Treatment of Family Loans in Divorce and Financial Settlement Proceedings
Getting divorced and reaching a financial settlement can be hard, even where there are only two of you involved in reaching a financial settlement and securing a Financial Court Order. It can be even harder when family members have given or loaned money, with disputes over whether the money was a gift or a loan and how the loan should be treated in the divorce and financial settlement proceedings.
For expert Divorce and Financial Settlement advice call our team of specialist divorce lawyers or complete our online enquiry form.
The recent financial settlement Court case of P v Q (Financial Remedies) [2022] EWFC B9 (10 February 2022) has confirmed how the Courts should treat family loans in a divorce. The case emphasises the importance of extended family members taking legal advice if they intend the transfer of money to be a loan or want a gift to be ring-fenced in the case of separation or divorce.
Family loans in financial settlement proceedings
If a member of the extended family gives money to a husband or wife during their relationship then undoubtedly at the time of the gift or loan the money is very welcome. When a couple split up, family loans can complicate things where there is a dispute about:
Whether the money was a gift or loan.
Whether the gift was to the husband or wife or to the couple jointly.
If the money was a loan, the repayment terms.
If the money was a loan, whether the debt should be included as a debt in the asset schedule.
If the money has been repaid to the extended family member because of the divorce, whether the money transferred to the relative should be added back into the asset schedule.
Whether the extended family member should intervene in the financial settlement Court proceedings.
Things can get very acrimonious when family money is in issue, with one party saying the money was a gift and the other a loan.
Expert divorce and financial settlement solicitors say it is best to:
Get help from an experienced divorce and financial settlement solicitor. They will give you an unbiased view on whether the family Court will say the money is a gift or a loan. Whilst you may not like their opinion about the treatment of the family money, you don’t want to waste time or money on an argument that you are not likely to win.
Look at the cost of arguing whether the family money was a gift or loan as you don’t want to spend more in legal costs arguing the point if the costs will be more than the amount to be gained in your likely financial settlement.
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The case of P v Q (Financial Remedies) [2022] EWFC B9
The case of P v Q involved an international family based in the UK and Germany. The wife was German, living in England. The husband was English, living in Germany with the couple’s two children. The case had many unusual points, including the value and liquidity of company shares, particularly as the case was heard at a time when Russian forces were massing at the Ukraine border and there were expectations of share price volatility because the shares were held in an energy company.
Divorce and financial settlement proceedings were started in the UK. The wife said the husband had given his mother £150,000 to reduce the amount the wife would receive as a financial settlement. The husband said he had given his mother the £150,000 to repay a loan and that the money should not be added back into the asset schedule.
The judge acknowledged he had to consider the factors set out in Section 25 and Section 25A Matrimonial Causes Act 1973 together with any relevant case law when deciding how to split the assets and how to treat the family loan money.
Section 25 Matrimonial Causes Act 1973 broadly says it is the duty of the Court when making a Financial Court Order to have regard to all the circumstances of the case, first consideration being given to the welfare while a minor of any child of the family who has not attained the age of eighteen. Amongst other things, and of particular relevance to family money and loans, the Court should have particular regard to:
The income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future, including in the case of earning capacity any increase in that capacity which it would in the opinion of the Court be reasonable to expect a party to the marriage to take steps to acquire.
The financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future.
In the case of P and Q , the husband’s mother gave each of her three children the sum of £150,000 to help them with housing. No loan documentation was drawn up. There was no evidence that the husband's mother had gifted the money as part of an estate planning strategy.
No demand was ever made for repayment of the £150,000 and there was no discussion about the circumstances when repayment was required. In evidence the mother said she hoped the family would repay the money to her if she was in need.
The husband repaid the £150,000 to his mother without his mother asking for the money. The wife argued the transfer was a device to remove £150,000 from the asset schedule so she lost out, using the sharing principle of a 50:50 split, of £75,000.
The judge had to consider if the £150,000 (and other family monies) were gifts or loans. The judge held that for money to amount to a gift there must be an intention to give away – with no expectation of repayment. Accordingly, the £150,000 was a loan.
The arguments didn’t stop there as the judge, using case law, then had to go on to consider the nature of the hard or soft loan to determine if the £150,000 should be added back into the asset schedule.
When looking at the treatment of loans in financial settlement proceedings, the judge said the family Court needs to consider:
If a judge concludes there is a contractually binding obligation by a party to the marriage towards a third party, the Court should then consider whether the obligation is a hard obligation debt or a soft debt.
There is no set test to decide if a loan amounts to a hard or soft debt.
A common feature of family loan analysis in financial settlement proceedings is to consider if the obligation to repay will be enforced.
Factors pointing to a hard loan include that the terms of the obligation feel like a normal commercial arrangement, there is a written loan agreement and a written demand for payment, a threat of litigation or intervention in the financial settlement proceedings, there hasn’t been a delay in enforcing the debt and the amount of money owed is such that it would be less likely for a creditor to waive the obligation to pay.
Factors pointing to a soft loan include that the debt is owed to a friend or family member who remains on good terms, the loan is informal without a commercial arrangement feel to the loan, there has been no written demand for payment despite the loan repayment date having passed, there has been a delay in enforcing repayment, and the amount of the money is such that it would be more likely for the creditor to be likely to waive the obligation to repay.
Using these principles and looking at the facts of the husband's loan from his mother, the judge concluded the loan fell into the ‘soft’ category of loan. For the financial settlement, that meant the loan monies were added back into the asset schedule, thus increasing the amount to be shared between the husband and wife by £150,000.
Divorce and private client considerations when making or receiving family loans
If you are thinking about making a gift or loan to a family member, it is sensible to take private client advice to try to ensure your gift is either tax efficient for inheritance tax purposes or ring fenced and protected in case of divorce through the use of a loan document, preferably combined with a prenuptial agreement or postnuptial agreement.
For expert Divorce and Financial Settlement advice call our team of specialist divorce lawyers or complete our online enquiry form.
Robin Charrot
Apr 14, 2022
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8 minute read
How Does A Divorce Settlement Work?
The Impact of Domestic Violence On A Divorce Financial Award
In this blog divorce financial settlement solicitor, Robin Charrot, looks at a recent court case involving divorce financial settlement claims and allegations of domestic violence to see how divorce settlements work and how the court treat domestic abuse allegations when making financial settlement decisions.
The financial settlement
A wife, age 55, separated from her husband. They could not reach a financial settlement by agreement and financial court proceedings were started. Sadly, the scenario of a husband and wife splitting up and going to court to get a financial court order isn’t unusual but what marks this case out is that the wife was a barrister and had a property portfolio in her name, acquired through her earnings during the eleven-year marriage. The husband, age 58, wasn’t working and had not worked independently of the wife throughout the marriage. Again, there isn’t anything unusual about this save for the situation not complying with the unusual gender stereotype. However, the wife said that as well as her being the bread winner in the marriage, the husband had been violent to her on two separate occasions. The wife said that meant the husband should get nothing by way of financial award. The husband argued that wasn’t fair.
The domestic violence allegation
The financial court looked at the domestic violence allegations. The husband had been prosecuted but was acquitted so had no criminal conviction for domestic abuse. None the less the family court said it could take the allegations of domestic violence into account because the family court had made findings about the domestic abuse.
A husband or wife should therefore not assume that just because a spouse did not report domestic abuse to the police that the family court will disregard domestic violence. However, the court also made it clear that just because there has been domestic violence in a relationship that does not mean that the perpetrator of the domestic abuse should end up with nothing.
The financial court proceedings
The family court ordered the wife to pay the husband £625,000 as a financial court order but the wife disagreed and appealed. She thought the ruling was unfair. The second judge said that £200,000 of the £625,000 award should be a charge to the wife, repayable by the husband’s estate on his death or repayable by the husband to the wife if the husband were to remarry or live with a new partner. The wife asked the court to reduce the lump sum payment to £425,000. On appeal, the court kept the payment at £625,000 and cancelled the charge. This means the wife has to pay the full £625,000. The court calculated that £625,000 was necessary to enable the husband to buy a new house with a budget of £400,000, with £25,000 to buy a car and pay living expenses and £200,000 to cover costs.
The appeal judges concluded that the domestic violence findings did not mean there should be no financial award or a charge back of some of the financial settlement. The appeal judges favoured a clean break financial settlement with no ongoing financial ties between husband and wife.
The costs of not agreeing a financial settlement
When determining the appeal, the judge said the family financial proceedings had become ‘an exercise in self-destruction' because the legal costs had become disproportionate to the family assets so it was hard to achieve a financial settlement that either husband or wife thought was fair.
As the appeal court concluded that the findings of domestic abuse made against the husband do not justify making what would otherwise be an inappropriate order the £200,000 charge was removed giving him a lump sum of £625,000.
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The lessons from the court case
The lessons from the court case are that arguing over principles doesn’t always pay as whilst the wife was the breadwinner the husband was nonetheless entitled to a financial award to meet his needs. Those needs were not extinguished by the finding of domestic violence in the relationship by the family court although it is fair to say that the award is smaller than if no domestic violence allegations had been made. It is therefore important to raise allegations of domestic violence but not to expect that the court will make no award or an award that is lower than an amount that meets the perpetrators basic needs if the other party has his or her needs met.
In this case the wife was not only a barrister, she specialised in family law. What that tells us is that it is important to get independent and impartial expert family law legal advice as early as possible. Whilst you may not like the legal advice it may save you a lot in legal costs if that legal advice enables you to reach a pragmatic financial settlement.
Evolve Family Law are North West and Online Family and Divorce Solicitors
For legal help and advice on divorce and family law call us or complete our online enquiry form.
Robin Charrot
Jan 20, 2022
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5 minute read
The Impact of Divorce on Your Income
When you take the decision to separate you may not realise just how big an impact your divorce may have on your future income. The financial services company, Legal and General has revealed that women’s income falls by a third and men’s income by 18% on divorce. In this blog we look at the impact of divorce on your income.
The divorce statistics
You may be shocked by the divorce statistics and question why a woman’s income on divorce should reduce by more than men’s income.
The Legal and General research suggests that there are several factors behind the statistics, such as:
The reality is that many women earn less than their male counterparts during the marriage because of career choices and childcare
In divorce financial settlements women are more likely to ask her for and get a financial settlement that includes the family home or more than half the equity in the sale proceeds of the family home. If you get a greater share or all the equity in the property, then you are less likely to be awarded spousal maintenance or to receive a share of their husband's pension fund and the making of a pension sharing order.
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Will a divorce impact on my income?
When a couple separate it is usual to go from a two-income household to a one-income household with a consequent reduction in income.
If a reduced income means that you can’t manage to pay your reasonable outgoings, the court can make an order that the other party to the marriage pay spousal maintenance. The payment of spousal maintenance can continue indefinitely until terminated by death, re-marriage of the receiving party or further order. Alternatively, the court can order that spousal maintenance is paid on a time limited basis.
What amounts to reasonable outgoings will depend on the standard of living enjoyed during the marriage as well as the affordability of the current outgoings considering:
The ability of one spouse to afford to pay spousal maintenance and still meet their own reasonable outgoings and
The ability of the other party to the marriage to either find work or increase their earnings capacity so they can meet all or a greater proportion of their own reasonable outgoings.
Divorce solicitors will tell you that when it comes to income on divorce and whether your respective incomes will be shared (through a spousal maintenance order) comes down to a range of factors, such as:
Whether you have young children to support and whether the care of children impacts on your earnings capacity
Whether any disability or age impacts on your ability to seek employment or increase your income
Your income and earnings capacity
The extent of your reasonable outgoings
The length of the marriage
Other factors, such as the existence of a prenuptial agreement that sets out whether and how long spousal maintenance should be payable on separation and divorce.
Perhaps, just as importantly, parity of income on divorce can come down to a question of priorities. You may want to forgo a pension sharing order on divorce as your priority isn’t income on retirement but instead getting the equity in the family home so you can rehouse yourself without a mortgage. Alternatively, you may want the capitalisation of your spousal maintenance payments so that you get a cash lump sum instead of ongoing monthly payments.
Whatever your priorities it is best on separation or divorce to take legal advice from a specialist divorce solicitor so you can understand the range of options for your financial settlement and work out which one is best for you and your family. Without expert legal and financial advice, you may not appreciate the value of the pension fund belonging to your spouse and how a pension sharing order could be to your financial advantage.
The divorce solicitors at Evolve Family Law will not only look at your financial settlement options but they will also reality test them with you. For example, if your priority is to keep the family home and you are willing to forgo a pension sharing order or spousal maintenance to keep the property then this may not be a realistic or best option if you can’t afford to pay your reasonable outgoings on the property as you aren’t getting spousal maintenance or a pension sharing order.
Our Manchester and Cheshire Divorce Solicitors
Evolve Family Law specialise in separation and divorce proceedings and resolving financial settlements .Call us or complete our online enquiry form for expert legal assistance with your financial settlement. Evolve Family Law have offices in Whitefield, North Manchester and Holmes Chapel, Cheshire but our family law solicitors are also experienced in working remotely and offer meetings by telephone appointment or video call.
Robin Charrot
Mar 25, 2021
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5 minute read
Keeping Money Secrets During a Separation or Divorce
Did you know that almost forty percent of people questioned admit to keeping money secrets from their partner? That information comes from a survey conducted by the Money & Pensions Service. In this blog we look at keeping money secrets during a separation or divorce.
What the Money & Pensions Service Survey Reveals About Us
The Money and Pensions Service survey questioned 5,200 people across the country about their financial habits and personal finances. The key findings are:
Those in the age range 25-34 are the most secretive age group, with three in five not revealing financial details to loved ones
Whilst nearly twenty five percent of those surveyed thought their husband, wife or partner was hiding financial things the reality is that nearly half said that they had hidden things themselves
It is most common to hide credit cards and credit card debt – nearly forty percent of those replying to the survey had done so
Undisclosed loans are the second most popular thing to hide from family with just over twenty per cent of those surveyed doing so
Around twenty percent of those responding to the survey had a secret savings account.
As the Money and Pensions Service acknowledged there are many reasons why someone might hide money or not reveal their financial situation whilst in a relationship, such as:
Wanting to build up a safety net of savings that their partner won't spend. That way there is a rainy day savings fund in case of redundancy or a large unforeseen bill, such as replacing the boiler
Feeling the need to save money so that there is an escape route from an abusive relationship where the partner secreting the money is afraid that without hidden money if it will be impossible to leave their controlling partner
Hiding credit card debt or loans because you know that your partner will worry about the debts
Feelings of embarrassment of having incurred debt, sometimes the debt was incurred before the new relationship and it now feels ‘too late’ to mention it.
The Money and Pensions Service encourages people to talk about their finances as, by doing so, it can make money worries more manageable, especially when you are concerned about other matters such as redundancy or the impact of Covid-19 on the prospects of your getting a 2020 bonus from your employer.
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Financial secrets and separation and divorce
As Manchester divorce solicitors we have to ask about financial matters so we can give the best advice on financial settlement options. Sometimes people are reluctant to mention undisclosed credit card debts or loans as their husband or wife doesn’t know about them. However, it is important that you do so as those debts may affect your ability to take over the mortgage on the family home or to secure another mortgage to buy a new property.
In cases where there is debt then in financial settlement court proceedings the court rarely wants to undertake a forensic exercise into how the debt was incurred and whether, for example, you should have bought the shoes or motorbike but instead will ask:
Is the debt family debt – in other words whilst the debt was hidden from a husband or wife was the loan or credit card money used for the benefit of the family. For example, a credit card was used to clothe the family or to pay for family holidays or a family car
What impact does the debt have? The court will want to know if the debt will stop a husband or wife from being able to buy another house or stay in the family home or meet their other needs.
In addition to debt and divorce, when it comes to financial disclosure on separation or divorce there is an obligation to provide what is referred to as full and frank financial disclosure of all your assets. That includes secret bank accounts that your husband or wife doesn’t know anything about or money given to a family member to ‘hold’ for you or cash that you keep.
Failure to provide full and frank financial disclosure may mean you are less likely to reach a financial settlement by agreement as your husband or wife probably won't believe your financial disclosure or a court drawing inferences or making findings against you in a financial settlement court hearing. For example, if your family business generates cash but according to your accounts you receive an income that amounts to less than your essential outgoings (mortgage payments, utility bills or other known expenditure) then the court could make inferences or findings against you.
Therefore, whilst there may be many reasons why you would want to keep things secret during a relationship, when it comes to a separation or divorce there is a court imposed obligation to be both ‘full and frank’ in your financial disclosure.
We are Manchester and Cheshire Divorce and Financial Settlement Solicitors
Evolve Family Law specialises in family law and divorce and financial settlements. If you have questions and need advice on your divorce and financial settlement options call Evolve Family Lawor complete our online enquiry form. We offer face to face appointments, remote meetings by appointment by video call or telephone.
Robin Charrot
Dec 09, 2020
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5 minute read
Divorce and Selling the Family Home
As Manchester divorce and family finance solicitors advising separated couples, we think getting divorced and trying to sell your family home during a global pandemic is a lot to expect of anyone. It isn’t therefore surprising that many of the calls that we’re currently receiving are from husbands or wives concerned about if or how they can get divorced and sell the family home. In this blog we look at the issues and your best options when it comes to divorce and selling the family home. Online Family Law Divorce and Financial Settlement Solicitors
Manchester and Cheshire based Evolve Family Law solicitors specialise in divorce and financial settlements. If you need advice about a financial settlement and the family home or any other aspect of family law call Evolve Family Law on 0345 222 8 222 or complete our online enquiry form to set up a video conference or telephone appointment.Should I sell the family home?
Sadly, some divorcing couples don’t have a choice: the family home has to be sold. For others you can make the financial or personal choice to either sell up, transfer the property to your husband or wife or keep the property yourself.
Often people have a strong knee jerk reaction that they must keep the family home at all costs whilst others are equally adamant that they don’t want to stay in the family home because of the memories associated with it. Undoubtedly selling a family home and moving involves hassle but it is best to consider all your options and the practicalities of a move, such as:
How much is the family home worth and how much would I need to spend to buy a suitable new property?
If I stay at the family home would the mortgage company agree to transfer the mortgage into my name?
If I sell and buy another property what is the maximum mortgage that I could get?
Can I afford the monthly mortgage payments on the family home after taking into account any spousal maintenance or child support paid or received?
Is it better to make a fresh start and take advantage of the stamp duty holiday?
Will my husband or wife agree to the sale of the family home?
The effect of Covid-19 on your decision to sell the family home
Experienced family law solicitors encourage separating couples to look at whether they should sell the family home or not from a short and long term perspective so that you make the right decision for you and your family. However, it is inevitable that Covid-19 may have some influence on your decision making process because:
You are worried about house prices and achieving your sale price
You are concerned about getting the mortgage on the family home transferred to you or taking out a mortgage on a new property if you don’t feel that your job is secure or you are worried that your husband or wife is at risk of being made redundant and redundancy will affect their ability to pay you child support and spousal maintenance
You want to take advantage of the stamp duty holiday as you think that it will be easier to sell the family home during the period of the stamp duty holiday and you will save money on your purchase.
With or without the pressures of Covid-19 the decision to sell the family home, or resolving which one of you should stay at the family home, is always a stressful decision. That is why it is best to take time over your decision and not be too influenced by the views of teenage children who may be leaving home to go to university soon leaving you with a house that is too large for you and without sufficient money to pay for life’s luxuries such as holidays. Alternatively, you could end up with the family home but the trade-off is that you don’t get a share of your husband or wife's pension so you eventually have to sell the family home to fund your retirement. However, the released equity on the sale of the family home won't necessarily give you the same income return that a pension sharing order would have done.
Manchester divorce lawyers recognise that with the news all about Covid-19 and reports of localised Manchester and North West lockdowns it is tempting to decide what to do about your family home and your financial affairs based on your Covid-19 concerns. Family lawyers can help you look at all your options and factor in Covid-19 as just one consideration in your deliberations about what to do about your divorce and the family home.
The best way to divorce and sell the family home
If you are getting divorced and thinking about selling the family home here are our tips on selling the family home whilst separating from a partner or getting divorced:
Is it realistic for you both to live at the family home until it is sold bearing in mind that once the property is sold it will take time for the conveyancing process to reach completion? It is advisable to always take legal advice before leaving the family home as doing so may make your husband or wife less keen to achieve a sale. However, if the atmosphere at home is affecting you, then one option would be for one of you to rent a property or stay with family until the family home is sold
Consult with your husband or wife over the sale price and choice of estate agent and make sure that the estate agent keeps you both informed about viewings and the feedback from prospective buyers. That way if the estate agent recommends a reduction in the sale price your spouse is more likely to be willing to consider this
Get your paperwork in order as requests for documents from your buyer’s solicitor can delay the sale of the family home. If you have had work carried out at the property you need to locate your planning and building regulation documents, electrical, gas and FENSA certificates or organise duplicate paperwork
Agree how you will divide the household contents as the last thing that you are likely to want to do is try and sort out household contents at the date of the sale. It is best to list the household contents and both sign the agreed schedule and the division of contents between the two of you and highlight what items, if any, will be sold with the house
Think about whether you want to sell the family home if you haven’t reached a financial settlement with your husband or wife. It is common for a sale of the family home to be achieved before you reach a full financial settlement including how pensions, business assets and investments are split as well as whether spousal maintenance should be paid and for how long. If you are happy with the sale price of the family home and fear that you will risk losing your buyer if you delay beyond the end of the stamp duty holiday you could agree with your husband or wife that the net proceeds of sale of the family home (after discharging the mortgage, conveyancing solicitor and estate agent fees) are kept in a joint account or by a solicitor until agreement is reached or a financial court order is made. In some situations you can agree to the release of some extra money to allow you to buy your planned new property or to discharge family debts
If your spouse won't agree to a sale of the family home get a court order. If you are certain that the family home has to be sold as it isn’t financially possible for either of you to take it on because the mortgage company won't transfer the existing mortgage into one of your names or you won't be able to afford the mortgage on one salary then speak to a divorce and financial settlement solicitor about starting financial proceedings for an order for sale of the family home. If your husband or wife won't cooperate with the sale of the property then a family judge has the power to make orders about the sale price, the choice of estate agent and can even sign the paperwork to sell the property if your ex-partner refuses to sign the contract to sell the house or the deed of transfer.
How can Evolve Family Law solicitors help?
Following the tips on how to sell your family home during a separation or divorce may make the sale process a bit easier but Manchester divorce and financial settlement solicitors recognise that taking the decision to separate and sell up is hard, especially in such troubled and turbulent times. For advice on any aspect of family law or information on your financial settlement options call Evolve Family Law on 0345 222 8 222 or complete our online enquiry form to set up a video conference or telephone appointment.Latest From Our Divorce Blog:
Robin Charrot
Aug 17, 2020
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8 minute read
Should I Divorce in England or Scotland?
You may think that when it comes to getting divorced and sorting out a financial settlement you don’t get a choice about where to start court proceedings. Our Manchester divorce solicitors will tell you that isn’t necessarily right and that when it comes to choosing your divorce forum it is best to get expert legal advice to make sure that you make the decision that is right for you. In this blog we look at the recently reported case of Mr and Mrs Villiers that highlights how a short geographical distance can make an enormous difference to the size of your financial settlement.
The Case of Mr and Mrs Villiers
One of the things that the Villiers case reminds divorce solicitors about is that divorce forum shopping doesn’t have to involve international families. That is because the disputed jurisdiction was between England and Scotland.
Charles Villiers asked the English Supreme Court to rule that his wife’s spousal maintenance claim should be decided in Scotland because he had started his divorce proceedings there.
In 2014 Mr Villiers filed for divorce from his wife, Emma in Scotland. During the eighteen year marriage the couple lived near Dumbarton in Scotland. When the marriage broke down Emma Villiers moved to London and started a new life there. In 2015 Emma Villiers applied to an English court under section 27 of the Matrimonial Causes Act 1973 for spousal maintenance. The English court ruled that she was habitually resident in England at the time of her application and so was entitled to ask the English court to rule on the amount of spousal maintenance. Mr Villiers disagreed and he therefore appealed the jurisdiction decision. His appeal eventually arrived at the Supreme Court.
The Supreme Court ruled, by a majority decision of three to two, that Emma Villiers could pursue her spousal maintenance claim in England.
You may question why time and legal fees were spent on arguing on court jurisdiction when Scotland and England are both part of the UK and not a million miles apart.
The cost of the court proceedings makes sense in the financial context that family courts in Scotland only tend to order payment of spousal maintenance for three years. Manchester divorce solicitors say that the Scottish position is sharply contrasted to the position in England where, in an appropriate case, a family judge can order spousal maintenance for life. Spousal maintenance for life means that the spousal maintenance payments won't stop until:
The payer dies – however the spouse receiving the spousal maintenance payments can make a claim against the estate if financial provision isn’t made under the terms of the Will or through an insurance policy
The payee dies
The payee remarries
The court makes an order to stop payment of spousal maintenance – for example, if the spouse receiving the spousal maintenance is in a long term cohabiting relationship or wins the lottery.
Court jurisdiction makes a big difference when the monthly spousal maintenance payments amounts to £5,500 per month on an interim basis. Furthermore, Mrs Villiers is asking the court to award her spousal maintenance of £10,000 per month based on the lifestyle enjoyed by the family during the marriage and her husband's wealth, although the extent of his wealth and the relevance of family trusts is disputed by him.
Doing the calculations, maintenance at £10,000 per month for three years amounts to £360,000 using Scottish law spousal maintenance principles but if sixty one year old Emma Villiers succeeds in her argument for life time spousal maintenance using English spousal maintenance principles then the figure could be far higher.
Mr Villiers said that his wife's actions in starting court proceedings in England amounted to ‘'divorce tourism'’ but the Supreme Court has ruled against him this week and therefore the spousal maintenance court proceedings will take place in England.
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The Supreme Court decided that the English court has jurisdiction to hear the wife's spousal maintenance application because the divorce proceedings in Scotland are not what it called a ‘‘related action’’ under article 13 of the Maintenance Regulations. Not all of the Supreme Court judges agreed with the decision but the lead judge said that as Emma Villiers is habitually resident in England the court in England can decide the issue of spousal maintenance.
The decision is being seen by many as a charter for divorce shopping to ensure that a husband or wife gets the optimum financial settlement through their choice of court jurisdiction to hear the divorce or associated financial proceedings.
England is known for its generous financial provision for the spouse who is in a weaker financial position and the decision in the case of Mr and Mrs Villiers will reinforce that view amongst international divorce solicitors.
If there is potentially more than one court jurisdiction for your divorce and financial court proceedings then it is best to take early legal advice from an expert Manchester divorce and financial settlement solicitor to make sure that you achieve a financial settlement that best meets your needs.
Our Manchester Divorce Solicitors
For specialist divorce and financial settlement legal advice call Whitefield, North Manchester and Cheshire based Evolve Family Law or complete our online enquiry form. We offer family law consultations by face to face appointment, video conferencing, Skype or by telephone appointment.
Robin Charrot
Jul 13, 2020
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5 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
Nov 18, 2019
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3 minute read
Can Bad Behaviour Affect a Financial Settlement on Divorce?
When I first see a client regarding their divorce, one of the questions they will most often ask me as a Manchester divorce solicitor is ‘can my spouse’s bad behaviour impact our financial settlement on divorce?’ Often, the desire to apportion blame for the breakdown of the marriage and divorce can result in a husband or wife wanting the financial settlement to reflect this, for example when a spouse has had an affair, and the affair has involved some level of dishonesty.
If you are separating or divorcing and have questions about how your husband or wife's behaviour will affect your financial settlement then the Manchester divorce solicitors at Evolve Family Law in Whitefield can help you. Call us or complete our online enquiry form.
Our solicitors are approachable and friendly, providing pragmatic expert divorce and financial settlement solutions.
Divorce proceedings and unreasonable behaviour
A spouse’s bad behaviour can be very relevant to the actual divorce proceedings, because under the current law ‘bad’ behaviour always has to be used for a divorce which is started less than two years after separation. The direct financial effect of this ‘bad’ behaviour is usually an order for the ‘bad’ spouse to pay the legal costs of the divorce proceedings (normally about £1,500).
The link between ‘bad’ behaviour and division of finances is less definite, and a spouse will very rarely get less of the family money because they have had an affair. However, a spouse’s behaviour during the marriage must be considered by a court (the court refers to it as ‘conduct’) when it is deciding what would be an appropriate financial settlement.
Is the behaviour gross and obvious?
The court’s view is that a spouse’s conduct will only affect the financial settlement if it is ‘gross and obvious’, and so serious that it would be unfair for it to be ignored.
Whether a spouse’s conduct has been serious enough to be classed as ‘gross and obvious’ will be a highly subjective decision. From the point of view of an experienced Manchester divorce solicitor, I know it when I see it!
What is classed as bad behaviour?
There are a number of forms of bad behaviour or ‘financial conduct’, as it is called in legal terms. It is always easier for the court to change the financial settlement if there is a direct link between a spouse’s conduct and the family’s finances, for example:
If a spouse has needlessly stopped working, or recklessly overspent, or gambled away a lot of the family’s money;
If a spouse has physically assaulted and injured the other spouse so that their ability to work and earn money has been affected;
If a spouse has been found guilty of a financial criminal offence, e.g. fraud.
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Other types of financial conduct – during the divorce
Dragging out the divorce proceedings, or running up needless and excessive legal costs: This isn’t usually reflected in the financial settlement. Instead, the court can order the guilty spouse to pay some or all of the other spouse’s legal costs;
Hiding assets or lying about your financial situation and not giving proper financial disclosure: This commonly happens, the most high profile example being the Supreme Court cases for Alison Sharland and Varsha Gohil. Rather than changing the financial settlement, the court can do one or more of the following:
Assume, when making a final financial decision, that the guilty spouse is much more wealthy than they say they are;
Order the guilty spouse to pay some or all of the other spouse’s legal costs;
If the lying is discovered after a final decision, setting aside that decision or financial court order and starting all over again.
Examples of non-financial conduct
It is less easy, but not impossible, for the court to change the financial settlement as a result of conduct which does not have a direct financial effect. The fact that one spouse has had an affair, or the usual arguing and name calling that often accompanies marriage breakdown will not normally be considered serious enough to be ‘conduct’.
Examples of non-financial conduct which have changed an award are:
violent or sexual assaults on the spouse, children or close family members;
refusing to move in with a spouse after marriage;
continued serious harassment of spouse’s new partner;
Inability to give spouse respect and affection.
How much does conduct change the financial settlement?
The impact of the conduct on the financial settlement will vary greatly, and entirely depends upon the particular circumstances of the case. Often, the person guilty of the conduct will already be in a bad position, for example in jail or having lost their job. However, even in those cases, the court can decide to reduce or even ignore that person’s financial needs because of their conduct.
Manchester divorce solicitors
Manchester divorce solicitors at Evolve Family Law in Whitefield are experts who offer a friendly and solution focused family law service. Call us or complete our online enquiry form.
Robin Charrot
Oct 26, 2015
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5 minute read
Should I Sell the Family Home Before or After my Divorce?
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.
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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
Robin Charrot
Oct 19, 2015
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5 minute read
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