Divorce & Financial Disclosure

If you have taken the decision to separate from a husband or wife, it is tempting to leave sorting out financial and property matters and things can drift. Alternatively, a husband or wife can rush into an agreement, often without first getting accurate or up to date valuations of property and other assets.   Which Property Should be Valued in Your Divorce? It is assumed by a separating couple that only the family home needs to be valued as part of their separation or divorce. That is not necessarily correct, as it is important that all relevant property is valued.   What then is ‘’relevant property ’’ that should be valued? The honest answer from a Whitefield divorce solicitor is that it all depends on the individual personal and financial circumstances of a husband and wife. However, property can be relevant even if it is owned in the sole name of a husband or wife. Property does not have to be owned jointly to be relevant to divorce proceedings and form part of the family wealth and financial settlement options.   If a husband and wife are splitting up then consider valuing: The family home ; and Any second home or holiday home or chalet (including overseas property ) ; and Buy to let property portfolio; and Any property owned by a family business. This is because if the property is included in the company business accounts the company shares cannot be accurately valued unless there is an up to date valuation of the property ; and Any property held within a pension fund, such as a SIPP. This is because the value of the pension fund cannot be accurately ascertained without an up to date value of the property held in the pension fund ; and Property owned by a third party, for example a family member, if a husband or wife has a beneficial interest in the property. An expert divorce solicitor will look at the financial disclosure and advise you on what property should be valued and talk to you about the best way to obtain accurate valuations. The solicitor’s advice may depend on a range of factors, for example, the length of the marriage or when a property was last valued. Sometimes an independent surveyor may have recently valued business or pension property for business related or pension administration purposes. That can mean that a further report is not necessary but careful thought should be given to the purpose of the original valuation and the reliance that can be placed upon it. [related_posts] Valuing Property in Financial Court Proceedings The first step in reaching a financial settlement is to find out what the family home and other property and assets are worth. If property and assets are not accurately valued then the financial settlement can result in unfairness to either the husband or wife.   If a couple cannot agree on the value of a property value, a court can order a formal valuation by a surveyor who is a member of the Royal Institute of Chartered Surveyors.   Normally a family judge will say that one surveyor, jointly instructed by the husband and wife, should undertake a valuation of property for use in financial court proceedings. The main advantage of using one single joint expert is there are no conflicting opinions on a property value by different surveyors and costs do not escalate by surveyors going to court hearings to justify their different property valuations.   A single joint expert is: Independent of both husband and wife ; Will not of had undisclosed prior dealings with either the husband , wife or the property ; and Not influenced by whether the property is owned jointly or by the husband or wife or jointly with a third party. This is because the expert is focussed on the value of the property and not its ownership; and Under professional and court rules on reporting duties to ensure that the report is independent and impartial.   Specialist Whitefield divorce solicitors also recommend that you take advice on the tax implications of the sale or transfer of property so that the tax bill can be factored into the financial settlement to achieve a fair net result.   A divorcing couple can worry about the cost of getting legal advice, property valuations and tax advice. However, given the importance of knowing how much property and assets are worth before looking at the wide range of property solutions, it is always sensible to get expert advice before deciding what to do. The cost of this advice and preparing any legal documentation is tiny compared to the cost and stress involved if something goes wrong without the right valuations and documentation in place. For legal assistance with divorce financial settlements and representation in financial court proceedings please contact our expert divorce lawyers today

Divorce and debt sounds a depressing topic. However, it is a subject that has to be discussed by many couples who are thinking about separating or getting divorced.   Putting off a separation or divorce because you are in debt is rarely a good idea unless you think that the marriage still has a chance of working. If you think your judgment is impaired by the debt, it is sensible to take advice on your options.   Debt and divorce proceedings   Many Whitefield divorce solicitors find that debt is one of the major reasons behind the decision to start divorce proceedings. For example: A spouse may have hidden spending from their partner so they have lost trust in them; Family debt has arisen and because of financial pressures, arguments have escalated.   Debt issues can be included in a divorce petition based on a spouse’s unreasonable behaviour. There is often a reluctance to agree to a divorce if allegations are made about debt and spending.   When a couple agree that a marriage is at an end the simplest solution is for the respondent to the divorce proceedings to agree to the divorce and to say that they do not accept the debt allegations in the divorce petition. That way the husband and wife avoid the cost of contested divorce proceedings. However, the respondent to the divorce petition can argue his or her case in any later financial court proceedings.   Debt and financial disclosure   If you are negotiating a financial settlement or asking the court to make a financial court order, it is vital that all debt is disclosed. In financial court proceedings, financial disclosure involves giving information about assets and debts.   Debt can include joint debt and individual borrowings. Debt is not just overdrafts and loans but includes credit and store cards, gambling debts, money owed to family or car loans and hire purchase commitments.   As well as providing details of the debt, it is important to disclose how much is repayable each month and the debt repayment date. Without that additional information, financial settlement options cannot be explored.   Am I liable for the debt in my spouse’s name?   If your spouse took out loans or debt in his or her name then the person or organization owed the money cannot pursue you for recovery of the debt unless it is legally assigned to you.   However, in family court proceedings the judge can take into account debt in one spouse’s sole name. The court may have to decide if the debt is ‘’family debt’’ or ‘’non-family debt’’. For example, if a wife took out a credit card to pay for family holidays and clothes for the children the court is likely to class the loan as family debt even if the husband did not agree with all the spending. However, if a loan was used to buy presents for a new partner or furniture for a new house it is likely that it would be viewed as non-family debt. [related_posts] What happens to non-family debt in divorce and financial court proceedings?   If you can establish that a spouse has incurred debt purely for their benefit then a divorce solicitor can argue that the debt should be ‘’added back’’ to the assets of the person who incurred the debt.   Normally the divorce court will only add back non-family debt to the family asset pot if the expenditure was wanton and reckless.   Non-family debt can be a highly emotive topic. However, it is always important to weigh up the extra legal costs involved in analysing the debt and the benefits to be gained from pursuing the legal argument.   Your divorce solicitor should help you stand back from the situation to work out if it is in your financial interests to pursue the argument. It will all depend on the amount involved, how ‘’reckless ‘’ the expenditure was and the potential additional legal costs.   For help with divorce proceedings or financial settlement solutions and financial court orders please contact our divorce lawyers today.

It is difficult if you are getting divorced or are contemplating separating from your husband or wife, to answer the question "Can I give property to my relative?’’. On the one hand, you do not want your marital troubles to affect your decision to give money or property to a relative. On the other hand, you do not want your actions to appear as if you are deliberately trying to give assets away so your husband or wife will not be able to make a financial claim against the asset in any subsequent divorce and financial proceedings. Our Manchester divorce solicitors acknowledge that it is a tricky issue. What can be a genuine gift to a relative can be perceived as a clever ploy to reduce a divorce financial settlement. In other cases, a gift of property or money to a relative can easily be seen as a clumsy attempt to try to defeat a spouse’s financial claim. Take the case example of a husband transferring his share in a property investment portfolio to his wealthy brother, the week before the husband leaves his wife. If a husband or wife wants to make a claim against the property given away to an elderly or impoverished relative, the spouse can be viewed as greedy. Take the case example of a wealthy husband and wife, where the husband paid for his parent’s council home so his parents could own their own home and have security.   There are many examples of where either a husband or wife has given money to a relative, only to find that their spouse challenges the gift in later divorce financial proceedings. Take the real life case of lawyer, Melanie Panzone and her former husband and banker, Jonathan Read. He bought a holiday apartment in Panama for £300,000. Fair enough, you might think. However, ownership of the apartment was put in his mother’s name. Mr Read said it was a thank you for all his mother had done for him.    A family judge ruled that Mr Read beneficially owned the apartment. This meant the asset was brought into the equation in the divorce financial settlement. Mr Read’s mother disagreed with the ruling of the first and second family law judges. She has appealed the decision to the court of appeal.  If the court of appeal agrees with Mrs Panzone’s mother in law, then the holiday home apartment may be transferred back to her.  [related_posts] Property division in divorce: Can I give property to my relative? The case of Mrs Panzone and her ex-husband, Mr Read, and Mrs Panzone’s mother-in-law demonstrates what can happen if you give money or property to a relative, even if the transaction takes place prior to the breakdown of the marital relationship. Our Manchester divorce solicitors recommend that if you are contemplating a separation or are already going through divorce proceedings that you take expert legal advice before giving property or money to a relative. That is because if the gift is thought, by your ex, to be a device to reduce the size of their financial settlement, they could ask the court to set aside the property transfer and your relative could be invited to intervene in the divorce financial proceedings. That can add to the cost and the complexity of the financial proceedings.  Sometimes giving money to a relative whilst in the midst of divorce proceedings is the best way to resolve a financial impasse with your husband or wife. If you are not able to reach an agreement over whether a spouse should receive £x or £y as their financial settlement, the solution may be to give the difference to the adult children to fund a house deposit or to pay off part of their mortgage. After all, you may find with a bit of communication between husband and wife that they both planned to help their adult children with a lifetime gift. The key to successfully giving property to a relative is to: Take legal advice before making the gift – this applies whether or not you are contemplating a separation at the time that money or property is given away; Discuss your plans to give property to a relative with your spouse and other key family members; Record the agreement and the basis of the transfer of property to the relative – although the record of the agreement will not mean that your spouse cannot challenge the transfer it is evidence of the rationale behind the gift; If you are concerned that your spouse might challenge a large gift of money or property to a relative or the transfer of a large part of wealth into a discretionary trust then take legal advice on the option of a post nuptial agreement. The agreement could simply record that your spouse accepts that the transfer is a genuine gift to your relative or could be more wide ranging and set out how your remaining assets will be divided between you if you later decide to separate or divorce. A postnuptial agreement is just part of sensible estate planning, in the same way as making tax efficient lifetime gifts to relatives or making a Will.    For legal help with financial settlements and divorce, for help in intervening in financial proceedings or for advice on drawing up a postnuptial agreement please contact us

When you are divorcing and you or your spouse runs a business or has shares in a family firm, you need to know if the business is relevant to the divorce settlement and how it will be valued. Our North West divorce solicitors specialise in negotiating financial settlements where one or both spouses own a family business. In this blog, we answer your questions on business assets in divorce proceedings and how you value company shares in divorce. For expert family law advice, call our team of specialist divorce lawyers or complete our online enquiry form. Your frequently asked questions on business assets in divorce proceedings   Divorcing couples ask these questions when they or their spouse has business assets: Can the divorce court decide what happens to a business? Will company law and the shareholder agreement determine what happens to the shares in a family business? Are business assets relevant to divorce proceedings? How are businesses valued in divorce proceedings? Can the company accountant value the business in divorce proceedings? Is the book value of a business an acceptable valuation of a business asset in divorce proceedings? How are minority interests in family companies valued in divorce proceedings? What is the relevant date to value a company shareholding? Can a shareholder in a family business be forced to sell their shares as part of a financial court order? What happens to a family business when both spouses are shareholders in a family business?  At Evolve Family Law, our family lawyers can answer all your business-related financial settlement questions, whether you own a family business or are married to someone who is either a sole trader, in partnership or a majority or minority shareholder in a family business. Can the divorce court decide what happens to a business? The divorce court can decide what happens to business assets in a divorce. The court will consider: Is the business a family asset? What is the value of the business? What is a fair financial settlement? If the spouse’s shareholding is not classed as a family asset, the court will only include it in the financial court order if necessary to meet the needs of a spouse. If a spouse’s reasonable needs can be met without reference to the business asset, its value will be ignored. In divorce proceedings concerning a family business, the judge can order: The spouse who owns the business asset retains it as part of their share of the family wealth. The shares in a family company are sold, and the sale proceeds are divided in the proportions ordered by the judge. The shares in the family company are transferred from one spouse to the other.  If one spouse is the only one actively involved in the family business, the court will normally order that the spouse retain ownership of their shares. However, the other spouse may receive all the equity in the family home, a lump sum payment, spousal maintenance, or a combination of these. If one spouse is a minority shareholder and the other a majority shareholder, the court may order the minority shareholder to transfer their shares in the company to their spouse. If the divorcing couple can still work together in the business and want to continue joint ownership, the court could leave both spouses with shares in the company. This scenario is unusual unless the couple asks the divorce court to make an agreed financial consent order. Will company law and the shareholder agreement determine what happens to the shares in a family business? Spouses sometimes assume that the divorce court lacks jurisdiction to decide what happens to a business in divorce proceedings. For example, if a husband and wife are the major and minor shareholders in a company and are in a shareholder dispute. Logically, you would assume that the dispute is a matter of corporate law. It is and it isn't. If one spouse starts proceedings in the commercial court under the Companies Act 2006, the judge has jurisdiction to resolve the corporate dispute.  However, if the husband or wife initiates financial proceedings because they cannot reach a divorce settlement, the family court has wide-ranging discretion to make orders, including orders over business assets. Therefore, it wastes time and money for a shareholder dispute between a divorcing husband and wife to be litigated first in the commercial court using corporate law principles when the family court can decide how to divide assets, including the business, using the principles contained in Section 25 of the Matrimonial Causes Act 1973. Are business assets relevant to divorce proceedings? Business assets are relevant to divorce proceedings. The judge will decide if they are: A matrimonial or family asset, or A non-matrimonial or non-family asset. If deemed a family asset, the business is relevant to the divorce settlement. If it is classed as a non-matrimonial asset, its value could be considered if it is necessary to do so to meet the reasonable needs of the spouse who does not own the business. How are businesses valued in divorce proceedings? Business assets must be disclosed as part of the Form E financial disclosure process. In Form E, a spouse is asked to value their business and other assets. The other spouse may agree on the valuation. If so, an accountant doesn’t need to carry out a valuation. A business valuation may be agreed in scenarios such as: The spouse works freelance and their earnings are paid into their company account. There are no valuable business assets and no goodwill value. The business is valued at the amount of cash in the bank. The husband and wife are shareholders in a company, and an offer for purchase has been accepted from a third party unconnected to either spouse. In other situations, the court may be asked to order an independent valuation of a sole trader's business, a partnership interest, or a company shareholding. The court typically orders the instruction of a forensic joint accountant as a single joint expert. Both parties instruct the expert and agree to the terms of the letter of instruction. The court will typically specify the scope of the expert's report, for example, whether the expert is to assess company liquidity in addition to providing a valuation. Can the company accountant value the business in divorce proceedings? A company accountant can provide the Form E value for the business. If additional information is necessary, the court may be persuaded that a detailed valuation by the company accountant is more appropriate than the instruction of a forensic accountant with no prior knowledge of the business. The approach taken by the court will depend on the size and structure of the company, as well as the representations made on behalf of both spouses. For example, one spouse may claim that the majority shareholder heavily influences the company's accountants. You might also be interested in [relate_posts] Is the book value of a business an acceptable valuation of a business asset in divorce proceedings? The book value of a business can be an acceptable valuation for certain types of small businesses, such as a company set up by a freelancer to channel their income through, and the business has no goodwill value or significant assets. A divorce solicitor can explain the valuation options and why you may need a more detailed valuation of your spouse’s shareholding or partnership interest. How are minority interests in family companies valued in divorce proceedings? If a spouse is a minority shareholder in a family business, special consideration needs to be given to the value of the shares. The shares may not be attractive to a third party, who would be buying shares in a business where they have no control or power to veto.  The professional conducting the valuation will generally apply a discount to a minority shareholding, depending on the percentage shareholding and the degree of control, if any, the minority shareholder has. The value of a minority shareholding should be examined carefully. For example, minority shareholding may not be heavily discounted in a company with significant cash reserves. What is the relevant date to value a company shareholding? Sometimes, spouses and their lawyers argue about the date to be used for valuing the shares in a company, as the fairness of the financial settlement may depend on the valuation date. For example, a forensic accountant may be asked to value company shares at: The date of separation, and The date of cohabitation or marriage, and The date the company shares were transferred or gifted to a husband or wife. The importance of business asset valuation dates was explored in the Court of Appeal case of Martin v Martin (Rev 1) [2018] EWCA Civ 2866. The Martin case illustrates the complexity of valuing shares in a non-listed company. A high court judge awarded Mrs Martin 40% of the 182 million family fortune. Mrs Martin appealed, saying she should have got 50%. Mr Martin counter-appealed, arguing that his ex-wife should have received less than 40% of the assets. The crux of the appeal was the relevance of the value of Mr Martin's shares when the couple began to live together. The court concluded that it was fair to assess the value of the shares at the date of cohabitation and, therefore, ringfence the value of the husband's pre-marriage-acquired shares. This resulted in Mrs Martin receiving 40% rather than an equal division of the family assets. The court said that a financial settlement ‘’ involves a holistic, necessarily retrospective, appraisal of all the facts and then the application of a subjective conception of fairness, overlaid by a legal analysis.’’ That subjective approach makes it even more critical for spouses to seek early specialist legal advice from divorce solicitors experienced in divorces involving family businesses and in assessing what a court is likely to determine as a fair financial settlement. Consult Evolve Family Law for advice on divorce and business assets The specialist divorce lawyers, led by Robin Charrot, have substantial experience representing spouses, civil partners, business owners and non-business owners in financial proceedings involving businesses ranging from SMEs to listed companies. With many years of experience advising on business assets in divorce, our team is well-equipped to hone in on the key aspects. That could be tracing vital financial disclosure, analysing company accounts or instructing a shadow accountant to assess the relevance of the transfer of business assets into a SIPP pension and leaseback at an overvalue to the company, impacting company profitability at the time of the divorce proceedings, or spotting unusual movements or discrepancies in director loan accounts. Alternatively, when acting for a majority shareholder, it could be robustly arguing against fishing expeditions for excessive financial disclosure or arguing for the instruction of the single joint expert to be limited to current issues rather than their remit extending to a historical trawl of company transactions. At Evolve, we combine expertise with a personal touch, providing strategic advice tailored to your family and business circumstances, as well as robust court representation. For expert family law advice, call our team of specialist divorce lawyers 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