Divorce & Financial Disclosure

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

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.

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

Dishonest Financial Disclosure When a divorce financial settlement solicitor tells a husband or wife that in order to reach a fair financial settlement, they will each have to provide full and frank financial disclosure they are sometimes greeted with laughter. That’s because a divorcing spouse knows their husband or wife so well that they realise that honesty and fairness isn’t part of their spouse’s vocabulary. In this article divorce financial settlement solicitor, Robin Charrot, looks at dishonest financial disclosure and what you can do about it. For expert Divorce and Financial Settlement advice call our team of specialist divorce lawyers or complete our online enquiry form. Not everyone is dishonest Divorce financial settlement solicitors tend to specialise in complex divorces where one spouse has hidden money or assets or is trying to undervalue assets so the other spouse doesn’t get a fair financial settlement. However, its important to remember that not every husband and wife is dishonest. The vast majority of divorcing couples know all about the other spouse’s income and their savings and property. If you do then there is no need to spend money on divorce solicitors trying to find assets that don’t exist. Your financial settlement solicitor is best focussing on negotiating a fair financial settlement that meets your needs and converting the agreement into a binding financial court order. Do you think your spouse is dishonest? A husband or wife can be dishonest about some aspects of their lives but not others. Often you are the best person to know if your husband or wife hasn’t been honest about relationships but is totally upfront about money. Alternatively, you may suspect that your husband or wife has been planning to leave you for a while and you strongly believe that they’ve been managing their financial affairs so you won't get the financial settlement you are entitled to. If you think your husband or wife is dishonest (or to put it neutrally ‘ won't give full and frank financial disclosure’) then it is best to have a discussion with your divorce solicitor to see what financial  information can be requested and what follow up questions may need to be asked. If you just have a strong suspicion of dishonesty but no concrete proof or ‘smoking gun’ then don’t worry. Divorce financial settlement solicitors are experienced in getting to the bottom of financial disclosure and ensuring all assets are disclosed and properly valued before reaching a divorce financial settlement. [related_posts] Why do you think your spouse is dishonest Sometimes you just know your spouse is going to be dishonest in financial disclosure as they haven’t been honest in financial dealings with third parties over the course of your marriage and you think dishonesty is just part of their genetic make-up. In other situations, you may have been warned about the dishonesty by your spouse’s business partner or a family friend. It is important to understand why you think your husband or wife is being financially dishonest as you don’t want divorce financial settlement solicitors to explore and analyse your spouse’s bank statements or business accounts or ask additional questions about their financial affairs if your views on their honesty is being clouded by your upset about your spouse walking out of the marriage or any of the many other things that a husband or wife can do to aggravate an already difficult and emotional time. Tackling dishonest financial disclosure When you split up you are entitled to a fair financial settlement. What’s ‘fair’ depends on your personal and financial circumstances but you can't reach a financial settlement unless you know the true amount of the family assets in your joint and sole names and those assets are correctly valued. If you spouse won't give full and frank financial disclosure on a voluntary basis you will need to start financial  proceedings. During the financial case your husband or wife will need to give honest and full information when: Completing the standard Form E financial disclosure document and providing supporting paperwork. Answering questionnaires about their finances and disclosing additional documents as ordered by the court. Speaking to a single joint expert – such as a forensic accountant appointed by the court to value the family business. Giving evidence at the financial settlement court hearing. If a spouse doesn’t comply with disclosure orders during financial settlement court proceedings you can ask the court to: Enforce the disclosure order or Draw inferences because of a failure to comply with the disclosure order or incomplete provision of information. For example, if the financial disclosure reveals drawings from the business of £80,000 gross per year but documented expenditure on mortgages, cars, holidays etc show outgoings of £110,000 but there is no corresponding debt or use of savings to meet the income shortfall or other reasonable explanation, other than cash syphoning. Discovering dishonest financial disclosure after a financial court order Sometimes you just don’t know that the person you loved and trusted has been dishonest with their financial disclosure until sometime after you have agreed a financial consent order or the court has made an order after contested court proceedings. Even if you discover dishonest behaviour  after the event, it may not be too late to take action. Divorce solicitors issue a word of warning though – it is easier and cheaper to show dishonesty before a financial order is made as there are no absolute guarantees that you can reopen a financial court order. If you can show there was dishonest financial disclosure the court has the power to set aside the financial court order it made. Divorce solicitors emphasis the importance of full and frank financial disclosure citing the Supreme Court cases of two ex-wives (Mrs Sharland and Mrs Gohil) who took their cases to the Supreme Court to try to win justice on the basis that their former husbands had deliberately misled them and the court about the true extent of their wealth. Mrs Sharland and her husband had agreed on a divorce financial settlement. A court order was drawn up by their divorce lawyers and approved by the judge. After the order was approved Mrs Sharland read in the financial press that her husband’s shareholding in his IT company was worth more than he told the court. Mrs Gohil agreed her divorce financial settlement on the basis of information her husband disclosed: a modest income and no assets. However, Mrs Gohil started a battle to overturn the divorce settlement after it had become apparent to her that her husband's lifestyle could not be supported by his disclosed assets and income. The husband was later convicted of fraud and money laundering. The evidence in criminal proceedings enabled Mrs Gohil to pursue her claim. In the cases of Mrs Sharland and Mrs Gohil, the Supreme Court ruled that if a husband or a wife in divorce proceedings intentionally keeps financial information from the court, then the court will presume that a different financial order would have been made if the hidden evidence had been made available at the time. Deliberately misleading the court can therefore invalidate a divorce financial settlement. That means the financial court order can be changed so dishonesty means uncertainty and extra costs for the dishonest spouse plus the real possibility of the court making a more generous financial settlement to the other spouse. Suspicions of dishonesty and financial disclosure If you are suspicious about financial disclosure and believe your husband or wife is being dishonest then don’t negotiate a financial settlement thinking that you can change it at a later date – you may not be able to do so or the costs and timescales may be a deterrent. If you are concerned that the figures just don’t add up or your spouse is doing some of the classic concerning actions (such as transferring assets to friends or family or closing bank accounts or telling you that the family business is at risk of going under but the order book seems as strong as ever) then speak to an expert divorce financial settlement solicitor so you can understand your options and achieve a fair financial settlement. For expert Divorce and Financial Settlement advice call our team of specialist divorce lawyers or complete our online enquiry form