1. I am going to deal with the divorce myself to save money so I don’t need a solicitor for sorting out finances do I?
Yes you do. Many people think that once a divorce is finalised that that ends the right of their former spouse to make financial claims against each other. This is not the case. Normally your right to make financial claims against your spouse or ex spouse and their right to make claims against you continues until the rights are dismissed by a court order.
Even in amicable cases where financial arrangements are agreed it is extremely advisable to have a Consent Order drawn up recording any agreement and providing, if appropriate, that neither of you will be able to make financial claims against each other in the future. Failing to do this can store up problems for the future. A significant amount of any family solicitor’s work is sorting out amicable arrangements that have become unstuck. The courts in England and Wales may take assets acquired after separation or even after divorce into account in any financial settlement, even if the assets are received some years later. To avoid this risk get advice.
2. Will it make any difference if I move out of our home before we are divorced?
Even if you are not a joint owner of the property you have a right to occupy the property until Decree Absolute. You can move back in therefore if you choose to do so. However, there can be a number of practical problems. If ultimately the property has to be sold then your spouse, if they are in occupation alone, may not cooperate with the sale. Although your spouse should not change the locks in practice people often do so and then you have to decide whether to break into the property. It is always sensible to ensure that before you leave you take any items you may require e.g. documents, your computer and any easily portable items that belong to you e.g. jewellery.
If your spouse is the sole owner of your home then you need to apply to register an interest in the property with the Land Registry. This will prevent the property being sold without your consent but note the land charge normally only lasts until Decree Absolute.
3. Are there any steps I should take to prevent my spouse from removing cash from accounts?
If, as is normal, your spouse can take money out of a joint account without your agreement then funds will almost certainly be withdrawn. You would also be jointly liable for any overdraft run up on a joint account. Therefore as a minimum we recommend that you ensure that no overdraft can be incurred, or increased, without your agreement. There are certain cases where it may be appropriate to close a joint account. The same applies to any form of joint account including joint savings or borrowing or spending facility including a mortgage offset account. Caution however, if you freeze accounts which your spouse needs to use to cover mortgage and other payments this will inevitably cause problems and may give rise to your spouse applying to the court for maintenance.
If there is a fear that your spouse may dissipate family assets or transfer assets to third parties or overseas then you must seek legal advice so your solicitor can advise you whether a form of injunction to freeze assets needs to be applied for.
4. When do financial matters need to be resolved?
Normally it is better to try and resolve matters as soon as possible. However most financial orders cannot be made until Decree Nisi and the orders cannot take effect until after Decree Absolute (i.e. the final Decree after which you are completely divorced). NB: if you do plan to remarry it is essential that you seek legal advice before doing so otherwise you may lose the right to make financial claims against your spouse.
5. If my spouse behaves badly the court will take this into account won’t they?
Probably not. Bad behaviour whether it be adultery, unreasonable behaviour (including even physical assault are not normally relevant). There are a few exceptional cases where the court will look at “conduct”. Part of the reason for not taking behaviour into account is that it would lengthen any court hearings and add significantly to legal costs. There is some conduct that the court may take into account e.g. excessive spending or dissipation of financial assets and very serious physical assault.
6. Will any maintenance or other payments I make to my spouse following separation affect the final outcome?
Not usually. Interim maintenance can be applied for if necessary even before Decree Nisi. In practice it is usually sensible to try and agree a reasonable amount for interim maintenance. Failure to maintain your spouse is likely to make them more hostile towards you. In cases where there is enough income a court would be likely to order interim maintenance. In larger cases these can include a sum for the other spouse’s legal costs a “fighting fund”. Clearly it would not be sensible to make excessively large payments to your spouse (either income or capital) as this could be used on to support an argument for their need for such payment and demonstrates your ability to pay.
7. How much maintenance is a spouse or former spouse entitled to?
Unfortunately it all depends there is no precise formula. The factors the court will take into account include:-
- Needs, assets and earning capacity;
- Standard of living before the breakdown;
- Any special needs;
- Contributions made whether it be by earning an income or looking after the home and bringing up children.
NB: Needs can be generously assessed and in high value cases the court may even award a compensatory element of maintenance to enable a spouse to save or to reflect the fact that had it not been for the marriage and giving up a career to have children the lower or non-earning spouse may have had a glittering and prosperous career.
8. What happens if I receive maintenance and my former spouse dies?
One option may be to take out a life assurance policy on the life of your spouse. It may be that as part of any financial settlement your spouse will have to pay the premiums on this type of policy. If your former spouse is paying maintenance to the children you can also arrange insurance to cover these payments. There may be other types of insurance that would be appropriate.
9. It is possible for a man to claim maintenance from his wife?
Yes. The courts are gender neutral and so if the wife is a high earner then in principle there is no reason why maintenance should not be paid in appropriate cases. There have been cases where court orders for maintenance have been made against a wife.
10. What happens if my spouse refuses to pay or stops paying maintenance?
If the arrangements have been on a voluntary basis then you will need to go to court to apply for an order. So far as maintenance for the children is concerned you can apply to the Child Support Agency. You can apply for an order at any time before or after the divorce provided that you have not remarried. Spousal maintenance comes to an end automatically on remarriage.
If there is already an order in force then you can apply to the court to enforce the order. If someone is employed by an employer then it may be possible to obtain an Attachment of Earnings Order whereby the payments are deducted from his salary before he receives it.
11. What happens if one of us starts cohabiting with a new partner?
If you are paying your former spouse maintenance then although maintenance would come to an end if your spouse remarried, it does not automatically come to an end if they cohabit. The cohabitation will be taken into account as one of the circumstances of the case and may justify you making an application to the court to vary the maintenance or even stop paying maintenance. The courts do tend to take cohabitation into account now but it does not mean the maintenance will automatically come to an end. Cohabitation does not affect maintenance to children.
12. What happens if one of us remarries?
If you remarry without having applied for a financial order from your former spouse you may have lost the right to make financial claims from him or her but he or she will still have the same right to make a financial claim against you. This is a complex area and you should seek advice.
If you are receiving maintenance from your ex-spouse it will normally continue even after they remarry. However, if they are finding it difficult to manage financially then they might apply for a variation.
13. How much maintenance do I need to provide for the children?
The Child Support Agency (CSA) has the formula for calculating the amount of maintenance that the non-resident parent must pay to support children. See link below to maintenance calculator:-
In most cases either parent can apply to the CSA to assess the level of maintenance. The court can still make the maintenance order for children. In fact what they will often do is order a global rate of maintenance but order that that should be reduced if there is a maintenance assessment by the Child Support Agency.
14. I have step children will I need to support them if my marriage to their mother breaks down?
The Child Support Agency (Now the Child Maintenance and Enforcement Commission “CMEC”) only become involved if you are the natural father of the children.
However you may be liable, however, to provide maintenance to step children if you have treated them as “children of the family”. The courts do, however, take into account the ability of the child’s natural parents to provide financial support.
15. How can I be sure that my former spouse will not come after me for more money?
In appropriate cases there can be a full clean break in the court order which means that neither party would be able to make financial claims against the other party. It is possible to have either a full clean break which would apply to capital and maintenance or a capital only clean break which means that your spouse would still be able to seek maintenance from you, or vary any maintenance ordered. It is not unusual in appropriate cases e.g. short marriages where both parties work and there are no children for there to be a full income and capital clean break. It is never possible to achieve a clean break in respect of your obligations to pay maintenance for your children.
16. How long will it take?
Obtaining the divorce, if both parties agree the marriage has broken down normally takes around 4 – 6 months. However, in practice most wives (if they are the Petitioner) will not apply for the Decree Absolute until financial matters have been resolved. The process can take longer if, for example, one party does not cooperate.
It should also be noted that in divorce proceedings the courts have to confirm the arrangements for the children are satisfactory. It will not be possible to apply for a Decree Absolute until the court is satisfied that satisfactory arrangements for the children are in place.
Sorting out a financial settlement can take longer to resolve. If matters can be agreed then it may be possible for a Consent Order to be drawn up and approved by the court within the initial 6 month period. If Court proceedings have to be issued then it will take normally no longer than a year for financial issues to be resolved.
17. Who pays the legal costs?
In relation to the divorce if the divorce is proceeding on the basis of say 2 or 5 years’ separation it is not unusual for the costs of the divorce proceedings (which are relatively small) to be shared. If one party is petitioning on the basis of the other party’s adultery or unreasonable behaviour then it is not unusual to ask for a contribution to your legal costs.
In financial proceedings the usual rule is that each party pays their own legal costs.
In very complicated cases it is possible to apply to court for an interim maintenance to include an allowance for legal costs. This is normally only possible if the case is likely to be expensive and/or complex. There are also other agencies who may be able to assist with legal costs, for example private banks.
Legal aid, now called public funding, is available in some cases. Anthony Gold does not undertake public funded work in matrimonial cases (apart from mediation). Even where you have public funding you may still end up paying your own legal costs.
18. Will I have to move out of our home?
If there are children under 18 then the first consideration in sorting out the financial matters is the welfare of the children. If it is achievable then it may best for the children to stay in the family home while the other parent buys another property. However, if there are not sufficient funds to do this then it may be necessary for the family home to be sold so that two less expensive homes can be purchased.
Where there are no children the court will want to be fair to both parties. In a case where there are substantial assets then it may be agreed that one of you will keep the home but the other may receive a corresponding larger share of other assets. If your assets are more limited then again the property may have to be sold so you can each buy a smaller property.
19. Will my spouse’s business assets be included in the financial settlement?
Yes. There is no presumption that the individual who has built up the business has a great claim to the business assets. The court takes the view that the other party’s contribution to the marriage, for example by looking after the home and children and supporting the other spouse in their career, might be considered to be equal. In most cases it is possible to agree a settlement which allows the business to continue. Where possible the court will try to avoid ordering a settlement which results in the sale, break up or winding up of a business.
20. What about my spouse’s overseas bank accounts or other assets owned abroad?
Assets held overseas can be taken into consideration in the same way as other assets. In practice however they can sometimes be difficult to trace. If you suspect your spouse is hiding assets overseas you should take immediate legal advice.
21. Can assets held in a Trust be taken into account?
This is a complex area. There is an obligation in divorce proceedings for both parties to make full disclosure of their respective financial positions. This has to include assets held on trust. So if one party has placed assets into a trust these assets may be taken into account. In the well-known Charman case the court took into account assets held in an overseas trust. The court is more likely to take assets in trust into account if the person establishing the trust is the beneficiary of the trust or if the assets are under that person’s control. This is a very complex area and specialist advice is needed.
22. What about my pension?
A pension is a matrimonial asset and the court may look at the value of your pension in deciding a fair settlement. Solutions that are available to the court include:-
- Pension sharing which is dividing the pension fund into 2 separate funds;
- Offsetting which means that you may receive a lump sum or larger share of property in consideration of giving up your right to a pension share.
23. What happens to assets like life insurance or endowment policies?
These are assets which are taken into account when resolving financial issues. Sometimes the policies are retained or they may be sold or surrendered. It is crucial to take financial advice on which is the best option for you.
24. Are inheritances taken into account?
A court will look at assets which someone may have in the foreseeable future. Therefore if you are an only child with a very elderly parent then it may be reasonable to assume that you will benefit. However with increased longevity the court will not take into account future inheritances of people in their 70s unless there is reason to believe that they are not in good health.
25. Is it worth me having a pre-nup?
In England and Wales pre-nups are not automatically binding. They are taken into account as one of the circumstances of the case. It is possible that they will be binding as long as certain safeguards are met, e.g. there has been a mutual disclosure of assets, independent legal advice, and the pre-nup was made not made less than 21 days before the marriage, or certain other circumstances apply pre-nups may be binding. The Law Commission is currently considering whether the law on pre-nuptial agreements should be changed and so it is possible that the law may change. However the courts are giving pre-nuptial agreements increased weight. Even if a pre nup is not completely binding it may limit the areas of disagreement. For example it may be agreed that pre-marital assets should each remain in the ownership of the party of the person owing them.
26. What about Civil Partnerships?
Most of the comments and provisions relating to divorce apply equally to registered civil partners. It is also possible for those contemplating entering into a registered civil partnership to enter into a pre-civil partnership agreement (which is similar to a pre nup).
27. What can I do if I find my spouse has assets or income which was not disclosed when we agreed a financial settlement or went to Court?
You need to seek legal advice as soon as possible. In appropriate cases even Consent Orders can be overturned however it is crucial to take action as soon as you are aware of the non-disclosure.
28. What happens if I cannot afford maintenance payments?
It may be possible for you to apply to the court to vary the maintenance Order. For example you may have to do this if you lose your job.
29. What happens if I cannot manage on my existing maintenance payments?
If your maintenance has not been increased for a long time then it may be possible for you to return to court. In many cases your former spouse’s income may have changed substantially since the original financial settlement was made. When the court considers the variation it has a duty to consider whether a clean break should be imposed and so what happens in many cases is that maintenance is then capitalised i.e. a lump sum is paid and the maintenance terminated.
30. What is the tax treatment of sales or transfers of assets following a divorce?
Assets transferred between married partners are exempt from Capital Gains Tax (“CGT”). This exemption applies during the tax year in which the parties separate, regardless of the date of the divorce.
Thereafter any transfer is treated as a sale at market value and subject to Capital Gains Tax if the annual exemption is exceeded. The transfer of the family home to the spouse who still lives in it will continue to be exempt from CGT. The transfer of a property as part of the divorce settlement is also exempt from stamp duty.
Inheritance Tax – transfers of assets between married couples are exempt from IHT. This is usually the case for any transfers made following a divorce as part of the financial settlement.
However these are generalisations and you should always seek advice on the way to minimise the tax consequences for you.
31. Do I need to make a new Will?
We recommend that you should consider making a new Will as soon as possible. Until Decree Absolute your ex-spouse would still be a major beneficiary under the Rules of Intestacy or under your Will.
On divorce your former spouse is normally excluded from your Will as either a beneficiary or executor. If you do want your former spouse to be a beneficiary after your divorce then you will need to draw up a new Will or codicil to your existing will. If your former spouse continues to remain dependent on you then it may be possible for them to obtain a share of your estate under provisions contained in the Inheritance (Provision for Family and Dependents) Act. However such a claim has to be made within 6 months of death or probate being granted. Therefore if you were dependent on someone who has died or is about to die you do need to take legal advice as a matter of urgency.
32. How does separation or divorce affect jointly owned property?
If you and your spouse own property jointly then you need to consider how the property is owned, whether it is as joint tenants or tenants in common. If the property is held as joint tenants this means that irrespective of the terms of your Will that in the event of your death your share of the property will pass to the survivor of you both. Therefore in many cases you need to consider whether to sever the joint tenancy and make a will so you are then free to leave your share of the property to whomsoever you wish.