Divorce and the Family Farm
A divorce can be traumatic but when a divorce occurs in a farming family, it can be particularly tough when the farm is not only the family business but also the family home.
In my experience as a family finance and divorce solicitor in Whitefield and Cheshire it is not uncommon for spouses to stay in unhappy relationships for fear of separating and the consequences on the family farm.
Some may question why divorce and a family farm are different to any other type of divorce. After all every divorce can be painful. However, with divorce and the family farm, often the farm has been in the family for generations. There is therefore great sentimental attachment to the farmhouse and land. Not only that, the farm is normally both the family home and the source of income for all the family, including extended family.
Adding to the complexities, the farm or some of the land could be owned by the older generation or parents may be paid an income out of farm profits as a means of providing a pension after they have transferred ownership of the family farm to a son or daughter.
Therefore, where do you start when facing the prospect of a divorce and sorting out what happens with the family farm.
In an ideal world, a farming family takes advice before handing over ownership of the family farm to a son or daughter. Often a farming family is told by a private client solicitor that it is tax efficient to transfer ownership of the farm to the younger generation to minimise the payment of inheritance tax. That is all very well but unless specialist family legal advice is taken the family may be reducing the risk of paying a big inheritance tax bill but exposing the family farm to divorce claims.
Some farmers think that if the family farm has been gifted or inherited it will automatically be ring-fenced from any financial claims on divorce. That is not the case.
Even if an asset is:
Owned in the sole name of one spouse; and
Was owned by the spouse prior to the marriage ;and
Has been in the family ownership for a long time
Divorce financial claims can be made against the asset. In a farming family, the asset in question is normally the farm and land.
When a couple get divorced all the assets they own, individually or jointly, are taken into account when negotiating a financial settlement or the court makes a financial court order.
Although the court will factor in the relevance of a family farm having been inherited or gifted by a husband or wife the court has to look at the husband and wife's needs and, most importantly, the needs of any children.
Prenuptial Agreements and the Family Farm
If a family own a farm and want to leave it as a legacy or gift to a son or daughter the best option to protect the family farm from divorce claims is for prenuptial agreements to be signed at the time of any marriage.
Although the prenuptial agreement can try to ring-fence the family farm from any financial claims in divorce, whether or not the prenuptial agreement will work fully depends on the family needs at the time of the divorce and the availability of other assets to meet divorce financial claims.
In any family situation involving a family farm, divorce solicitors recommend legal advice is taken on the benefits and potential disadvantages of a gift or transfer before the family farm is transferred to a son or daughter. Advice can then be taken on the option of a prenuptial agreement or, if they are already married a post nuptial agreement .
Divorce and the Family Farm
If you are getting divorced and one of you owns a family farm then it is particularly important that both husband and wife get expert legal advice from specialist divorce and family finance solicitors.
It is likely to be the case that the farm owner wants to keep the farm and the spouse that does not own the farm wants it to be sold to raise money to buy a house to rehome him or her. There may be mention of the land’s increased value if farm buildings or land could potentially get outline planning permission so it can be developed for housing.
In any divorce and financial proceedings, assets need to be valued. That applies just as much when the asset is a family farm. A specialist valuation will be needed to look at the value of the farm and land as well as any ‘’hope’’ value in relation to planning permission and development opportunities or the sale of part of the acreage. In addition, the value of the farm asset will depend on the income produced.
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If a farm is owned in the sole name of a husband or wife (rather than ownership being shared with parents and siblings) then it may be possible to sell part of the land or a farm building or to raise capital by mortgage to meet a husband or wife's divorce financial claims.
When it comes to a family farm and divorce, the court may view the family farm as a non-matrimonial asset and hence will not say that the value should be shared equally between the husband and wife. However, the bottom line is that a husband or wife may get an award that affects the family farm if it is the only way that their housing and other needs can be met.
When a divorce solicitor is giving legal advice to either a farmer or their spouse the aim is to achieve a financial solution that provides a home for the husband, wife, and children and ideally does not affect the continued viability of the working farm. This can require creative resolutions to secure the family farm for future generations.
For help with divorce and financial claims or prenuptial or postnuptial agreements please contact our expert family lawyers
Robin Charrot
Nov 18, 2019
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6 minute read
Valuing Property in Your Divorce
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.
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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
Robin Charrot
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5 minute read
How to Reduce the Stress of a Divorce
As leading Cheshire divorce solicitors, we are often asked if there is a simple hack to reduce the stress of a divorce. Many people thought that the government announcement that it intends to introduce ‘’no fault’’ divorce would result in less stressful divorces but most divorce solicitors say most of the stress of a divorce comes from:
Taking the initial decision on whether to separate or not;
Thinking about how you will tell the children about a planned separation or the decision to start divorce proceedings ;
Reaching an agreement about how much time the children will send in each household ;
Breaking the news of your decision to separate to close family or to mutual friends;
Worrying about how you will cope financially after a divorce ; that can either be immediate worries or long term concerns about the effect of getting divorced and the impact on your pension and retirement planning;
Concerns about whether or not you will need to move out of the family home and, if so, how that will affect the children, for example ease of getting to their current schools or seeing friends.
A good divorce solicitor will tell you that there is no one magic solution to reduce divorce stress, but some simple steps can help:
Take time for yourself
If you are facing a separation or divorce, you may be worried about how your children or family will react to the news. Often your wants and needs are low down on your list of priorities. Whilst that is understandable, it is not healthy. Whilst it is not legal advice, most good divorce solicitors would recommend that you take time for yourself, whether that is taking time for a chat with a friend or a trip to the gym.
Acknowledge how you are feeling
If you are feeling emotional or you think things feel out of control then speaking to a counsellor or to your doctor about how you are feeling can be a good option.
Limit social media
Social media and contact with friends via face book and other social media sites can be a comfort but it can equally be the major cause of divorce stress. That is because content and messaging, especially with a former partner, can quickly become overwhelming and distract you from the things that you do need to sort out.
Talking to the children
Parents are often reluctant to tell their children about a planned separation. That is normally because they want to protect their children for as long as possible. Parents also tend to think that they cannot talk to their children until they themselves know the answers to what the agreed parenting arrangements will be or whether the family home will be sold or not. However, children will pick up on the atmosphere or tensions at home and normally adult stress levels are reduced once children have been told about a planned separation.
Take legal advice
A divorce solicitor will be able to reach an agreement over parenting arrangements, custody and access and your financial settlement options. Practical and pragmatic advice taken either before your separation or at an early stage after your separation can help you reduce divorce stress and the likelihood of contested children or financial proceedings.
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For legal advice on your divorce or dissolution of civil partnership proceedings please contact us.
Robin Charrot
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3 minute read
Does the Length of a Marriage Affect the Divorce Settlement?
It is tempting to answer the question ‘’does length of marriage affect divorce settlement?’’ by saying that ‘’it all depends’’. However, many would say that reply is a typical politicians or lawyer’s answer and, if you are getting divorced, you want a clear answer, not something woolly.
The reality though is that the length of a marriage is a relevant factor when the court decides how much a husband and wife should get in a divorce financial settlement. Just how relevant the length of the marriage is depends on the couple’s financial and personal circumstances.
The short marriage and the divorce financial settlement
Many people assume that if a couple have only been married for a couple of years then the divorcing spouse will not get spousal maintenance or even a ‘’pay out‘’ or divorce financial settlement but it all depends.
If three couples have each been married for two years the financial settlement will be different for each couple, as highlighted by these three case examples:
Couple 1 Janet and John
Janet and John are both high flyers and each owned property before their marriage. They have no children. The short length of their marriage will be highly influential in reaching a financial settlement and clean break financial court order.
Couple 2 Mariah and Nick
The couple only got together just before their marriage two years ago and shortly afterwards the twins arrived. Mariah left work to look after them as Nick agreed juggling work and childcare was not in the interests of the twins. Although the couple have only been married for two years, the length of their marriage is not highly relevant, as the court will focus on the children’s needs when determining a fair financial settlement.
Couple 3 Bill and Ben
Bill and Ben married two years ago but within a matter of months, Bill realised that he had made a mistake. He has moved out and started divorce proceedings. He has assumed that he will get a clean break financial court order as the couple only lived together for twelve months out of their two-year marriage.
However, before the marriage, Bill and Ben had lived together in a continuous relationship for about fifteen years. The court takes into account pre-marriage cohabitation when looking at the length of the marriage, if it was ‘’seamless living together’’.
Although the marriage may have officially only been of two years duration, the family court could assess it as a long relationship of seventeen years when looking at what sort of divorce financial settlement would be fair to both Bill and Ben.
Does the length of marriage affect divorce settlement?
The case studies show that when a Whitefield divorce solicitor answers the question ‘’ does the length of a marriage affect divorce settlement ‘’ with a ‘’maybe’’ that whilst it may be a woolly answer it is the correct one until more information is available on a couple’s financial and personal circumstances.
For help with your divorce financial settlement please contact our specialist divorce lawyers.
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Robin Charrot
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3 minute read
How Are Lawyers Able to Find Hidden Assets During a Divorce?
We all know that it goes on; the press is always full of stories about international or multi-millionaire families involved in divorce and financial settlement cases where there are accusations that a husband or wife has hidden assets.
It is not surprising that there are allegations of hidden assets in divorce proceedings when, after all, divorce proceedings are often started because of a lack of trust in a relationship. The fact that a spouse has had an affair can make a husband or wife to lose emotional and financial faith in a spouse. When a separation is imminent or divorce proceedings are started, past actions and financial behaviours can take on a new significance.
You do not need to have the assets of a multimillionaire to worry about a spouse hiding assets in divorce and financial proceedings. The hiding of money or property in divorce and financial cases of more modest means is just as worrying and may even have a more profound effect on the financial settlement.
Examples of hiding assets in divorce
The best Cheshire divorce solicitors will tell you that there are numerous ways in which assets can be hidden during a divorce, and there are warning signs, including:
A spouse being secretive about money and not telling you about how many bank and savings accounts they hold;
If a spouse is self-employed or is in business and starts to use cash in all transactions whilst telling you that the business is doing badly;
If a spouse has boasted of their ability to hide things from you or has previously told you that he or she hid assets from their former spouse during earlier divorce and financial proceedings ;
You think that your spouse has transferred money or property to a relative to hide the assets from the divorce and financial proceedings.
Hiding assets – the cost of recovery
There are many different and clever ways that a determined and devious spouse can hide money and property in divorce and financial settlement proceedings. However, most Cheshire divorce solicitors are equally determined to trace hidden assets to ensure that everything is ‘’in the pot’’ and can be taken into account in the divorce financial settlement.
When a divorce solicitor is looking for hidden assets, they need to:
Work as a team with their client – after all a spouse knows her husband or wife best and will potentially have lots of invaluable information , even if they do not always appreciate just how important their information is to the solicitor;
Look at the cost benefit ratio- there is no point in running up a big solicitor’s bill or instructing a forensic accountant to pour over company accounts unless the extra work and costs is likely to produce more by way of financial settlement than the extra costs incurred. That is because you cannot guarantee that a court will order a spouse to pay your costs in tracing assets. It is a pointless victory if the bigger financial settlement is swallowed up by extra legal costs.
Look at the bigger picture and use their expertise to assess a case before embarking on tracing hidden assets. For example if a husband and wife have been married for twelve months the likely size of the financial settlement , based on the length of the marriage, may not be effected by whether the solicitor can discover hidden assets. That is because the short length of the marriage may be of overwhelming importance to the size of financial settlement, rather than the extent of the family assets.
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Financial disclosure and hiding assets
In financial court proceedings, a husband and wife are obliged to provide ’’full and frank’’ financial disclosure to their spouse. That does not always happen. Additional enquiries, such as questionnaires and single joint expert and shadow expert reports can be commissioned to trace assets. Sometimes a solicitor can spot that a spouse is trying to hide money, property or income through:
Transferring money out of a bank account as cash and saying that the cash has been spent but really opening a secret bank account with the cash;
Producing incomplete internet transaction histories for bank accounts to try to avoid revealing entries;
Saying that money taken out of a savings account was to repay family debt but the debt was artificial, with the plan being for the ‘’debt’’ to be repaid after the financial proceedings are finalised;
Pretending that they do not own a new property. A simple search of the Land Registry can reveal the truth about property ownership;
Not disclosing the existence of family trusts or inheritances.
These are just the tip of the iceberg when it comes to hiding assets in divorce proceedings.
The best thing that you can do if you suspect that your spouse is hiding or has hidden assets is to take legal advice from a specialist and experienced Cheshire divorce solicitor such as Evolve Family Law. We will be able to help you weigh up the pros, cons, and costs of tracing the hidden assets.
For information about financial settlement options or for representation in financial court proceedings please contact our expert divorce lawyers.
Robin Charrot
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5 minute read
How is Child Support Calculated?
Most separated and divorced parents find some of the child support service rules relating to the calculation of child maintenance incomprehensible. Child maintenance solicitors have to try to explain how child support is calculated without attempting to try to justify the rules or tribunal decisions.
Child maintenance and shared care
Nowadays, in the vast majority of family situations, if you separate or divorce and you have dependent children, the child maintenance service (rather than the family court) will have the jurisdiction to calculate how much child support should be paid and to enforce the assessment.
In order to try to keep child maintenance simple to calculate, some years ago the child maintenance service introduced a new child support formula. How much you pay in child maintenance is calculated as a percentage of your income. That sounds simple enough to most parents but then added child support rules start to creep in , such as if there is a shared or equal parenting arrangement with the children spending the same amount of time with each parent then no child maintenance is payable by either parent .
The rights and wrongs of the shared parenting rule and child maintenance is a moot point. Most child maintenance solicitors say it can produce both fair and unfair results. Take two scenarios:
Two parents equally share the care of the children and both earn roughly the same amount – no child maintenance is liable under child maintenance service rules, not because of the earnings of the mother and father are the same but because care of the children is shared;
Two parents equally share the care of the children. One is a high earner and the other barely scrapes by on their salary each month. No child maintenance is liable under child maintenance service rules as the parenting is shared. The parent who is on a lower income will not be able to ask for spousal maintenance to help address the income gap in the two households if they were in a cohabiting or unmarried relationship with their ex-partner.
Child maintenance and contact
It is not just shared parenting that can produce odd results with child maintenance service assessments. If a parent has overnight contact with their child, the amount they pay in child support under a child maintenance service assessment is reduced. The amount of the reduction depends on the extent of the overnight contact.
This child maintenance service rule can throw up some equally fair and unfair results, depending on whose perspective you look at child support from. Take two scenarios:
A mother is the main carer of the children. The father sees the children each night but cannot have the children overnight as he works shifts and his shift patterns mean that the children would have to get up too early. Although the mother earns twice as much as the father and despite his seeing the children each day, he is liable to pay the full child maintenance service assessment with no reduction for his daily contact as he does not have the children overnight;
A mother is the main carer of the children and the father has overnight contact on three nights a week. Although the mother still needs to pay her mortgage and pay for school clothes and holidays, the amount of her child support is reduced significantly because of the father’s overnight staying contact. The mother earns half the amount of the father. That scenario may seem unfair to the mother but imagine if the mother earnt double the father’s income. The father would still have to pay the same amount in child support and pay for his children’s upkeep on three nights a week. However, the father would pay nothing in child maintenance if care were shared equally. The difference a day makes in child contact can add up to hundreds of pounds a month in child maintenance.
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Child maintenance rules
The child maintenance scenarios are just a few examples of why child custody solicitors and child maintenance solicitors do not try to justify the child maintenance service rules.
The best advice , if you are splitting up from a partner and have children together , is to try and reach an agreement over who gets the house , who gets the pension and how the children are financially supported in one package so the fairness of the overall financial settlement can be looked at.
For information about child maintenance and contact and financial settlements please contact our expert children law solicitors today.
Appointments are available online or in Whitefield, Manchester and Cheshire.
Robin Charrot
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4 minute read
Divorce and Dementia
Living with a husband or wife who has dementia can be more than some spouses can cope with, especially when there were marital difficulties for a long time prior to the dementia diagnosis.
Although there is an increasing amount of support available and understanding of the impact of a dementia diagnosis on the family, for some married couples the right option is divorce. That is particularly the case when the breakdown of the marriage is not thought to be due to the personality changes that sometimes occur following the onset of dementia.
Divorce proceedings and dementia
Whether the dementia diagnosis has played any part in the reasons for the marriage breakdown there are likely to be feelings of guilt about the divorce and worry about how a spouse who is ill will face the future.
A diagnosis of early onset dementia can be particularly cruel when a husband or wife is relatively young. However, a spouse can find the situation at home equally unbearable.
As a Whitefield divorce solicitor, I have advised a number of spouses who have contemplated separating or divorcing after there has been a diagnosis of dementia. Many are loath to take legal advice, as they fear judgement by family, a solicitor or the court. It is an impossible situation to be in and I recommend that legal advice is taken so that you know what your options are.
Financial settlement and dementia
If you decide to separate, it is important that you get specialist legal advice. This is because in some financial and pension circumstances it will be in both of your interests not to get divorced. In other financial and pension circumstances it will be important to get divorced, rather than just live apart, so the court can make a pension sharing order.
When you are thinking about a separation or a divorce most people do not want to base their decision on whether to get divorced or not on financial considerations but the impact of not getting expert advice can have a massive impact on your retirement and personal and financial circumstances.
Many people worry about how a dementia diagnosis will affect a financial settlement. The court takes a number of factors into account when deciding what a fair and reasonable financial settlement is. One of those factors is the health of the husband and wife. A dementia diagnosis means that a spouse’s needs will be carefully considered by the court. However, the court will aim to make a financial court order that meets the needs of both husband and wife.
Dementia and taking part in divorce and financial settlement court proceedings
People also worry about whether a spouse will understand divorce and financial proceedings and think that they cannot get divorced if their spouse cannot play a part in court proceedings and instruct a solicitor. If a spouse does not have capacity to instruct a solicitor or make decisions you can still get divorced and reach a financial settlement. That is because court rules provide for your spouse to be represented in the court proceedings and their interests protected.
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How can Evolve Family Law help?
The decision to separate or divorce is never easy. It is even harder when a spouse is ill. In my experience as a Whitefield divorce solicitor, it is possible to divorce with dignity after a diagnosis of dementia as in many situations, whilst a spouse cannot cope sharing a home, they want their spouse to be provided for. The first step is to look into your options so you can make an informed decision about what is right for you.
For advice about separation or divorce or financial settlement options please contact us.
Robin Charrot
Nov 04, 2019
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4 minute read
Dealing with Debt in Divorce or Separation
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.
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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.
Robin Charrot
Oct 14, 2019
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4 minute read
Can I Give Property To My Relative During Divorce?
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.
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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
Robin Charrot
Jul 24, 2019
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5 minute read
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Getting in contact with Evolve Family Law could not be easier.
We put a lot of legal information on our website and if you have a single question about your situation, you should find an answer in our blog here.
If you need a greater level of help, please use this form and one of our team will call you to make an appointment. Please note that we cannot offer Legal aid.
Unfortunately due to the level of single question enquiries we receive, we cannot guarantee to provide written answers to individual questions posted via this enquiry form.
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Call us on 0345 222 8 222
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Email us at info@evolvefamilylaw.co.uk