Read the latest articles on Family Law from our expert Family Law solicitors here at Evolve Family Law in Manchester & Cheshire.
We put a lot of family law legal information on our website and if you have a single question about your situation, you should find an answer in this blog.
If you need a greater level of help, please contact us and one of our team will call you to make an appointment.
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.
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.
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.
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.
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
We are delighted to highlight that some good news has come out of Europe. New EU regulations have been set out to help protect children and parents involved in cross border child custody and access disputes.
Protecting children in cross border disputes
On the 25 June, the Council of the EU adopted a revision of a regulation setting out rules on the jurisdiction, recognition and enforcement of decisions in:
Matrimonial matters;
Parental responsibility matters;
Intra-EU child abduction
The council said that one of the main objectives of the revision to the EU regulation was to improve the current protection that EU directive gives to children in cases of cross-border children disputes, for example:
Custody (nowadays referred to as residence or a child arrangements order in the UK );
Access rights (nowadays referred to as contact or a child arrangements order in the UK );
Child abduction.
The focus of the new EU regulations is to ensure when resolving cross border children disputes involving more than one EU country that :
The focus is on what is best for the child;
Judicial co-operation between EU countries is faster and more efficient to make sure the child’s well-being comes first. It is anticipated that speedier court decisions will be made through abolishing the requirement for an exequatur (an intermediate procedure required to obtain cross-border enforcement).
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People often assume that EU law will not affect them and their families but statistically there are about 140,000 international divorces per year. It is reported that there are about 1,800 cases of parental child abduction in the EU. The number of international divorce cases rises each year as people become increasingly mobile because of work and travel opportunities.
With the update of the Brussels IIa Regulation, the intention is that a child abducted by one parent from an EU country and taken by the parent to another country within the EU will be returned much faster to the country where he or she is used to living in.
Top Manchester children solicitors have welcomed the new EU regulation but have issued a note of caution. UK families caught up in EU cross border disputes will only get the protection and assistance of the new regulation whilst the UK remains in the EU. Subject to Brexit, the additional protection may be short lived. That will not stop child custody solicitors from fighting to reunite parents and children caught up in cross border child custody and access disputes.
The top tip if you fear child abduction or need to enforce a UK custody or child arrangements order across different border jurisdictions is to take early specialist child custody legal advice on your options and to act quickly.
For legal help with child custody and access or child abduction please contact us
We often read in the papers about successful surrogacy arrangements involving a surrogate mother who lives outside the UK. That is because it is difficult for intended parents to find a surrogate mother in the UK. However using a foreign-based surrogate mother through an international surrogacy arrangement brings other legal and practical challenges.
International surrogacy and the law
Whether or not a child who is born to a surrogate mother is linked genetically to the intended mother or father (or both), under UK law, the surrogate mother who bears the child is the legal mother.
Many intended parents assume that the rules are different if they use a surrogate mother who is based in a foreign country. They are not. Even if the country where the surrogate mother nationality recognises the intended parents as the legal parents of the child, UK children and immigration law does not. That can make international surrogacy arrangements and immigration very complicated.
International surrogacy arrangements
In the UK surrogacy arrangements are not enforceable as a contract between the surrogate mother and the intended parents. Different laws apply to surrogacy agreements in other countries. However, even if a surrogacy agreement is legally enforceable in the country in which the surrogate mother is a national, the intended parents cannot bring court proceedings to enforce the surrogacy agreement in the UK.
International surrogacy and immigration
If a child is born to a surrogate mother who is not a British citizen then complex surrogacy and immigration law will determine the nationality of the child. Those rules will also determine if and how the child can enter the UK.
The child’s nationality and immigration status may depend on whether or not the intended father is genetically linked to the child and, furthermore, whether the surrogate mother is legally married or not.
If you are contemplating international surrogacy, it is vital that you take expert legal advice from children and surrogacy law solicitors as well as advice from immigration law experts.
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International surrogacy and parental orders
Under UK children and surrogacy law, a child born to a surrogate mother is the legal child of the surrogate mother. Intended parents can apply to the family court for a parental order. This order extinguishes the legal rights of the surrogate mother and makes the intended parents the child’s legal parents. The intended parents then have parental responsibility for the child.
In order for a parental order to be made various conditions have to be met such as:
There must be a genetic link between the child and at least one of the intended parents; and
The surrogate mother must consent to the parental order no earlier than 6 weeks after the birth of the child.
If you are considering an international surrogacy arrangement, it is vital that you take advice on the evidence required of the surrogate mother’s consent to the making of the parental order. Failure to secure adequate evidence of the surrogate mother’s consent could create problems with the parental order application.
International surrogacy and Evolve Family Law
Evolve Family Law is a niche firm of family law solicitors. Evolve Family Law has substantial expertise in children and surrogacy law. If you are contemplating a surrogacy arrangement, either in the UK or abroad, please contact us for advice on your options and for information on applying for a parental order.
The case of three siblings who ended up in court over their late mother’s Will emphasises the importance of professional Will writing and highlights the challenges involved in claims against estates and contesting Wills.
The Burgess family featured in the papers as two of the three siblings argued that their late mother’s £1.5 million estate should not be divided equally between them after Probate . Two sisters said that their brother, a wealthy former British Airways pilot, should get less than them as they were not as wealthy as their brother.
A reading of the Burgess case will help most people realise just how important it is to get professional legal advice when drawing up a Will. It is especially important to do so if you know that there is a chance that the Will could be challenged and a claim made against the estate.
The Burgess case
Chris Burgess was initially left £300,000 of his parents' £1.5 million estate in their mirror Wills. The couple made Wills leaving the lion’s share of their money to their two daughters because Jim and Freda Burgess thought their two daughters needed the money more than their son did.
After former solicitor and judge, Jim Burgess died, leaving his estate to his wife, Freda, she decided to change her Will to share the estate equally between her three children.
When Freda died in 2016, aged 90, her Will left the estate equally between the three siblings. This meant that each child would get about £500,000 rather than the son, Chris getting £300,000 and the two daughters £600,000 each. The daughters challenged their late mother’s last Will and the family ended up in court.
Grounds for contesting a Will
To contest a Will you have to be able to prove that there are valid grounds to do so, for example:
The Will maker lacked testamentary capacity; or
The Will was not executed properly; or
The Will maker was unduly influenced to make the Will; or
The Will was fraudulent or forged.
In the case of Freda Burgess it was alleged that:
At age 90 , Freda was too old and vulnerable to change her earlier Will leaving just £300,000 to her son, rather than an equal share of the estate;
The Will was not properly executed, as one of the witnesses had not seen Mrs Burgess sign the new Will.
The High Court judge decided that Freda Burgess’s last Will was not valid because it had not been executed properly. However, the judge concluded that Freda Burgess had known her own mind at age 90 when she decided to leave her estate equally to her three children. That meant the shredding of the first Will (that left the son about £300,000) was valid and the first Will was therefore revoked. What is more, as the second Will had not been executed properly Freda Burgess had not left a valid Will in existence at the time of her death.
Without a valid Will in place, Freda Burgess’s estate will pass in accordance with intestacy rules, meaning that the estate will pass equally to the three children.
The court result and the amount received by the three siblings would have been different if the court had ruled that Freda Burgess lacked capacity to revoke her old Will and make a new one.
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The lessons from the Burgess case
What can be learnt from the Burgess case? The Burgess case emphasises a few things:
It is vital that a Will is executed properly. A solicitor will not only draw up a Will for you but will check that it is executed properly;
If the Will maker is elderly or frail it can be sensible to get a doctor to confirm that the Will maker has testamentary capacity to make a Will;
If a Will maker is elderly or vulnerable it is important that they get independent legal advice on their Will;
If a Will maker is leaving a Will that they think may be challenged it is important that they explain why that they are making the provisions in the Will. The explanation does not need to be in the Will but can be contained in a separate private letter to the executor of the Will.
For legal help with claims against estates, challenging a Will or estate planning please contact us
How do you value company shares to reach a financial settlement? Our Manchester divorce solicitors have to answer this question when looking at divorce and the family business and negotiating financial settlements.
If a husband and wife cannot agree on the value of company shares, the husband or wife can start financial court proceedings. In the financial court case, a judge can order the valuation of shares by an independent forensic accountant. Ultimately, it is for the family judge to decide on what is a fair value of any company shares and to make a financial court order.
A fair financial settlement
The family court objective is to reach a fair financial settlement.
What amounts to a ‘’fair financial settlement’’ is subjective. A husband's opinion on a fair financial settlement may vary wildly to that of his estranged wife.
When deciding how to split family assets the court applies statutory factors, such as the length of the marriage and the husband and wife's ages, to reach what the court considers a fair result.
Although the court looks at statutory criteria when making a financial court order, the judge can exercise discretion. That discretion partially explains the number of appeals against financial court orders. The other reason spouses are often disgruntled with a financial court order is that they do not perceive the financial settlement to be fair as fairness is ‘’in the eye of the holder’’.
Valuing company shares to get a fair financial settlement
The fairness of the financial settlement depends on assets, such as property or company shares, being valued correctly.
To add to the complexity of valuing company shares, frequently our divorce solicitors need to ask experts to value the company shares at different dates.
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 of gifted to a husband or wife.
The Martin case and valuing company shares
The Martin case shows just how complicated it can be to value shares in a non-listed company.
Last year a judge had to decide how to split the Martin family fortune of roughly 182 million. Mr Justice Mostyn decided Mrs Martin should get about £73 million of the family assets. That is about forty percent of the family assets.
After a long marriage, Manchester divorce solicitors start from the premise that family assets should be divided equally on divorce. Equality can be departed from if there are good reasons to do so.
Mrs Martin therefore thought that the financial court order was unfair and that she should get more. Mr Martin was also of the view that the financial settlement was unfair.
Accordingly, Mrs Martin appealed to the court of appeal and Mr Martin cross-appealed.
The facts of the Martin case
Mr and Mrs Martin had been married for 29 years and had two adult children. This was a long marriage.
At the time of their marriage, Mr Martin owned shares in the family company and Mrs Martin was a shop floor employee. There were no prenuptial agreements in place. If there had been a prenuptial agreement this could have potentially avoided the contested court proceedings or narrowed the issues.
Valuing a company in divorce and financial settlement proceedings
The appeal centred on the valuation of the shares in the company, Dextra Group PLC, at the time that Mr and Mrs Martin began to cohabit.
At the time the couple began to live together the company was not listed. An expert was instructed to prepare a report on the value of the shares.
Mrs Martin valued the shares at 1.6 million at the date of cohabitation. The judge decided the shares were worth 44 million.
The valuation of the company shares at the date of cohabitation was key to deciding if Mrs Martin’s 73 million was a fair financial settlement. That is because Mr Martin said the value of the company shares he owned at the date of cohabitation should be ‘’ring-fenced’’ and not shared with Mrs Martin.
The Martin court of appeal decision
The court of appeal decided to refuse Mrs Martin’s request for more than 73 million of assets.
The court of appeal concluded that the first judge had reached a fair decision. Their view was that a judge is entitled to take a view on the value of the assets and wealth that a husband or wife brings into a marriage.
In other words, the court of appeal rejected the idea that judges should just focus on the accountant’s figure for the value of the company shares at the time of cohabitation.
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.’'
The court of appeal has reconfirmed to divorce solicitors that the financial settlement fairness test is subjective.
That subjective approach makes it all the more important for spouses to take early specialist legal advice from divorce solicitors who are experienced in divorces involving family businesses and in assessing what a court is likely to determine as a fair financial settlement .
How can Evolve Family Law Solicitors help?
For expert legal assistance with divorce and financial settlements, contact us.
Getting in contact with Evolve Family Law could not be easier.
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