Finances on Marriage Breakdown
We give advice following marriage breakdown where people are worried about their future finances and require advice and assistance to guide them through the decisions they have to make for their financial
We offer sensible, clear and pragmatic advice on how to deal with these issues.
Financial issues can be resolved; either by agreement or by making an application to the court. We will negotiate a settlement on your behalf by way of a Matrimonial Agreement if possible , as this is usually the most cost efficient, speedy and most amicable way of resolving matters.
What is a Matrimonial Agreement?
It is an agreement between separated spouses intended to resolve issues such as occupation of the matrimonial home, ownership and division of the matrimonial assets, including properties, pensions, savings, policies, incomes, claims and inherited assets, as well as resolving division of any debt and dealing with issues of maintenance and care of the children.
When is it made?
A matrimonial agreement can be made at any time after separated spouses both decide it is time to finally resolve their financial issues. Both parties have to be in agreement on all the issues dealt with. A matrimonial agreement has the advantage of providing a conciliatory approach to the settlement of the financial affairs of separated spouses, as opposed to embarking upon contentious court proceedings.
Can we do it ourselves?
A matrimonial agreement will not be binding and conclusive without each party having received full, proper and independent legal advice as to the nature and extent of their entitlement. Both parties would normally be expected to declare that they have had such legal advice and they would sign the agreement in the presence of their solicitor after receiving such advice.
Disclosure of assets?
If either party does not make full disclosure of all their assets to the other party, any matrimonial agreement signed under these circumstances can potentially be set aside by the Court upon an application by the aggrieved party. Accordingly before a matrimonial agreement can be drafted, a full and frank exchange of information must take place so that both parties are fully informed before entering in to the agreement.
What information is important?
The income, earning, property and other financial resources which each of the parties to the marriage has and 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 each of the parties to the marriage has or is likely to have in the foreseeable future;
The standard of living enjoyed by the family before the breakdown of the marriage;
The age of each party to the marriage and the duration of the marriage;
Any physical or mental disability of either of the parties in the marriage;
The contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family;
The conduct of each of the parties, but only if that conduct is such that it would in the opinion of the Court be inequitable to disregard it;
In the case of proceedings for divorce or nullity of marriage, the value to each of the parties to the marriage of any benefit (for example, a pension) which, by reason of the dissolution of annulment of the marriage, that party will lose the chance of acquiring.
What is discovery?
Discovery is the legal process by which the exchange of information is made between the solicitors acting for both parties.When each solicitor has gathered all the necessary information from their own client discovery folders are prepared and then exchanged.Each side then examines and checks what has been disclosed to make sure all that has been asked for has been provided and is accurate and complete.
What discovery is required to be exchanged?
A valuation of less than 6 months vintage for any property in which either party has an interest
Up to date mortgage redemption statement for any property
A P60 for the last 12 month period
Statements for all bank/ building society accounts for the last 12 months
Pay slips for the last 12 months
Details of all policies, ISAs, stocks, share, investments etc
An up to date statement of the all pension entitlements, either occupational or private (the Cash Equivalent Transfer Value of any pension is usually required)
Sometimes additional information will be required such as credit card statements, loan accounts, details of any pending claims, inheritances to be acquired or received during the marriage.
Legal representatives examine all the information collated and then attempt to work out a settlement. A joint consultation with the other party’s legal representatives can be set up so that direct negotiation between spouses and their representatives can take place to try to resolve the issues or alternatively an offer may be made in writing with a time limit set for the other party to respond.
What happens next?
If negotiations are successful and agreement is reached the terms and conditions of the agreement are drafted and each party signs in the presence of their own legal representatives who will witness their signatures.The legal representative who draws up the agreement will normally undertake to make the document a rule of Court as part of any subsequent divorce proceedings.This means the agreement is lodged with the Matrimonial Office of the Court and upon expiration of a two year period of separation either party can apply for a divorce as agreed in the agreement. Both parties must complete a Schedule of information attached to the agreement setting out the background to the marriage and the various assets/ liabilities that they have.
What do solicitors charge for matrimonial agreements?
Solicitors and their specialist trained staff charge for their time and skills. Matrimonial agreements can be drawn up in a variety of circumstances ranging from amicable resolutions already agreed by the parties before taking legal advice through to long protracted, contentious exchanges which are ultimately negotiated through to settlement by solicitors or barristers.
Solicitor’s fees for the work involved in drafting and finalising a straight forward separation
It is difficult to put any exact figure on the costs of resolving disputed and protracted exchanges as this will depend on the number of assets and issues to be resolved, their value and importance, whether it is necessary employ experts ( for example, valuers, forensic accountants, actuaries to value pensions) and the experience and hourly charge out rate of the solicitor carrying out the work. However we will be clear with you on costs from the outset; we will keep you regularly appraised of your costs and will endeavour to assist you in managing your account with us to that there are no nasty surprises at the end of your case.
The legal effect of a matrimonial agreement
A matrimonial agreement, once it has been signed by both parties, has very significant legal and financial implications for each party. Providing both parties are of sound mind when signing an agreement and providing full disclosure has been made under the discovery process and there have been no other deficiencies in the process of finalising the agreement, the following consequences are likely to arise:
Neither party will be able to make a claim against any property or assets in the other’s name in the future unless the agreement allows this to happen. Both parties will be free to move on financially and acquire new property without fear of a claim on same by the other.
Both parties in effect waive their rights to any claim on the future expectations of the other including possible increases in the value of businesses assets and salaries and an inheritance or other windfalls arising to the other party.
Neither party will be able to make a claim against the estate of the other under the Inheritance (Provision for family and Dependants) (NI) Order 1979 unless the payment of maintenance has been provided for in the agreement or the agreement allows such a claim to otherwise be made.
Neither party may claim the benefit of the married couple’s allowance against their income tax liabilities.The loss of the spouse exemptions available in relation to Inheritance Tax and Capital Gains Tax liabilities considerably increases the potential for tax to be paid on the disposal or gifting of assets in the future.
Neither party will be able to contract in the name of the other and any debts accrued by either party will have to be indemnified by the person who accrued them.
Husbands and wives have rights to succeed to their spouse’s pension rights e.g. half on the death of a spouse.Each has expectations of enjoying a standard of living supported by the pension of the other. The matrimonial agreement may exclude any such future claims or expectations.
The matrimonial agreement can include a clause dealing with how and when divorce proceedings may be subsequently issued e.g. you both agree after two years separation either party may apply to the Court for divorce.As a part of the divorce proceedings an application will be made on the date of the divorce hearing to make the agreement a ‘Rule of Court’ or an ‘Order of Court’.This means the original agreement is lodged with the Court and is thus enforceable through the Courts so if any part of the agreement is breached an application can be made to refer the issue back to the Court to be remedied.
Court Matrimonial agreements can be set aside or overruled by the Court in certain circumstances.They can be overruled if the Court is convinced that one of the parties was not of sound mind at the date of signing the agreement or if one of the parties was not aware of their right to obtain legal advice at the time of signing. Agreements or parts of agreements can be set aside or varied if either party has not fully disclosed all assets during the discovery process or if the court deems the agreement to be so manifestly unfair to one of the parties that the court cannot approve it.
When you marry you enter into a contract, recognised by law, having implications in relation to your assets, your pension rights, your tax and other liabilities.When you sign a matrimonial agreement you are entering into a contract to end many or all of those rights as well as your obligations and responsibilities.You must be sure you are completely satisfied that everything you wish to have dealt with is covered by the agreement in a manner with which you are satisfied before you sign it.
DISCOVERY IN MORE DETAIL
Financial resolution issues Information is exchanged between the two parties involved in a divorce in the hope that through negotiation by their legal representatives, an agreement may be reached on the division of the finances and other assets of the marriage.There are a number of factors taken into consideration by the Courts when dividing up the matrimonial assets, these include:
·The income, earning, property and other financial resources which each of the parties to the marriage has and 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 each of the parties to the marriage has or is likely to have in the foreseeable future;
·The standard of living enjoyed by the family before the breakdown of the marriage;
·The age of each party to the marriage and the duration of the marriage;
·Any physical or mental disability of either of the parties in the marriage;
·The contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family;
·The conduct of each of the parties, if that conduct is such that it would in the opinion of the Court be inequitable to disregard it;
·In the case of proceedings for divorce or nullity of marriage, the value to each of the parties to the marriage of any benefit (for example, a pension) which, by reason of the dissolution of annulment of the marriage, that party will lose the chance of acquiring.
Asset proofs required
It is critical any agreement reached is based on full and frank disclosure of information. Each party to the marriage (“the party”) is expected to identify and disclose to the other details of:
·Any banking, post office and/or building society account of any nature whatsoever the party has or had any interest in, in the last three years complete with statements in relation to each such account from each such date.
·All bank statements, pass books, saving account books, building society accounts, shares deposits or certificates of investment of whatever kind and wheresoever situate which are or have been at any time in the last year past whether;
·in the party’s name
·in the party’s name jointly with another
·in the party’s name in trust for any other person
·in any other person’s name in trust for the party.
·All stocks, shares, bonds and annuities of any kind whatsoever.
·All pension entitlements that the party has or may have at any date in the future including any details of any pension, trust or related schemes. Details should state any interest and benefit that the party has in same.
·Any P60s which the party may have held in the last year.
·All income tax returns.
·All sources of income in the last three years and all details in relation to each source of income including any manner of benefit from said employment.
·All properties and assets in which the party has or may have had any interest whatsoever in the last year.
·All property and assets that the party has knowledge that the party is likely to acquire.
Each party should detail their requirements for day to day living. This may require production of mortgage, household and other bills and expenses.
Your spouse’s discovery
It is important you carefully consider the discovery information provided by your spouse.You will have a clearer idea of the assets held by your spouse than we will. Anything that is missing can be requested through further discovery processes until you are happy everything has been declared.
Either party who is not fully honest in the discovery process runs the risk that any matrimonial agreement based on the incomplete information can be set aside by the Court.Thus the final settlement benefit is put at risk by the party failing to properly disclose.