayment. Accordingly, the judge held that the £150,000 payment was a loan. The arguments didn’t stop there. Using case law, the judge had to consider whether the loan was a hard or soft loan to determine whether the £150,000 should be added back into the asset schedule. The judge concluded the loan was a soft loan. This meant the loan monies were added back into the asset schedule, thus increasing the amount to be shared between the husband and wife by £150,000 and increasing the size of the wife’s award. [related_posts] The law and the treatment of family loans in financial proceedings The judge in the case of P v Q said he had to consider the factors set out in Section 25 of the Matrimonial Causes Act 1973, together with any relevant case law, to decide: How to treat the loan and How to split the assets. Section 25 Matrimonial Causes Act 1973 broadly says it is the duty of the court when making a financial court order to have regard to all the circumstances of the case, first consideration being given to the welfare while a minor of any child of the family who has not attained the age of eighteen. Amongst other things, and of relevance to family money and loans, the court should pay particular regard to: The income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future, including in the case of earning capacity any increase in that capacity which it would in the opinion of the court be reasonable to expect a party to the marriage to take steps to acquire, and The financial needs, obligations, and responsibilities that each of the parties to the marriage has or is likely to have in the foreseeable future. Is a family loan a soft loan? A loan can be classed as hard or soft. The definition is important because a soft loan will not carry as much weight in divorce financial proceedings as a hard loan. A hard loan is more like a commercial or contractual agreement, while a soft loan is an arrangement between family members without too much formality. In P v Q, the judge said that when looking at the treatment of loans in financial proceedings, the court needs to consider: If there is a contractually binding obligation by a party to the marriage towards a third party, the court should consider whether the obligation is a hard obligation debt or a soft debt. There is no set test to decide if a loan amounts to a hard or soft debt. A common feature of family loan analysis in financial proceedings is determining whether the obligation to repay will be enforced. The court should consider common factors that point toward a hard or soft loan. Evidence that a loan is a hard loan in financial proceedings Factors that point to a loan being classed by a judge as a hard loan include: The terms of the obligation feel like a normal commercial arrangement. There is a written loan agreement and a written demand for payment. There is a threat of litigation or intervention in the financial settlement proceedings. There was no delay in enforcing the debt. The amount of money owed is such that it would be less likely for a creditor to waive the obligation to pay. Evidence that a loan is a soft loan in financial proceedings Factors that point to a loan being classed by a judge as a soft loan include: The debt is owed to a friend or family member who remains on good terms. The loan is informal without a commercial arrangement feel to the loan. There has been no written demand for payment despite the loan repayment date having passed. There has been a delay in enforcing repayment. The amount of the money is such that it would be more likely for the creditor to be likely to waive the obligation to repay. Divorce and private client considerations when making or receiving family loans If you are thinking about making a gift or loan to a family member, it is sensible to take private client advice to: Understand estate planning and ensure your gift is tax-efficient for inheritance tax purposes, and Ring-fenced and protected in case the family member gets divorced. This can be achieved through a formal loan document, preferably combined with a prenuptial agreement or postnuptial agreement. Specialist divorce and financial advice on the treatment of loans in divorce proceedings Our expert divorce solicitors can help you if you are: Disputing a payment made by a family member was a loan and not a gift. Arguing that the money given by your family to you individually or as a couple was a loan. The loan maker who needs advice on intervening in the financial proceedings to protect your loan and financial interests. Our divorce lawyers will: Give an unbiased view of whether the court will likely say the money is a gift or a loan. Whilst you may not like the opinion about the treatment of the family money, you don’t want to waste time or money on an argument that you are not likely to win. Look at the additional legal costs of arguing whether the family money was a gift or loan, as you don’t want to spend more on legal costs arguing the point if the costs will be more than the amount to be gained in your likely financial award. Our family law solicitors can also help prepare prenuptial and postnuptial agreements, and our private client lawyers can advise on estate planning, gifting, and family loans. Contact our specialist family lawyers for a consultation on your divorce and financial settlement.

Our North West divorce solicitors write lots of financial consent orders. This blog explains why you need an order and how we write them. If you would like our help in negotiating a financial settlement or writing an order then call us for a quote and to arrange a consultation. For financial consent order advice call our team of specialist divorce lawyers or complete our online enquiry form. Why you need a financial consent order  Anyone who is getting divorced, or who got divorced without a financial court order, needs an order.  That advice applies even if you: Don’t own a house Signed a prenup or postnup Parted amicably and you don’t think your ex would ever come after you for money  Split the house sale proceeds when you separated Didn’t start your new business or buy your current house until after your divorce  Signed a separation agreement  Reached an agreement in family mediation  Think your ex has more money than you  If you don’t have a financial court order you risk your ex being able to ask for a financial settlement.  Your former spouse can do that many years after the divorce is finalised. Back in 2000, you may have been married for a few years and think that you are in the clear but your ex could have hit hard times or heard about your success and want a share of your pension or a payoff because they know you have inherited some money. If you don’t want to be at risk of an unexpected claim you need a financial court order – preferably one that includes a clean break. What is a clean break financial consent order? A clean break financial consent order stops any future financial claims. Other types of financial consent orders leave the door partially open so a spouse can ask for maintenance later or can ask the court to swap their spousal maintenance into a pension sharing order. If you are relying on your ex’s solicitor to prepare the consent order because you want to save a bit of money then this may be a false economy as you need to know what your options are and what the clauses mean. For example, a financial consent order can be a full clean break, partial clean break or leave future claims open. The law is confusing and that’s why most divorcing couples find that they need expert advice to protect their interests. Even if you didn’t negotiate a clean break order some things can't be reopened after you have obtained your financial consent order. For example, if you agreed to give your ex-husband £100,000 in consideration for him agreeing to transfer the family home into your name, your ex can't normally argue after the order has been made that he wants an extra £20,000. The only circumstances where a capital part of a financial consent order can be re-opened is where a former spouse can show there was an element of dishonesty or coercion at the time of the original order. Feeling regretful that you didn’t get a better deal isn’t sufficient for a court to reopen the order. [related_posts] How to write a financial consent order? You need to take a lot of care when writing a financial consent order. That’s because once the order is made it is final. The judge won't agree to you asking to change the order because you did not fully understand what a clause meant. As family law solicitors we write financial consent orders every week but we are cautious when doing so to check that: The wording in the draft financial consent order is the same as in your negotiated financial settlement. Your financial  deal could be in a solicitor’s letter, minutes of a roundtable meeting or memorandum of agreement made in family mediation  The wording is as clear and simple as possible whilst also following legal precedents. These legal precedents mean it is less likely that your financial consent order wording could be questioned by the judge asked to approve the order or later on. For example, if your order includes spousal maintenance but does not give your ex the ability to apply back to court to extend the time that spousal maintenance is paid for, this must be carefully worded as a deferred clean break   You understand what your financial consent order means and who is responsible for checking its implementation. For example, if you agree to a pension sharing order it must be implemented by the pension administrator. The court will not implement the order for you  The order is capable of being enforced. If you have agreed to receive £100,000 as a lump sum from your ex there needs to be a deadline for payment so you can enforce the order if it isn’t paid. If you are going to receive spousal maintenance the order should say that the money will be paid by standing order to save aggro   You understand the importance of providing accurate information in your financial statement of information. The judge will not approve your agreed financial consent order without you both completing a financial statement of information. This must be on the prescribed form. While the judge won't be concerned about the pence (you can round down or up the amount you have in savings) the onus is on you to provide accurate information. For example, if you say your family business shareholding is worth £500,000 when you have had an offer for the company that gives your shares a value of £3 m. That level of inaccuracy would leave you exposed to your ex being able to reopen the order as it was made without full and frank financial disclosure. The same would apply if you only mentioned one pension transfer value when you had three pensions at the time of your divorce or if you didn’t mention other relevant financial or personal information The order is future-proofed if that is what you want.  If you have agreed to pay spousal maintenance, do you want to include a clause that says the maintenance is inflation-linked to avoid the need for variation applications? There are other ways you may need to future-proof your order      Fixed fee financial consent orders At Evolve Family Law we offer transparent pricing and fixed fees for preparing most financial consent orders. For more information on our fixed fees have a look here.  For information on financial consent orders or advice on divorce or family law call our team of specialist divorce lawyers or complete our online enquiry form.

Sorting out how you split the equity in the family home can be tricky. It can be a lot harder to reach a divorce settlement when you are also trying to agree on who pays the bank loan and credit cards, what happens to the pensions, and whether one of you should pay spousal maintenance and for how long. In this blog, our family law solicitors answer your questions on divorce financial settlements.  Call us for expert family law advice or complete our online enquiry form.  Reaching a divorce settlement  In the UK, divorce settlements are discretionary and based on reasonable needs. The statutory factors make it hard for couples to reach a financial agreement as English family law doesn’t say that a husband and wife must split their assets equally or that a wife must return to full-time employment when the youngest child is 11 or that a husband will always keep a family business owned before the marriage or even that the divorce court must follow a prenuptial agreement. If there are no hard and fast rules, how are divorce settlements reached? Ultimately, if a husband and wife can't agree, it is down to a family court judge to decide what happens to each asset and make a financial court order. The judge will look at statutory criteria and case law when making the order. When a divorce solicitor advises on likely divorce settlement outcomes, they base their advice on their experience in negotiating settlements and representing spouses in contested financial court proceedings.  Divorce settlement advice   If you need divorce settlement advice, it's crucial to speak to a divorce lawyer. The solicitor will talk to you about your circumstances before offering advice. Examples of why information and talking are important include: It is often assumed there should be a 50/50 split of assets after a long marriage. However, that assumption could be displaced for several reasons, such as the wife can't get a mortgage and needs more than 50% of the assets to buy a new family home for herself and the children or most of the assets were inherited by the husband before the marriage and the wife can comfortably rehouse herself and meet all her other needs with 30% of the total assets. Alternatively, the couple may have signed a prenuptial agreement to ringfence inherited money Clean breaks should be achieved to end any financial or other ongoing ties between husband and wife. However, if the family home is sold, the equity won't be enough for either the husband or wife to buy another property, so both parents will be stuck renting. Maybe the parent who is the primary carer of the children should stay in the family home until the youngest child is 18. The house can then be sold, and the proceeds of the sale can be split in percentages fair to the ex-husband and wife   Discretion and how it works with divorce settlements Family law solicitors will outline the discretionary factors the court applies when making a financial court order after a contested final hearing of a financial application. The factors are just as relevant if you are negotiating an agreement through family mediation, solicitor negotiations or trying to do a deal at a financial dispute resolution hearing. The discretionary factors are contained in Section 25 of the Matrimonial Causes Act 1973. The lawyer shorthand for them is ‘Section 25 criteria’. The court’s first concern should be the welfare of any dependent children and how the children's needs will be met. The court should then consider the Section 25 criteria: The income, earning capacity, property, and other financial resources that the husband and wife have or are likely to have in the foreseeable future. With earning capacity, this includes any increase in that capacity which it would, in the opinion of the court, be reasonable to expect a husband or wife to take steps to acquire The financial needs, obligations, and responsibilities that the husband and wife have or are likely to have in the foreseeable future The standard of living enjoyed by the family before the breakdown of the marriage The age of the husband and wife and the length of the relationship  Any health issues affecting either the husband or wife or their children   The contributions made by the husband or wife or likely to be made in the foreseeable future to the welfare of the family, including any contribution as a homemaker or stay-at-home parent  The conduct of the husband or wife if that conduct is such that it would, in the opinion of the court, be inequitable to disregard it The value to the husband and wife of any benefit (for example, a pension) that they will lose the chance of acquiring because of the divorce With this list of factors, it is easy to see how, in some situations, a judge may order a different financial settlement from another judge. However, the difference in judicial view should be within a band of reasonableness. For example, it would be unreasonable for one judge to say an equal split of equity in the family home and for another one to say a 90/10 split of the equity in the family home would meet the Section 25 criteria. With the uncertainty of judicial discretion, most divorcing couples prefer to try to negotiate a divorce financial consent order based on their family lawyer’s assessment of the Section 25 criteria. [related_posts] How to get the best divorce settlement  Some people think the only way to get the best divorce settlement is to apply to the court for a financial order.  They may be right. For example, if their former spouse is refusing to provide financial disclosure, is transferring assets to friends or family or is refusing to agree to a valuation of the family home or business. In other situations, a divorcing husband or wife must weigh up the costs and time in making a financial application against the benefits to be gained.  A family law solicitor will tell you that if your ex-spouse is only offering you 10% of the family assets, you need to go to court. It is far harder to advise on the decision to start financial proceedings if your former spouse is offering you 45%. The decision may then come down to the value of the 5% of the assets you may be losing out on balanced against the costs of going to court. Things are often more complicated than that, as you may also dispute your ex-spouse’s valuation of his business or home, or you may argue that your ex-partner is offering you assets that are not as valuable to you as the ones you want. For example, they may be proposing that they will keep all the equity in the family home and you keep all your pensions, but that deal doesn’t give you the capital to rehouse yourself even though it will provide you with an income in eventual retirement. At Evolve Family Law, our North West divorce solicitors focus on finding out what your ideal divorce settlement would look like and why. We then work on discovering the full extent of the family assets and any property that might be classed as non-family assets. We can then have an informed discussion with you about your realistic settlement options so you can weigh up the pros and cons of court proceedings over family mediation or arbitration or weigh up the advantages of spousal maintenance over a bigger share of equity in the family home. Having the right expert support behind you can give you the confidence to say yes or no to what is on offer from your ex, knowing that your lawyers have a strategy to get you the divorce settlement you need. Call us for an appointment to discuss your divorce settlement or complete our online enquiry form. 

In this article, our family law solicitors answer your questions on what a mesher order is and explain how the order works. If you are splitting up from your husband or wife and need advice on reaching a divorce financial settlement or need your financial agreement converted into a court order our Northwest family lawyers can help. For expert advice call our team of specialist divorce lawyers or complete our online enquiry form. What is a mesher order?  A mesher order is one way a family judge can deal with a family home when a couple split up. Alternative orders include an order that the family home is sold or transferred into the sole name of the husband or wife. A mesher order is best described as an order for the deferred sale of the family home but family law solicitors call this type of order a ‘mesher’ as the order was first made in a case involving Mr and Mrs Mesher. When the property is sold the financial court order will set out how the equity in the property is to be shared between the former husband and wife. One ex-spouse may get a larger percentage than the other so they can rehouse themselves or an ex-spouse may get less than 50% of the equity because they kept their pension or the family savings at the time of the divorce proceedings.  How does a mesher order work? A mesher or deferred sale order works by delaying the sale of the family home until a specified date or trigger point occurs. Until the trigger point, one former spouse can live in the house to the exclusion of the other, even though both are still legal owners.  Normally a mesher order is made by the court when a couple has children and there is not enough equity in the family home for the property to be sold and the equity to be split so both the husband and wife can afford to buy new properties. A mesher may be necessary if one spouse cannot rehouse themselves because they have no or limited mortgage capacity and housing is a priority for them as they are caring for the children. A mesher order is normally only appropriate where the spouse staying in the family home cannot raise money through a mortgage to rehouse or remortgage to pay off the other spouse’s share of the equity in the family home and the spouse cannot get the mortgage company to agree to transfer the mortgage on the family home from joint names to their sole name. A mesher order maintains property ownership and financial links between a separated couple. Even if no spousal maintenance is payable, they continue to be financially linked through the joint mortgage. The mesher order can say who is responsible for the mortgage payments but if the payer defaults on the mortgage the credit rating of all those named on the mortgage will be affected. What are the trigger points for a mesher order? You can agree on the trigger points with your ex-spouse if you negotiate an agreed financial settlement or the court can decide on the triggers if it makes an order for a deferred sale after a court hearing. Some of the usual trigger points are:   The youngest child finishing their secondary education The re-marriage or cohabitation of the spouse living in the property with the children. Cohabitation is normally defined as living with an unmarried partner for a specified period, such as three or six months The children no longer living with the spouse who has the right to stay in the family home. For example, if the children are older teens and vote with their feet to live elsewhere or if the court makes a child arrangement order    The spouse who occupies the property leaving it. For example, because they decide to move elsewhere  The spouse who occupies the property passes away If you are negotiating a mesher order through solicitor negotiations or family mediation you can ensure that the trigger dates work for your family circumstances. [related_posts] Is a mesher order a good idea? A mesher has good and bad points. The good points are: The spouse living in the property has a secure home for the children and is not at risk of having to keep moving the children between different rental properties   Keeps the mortgage in situations where the mortgage is on favourable terms or neither spouse  would qualify for another mortgage  Means the ex-husband and ex-wife remain on the property ladder and they may both have enough to re-house once one of the triggering events occurs  Some of the negative things about mesher orders are: The spouse in occupation may feel unsettled knowing that they will have to sell the property when a trigger point occurs. This may make them reluctant to invest in improving the property knowing that their ex-partner will get a share of the equity The former spouses are financially linked to one another by having a joint mortgage. If the spouse in occupation does not pay the mortgage this will affect the credit rating of both spouses The spouse not living at the family home may not be able to get another mortgage while their name remains on the joint mortgage on the family home and they will not be able to use their share of the equity in the family home to use as a deposit to rehouse themselves  Family law solicitors emphasise the importance of taking specialist advice before agreeing to a mesher order so you can fully weigh up the advantages and disadvantages of a deferred sale. Applying for a mesher order If you and your former spouse agree that the children should stay in the family home then your family lawyer can draw up an agreed court order for approval by a family court judge. If you can't reach a financial settlement either of you can apply for a financial court order leaving the judge to decide if a mesher order is the most appropriate solution for your circumstances. For expert advice call our team of specialist divorce lawyers or complete our online enquiry form.