By Norman Taylor

When couples divorce or terminate a civil partnership, a key issue is dividing any pension rights that have been built up during – and possibly before – the relationship started.

In fact, it has become more common for pension pots to make up the second highest value asset in a divorce settlement after the family home. In some cases it is the most valuable asset.Pension awards, which require meticulous financial planning, include a court making a pension share order where, like the name suggests, a share of the pension pot is transferred from a former spouse to their ex.

Awards also include a pension attachment order which sees the pot staying with one of the partners and the income divided when it is drawn down to take money out for retirement purposes, but these are far less common than pension share orders.

With a pension share order, the Court awards a percentage of one or more relevant schemes to the spouse who is not the pension scheme member.

However a pension share order share order only takes effect upon a Decree Nisi being made a Absolute – when the marriage ends formally.

Waiting for a pension share order to be made and become effective can present a problem if the scheme member spouse is about to retire and looking to take benefits before a court order is made and the pension share decided.

The pension share can either be a lump sum payable on retirement which can be separate to the pension income – or a commuted lump sum where the pension pay-out is lower because part of the fund has been taken as a tax free lump sum.

If the pension share is paid to one party before the divorce is finalised, it may be worth keeping the lump sum intact while waiting for court to decide what should happen to it.

Utmost consideration is required over where to place the pension share once a court order is granted – taking into account the many ways that now exist for dealing with, and taking benefits from, pension funds – along with any tax implications that may arise.

The value of a pension is a major part of the wider financial picture in divorce and needs careful attention when negotiating a settlement or presenting a claim in court. This is due to the complexity of pensions and the fact that different schemes offer different features and benefits and they are not the same as cash or other liquid assets.

Obtaining expert advice is critical. Jones Myers has extensive expertise in settling financial matters on divorce. We can assist with pensions and we work with neutral Independent Financial Advisers.

For more information about divorce and finances or any aspect of family law, call us at our Leeds office on 0113 246 0055, our Harrogate office on 01423 276104, visit jm2023.jonesmyers.co.uk, email info@jonesmyers.co.uk or tweet us @helpwithdivorce

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When one of our family law specialists took part in a BBC Radio Leeds legal phone-in recently, listeners’ questions included one on the final stages of divorce.

We wanted to take the opportunity to explain how there are two end stages to every divorce – and when you know that it’s finally over.

Decree Nisi

This does not officially end the marriage: it is a formal, but provisional, stage that confirms the person seeking divorce (the petitioner) is entitled to bring the marriage to an end. This means that after a further 6 weeks an application can be made for the Decree Absolute, which will terminate the marriage.

A Decree Nisi is granted when the court has been satisfied that the petitioner has not only established a cause for divorce under one of the five legal grounds in the UK such as adultery, or unreasonable behaviour –  but more significantly that the marriage has completely broken down.

Neither party need attend court unless one or both of the divorcing couple want to withdraw the petition or there is dispute about costs or a previous agreement or ruling.

Decree Absolute

This is the legal document granted by the court that officially brings the marriage to an end.  It is not until the Decree Absolute is received that the parties are free to remarry if they should wish. The petitioner can apply for the Decree Absolute six weeks and one day after the date the Decree Nisi is granted. If they do not do so, the other partner can apply after a further three months. Notice of that application has to be given to the other party, who can raise objections if so inclined. After Decree Absolute, the parties are no longer each other’s “next of kin”.

Often, the reason for delaying the application for a Decree Absolute is because of unresolved financial issues, such as the division of assets and of significant concern entitlements under insurance or pension arrangements.

While a marriage legally ends with a Decree Absolute, there is no legal requirement to establish a financial agreement dealing with each party’s claims before the divorce is finalised. This leaves the serious risk that a former spouse can make a claim against their ex, often years after the divorce is finalised.

Our team of specialists at Jones Myers always advise a final  order is critical when divorcing, regardless of how amicable the parting is. A formal agreement, known as a consent order, sets out any financial agreement in the process. It is particularly important for business owners, or anyone planning to set up a company post-divorce – because it can formally regulate, and sometimes dismiss, the right for either party to ask for money or a share of assets in the future.

If you have any queries about Decree Nisi, Decree Absolute, clean break orders, or any other divorce related issues, please leave a comment below, call the Jones Myers team on 0113 246 0055, or tweet us on @helpwithdivorce.

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Pre-nups and post-nups posts were top of the agenda following research which revealed that one in ten married British people regret not insisting that their spouse sign a pre-nup agreement before tying the knot.

Norman explained that a pre-nup agreement drawn up between couples before marrying sets out how their assets will be split if the marriage fails. He outlined that although not legally binding, a carefully thought through prenup, drawn up well in advance of the marriage – and without coercion – is likely to be upheld by a court.

The programme also covered how such agreements can protect other stakeholders in a marriage – typically in-laws, who might pay for the wedding or provide a home deposit. While a pre-nup can include undertakings to repay them – for example, if the property is sold following a split – without one, contributions may simply be treated as non-refundable gifts. Experienced family law firms such as Jones Myers have a wealth of expertise in this area.

The first question posed by a listener asked if there is such a thing as a post-nup – with Richard also unaware of such an agreement.

Norman explained how post-nups are entered into after marriage; with the same aim as a pre-nup should a court decision have to be made. He outlined how they are often made by couples in a second marriage who are seeking to protect children of previous relationships, or by those who wanted a pre-nup but didn’t have time, or simply to re-inforce a pre-nup

For a post-nup agreement to carry its full weight, both parties must enter into it of their own free will, without undue influence or pressure, and fully informed of its implications. Legal advice and disclosure are desirable, but what matters is that both parties are fully aware of the implications of the PNA and have the information necessary to make an informed decision. It follows that duress, fraud or misrepresentations are potentially vitiating factors.

The couple’s circumstances at the time of the agreement are also relevant. These include age and maturity, and whether either or both had previously been married or in long-term relationships.

The issue of whether pre-nups dampen romance came up with Norman, who advised that timing was important, suggesting an agreement be drawn up when financial plans and practicalities were being discussed – as opposed to introducing the issue over a romantic meal.

Phone in queries also included a listener questioning if a D37 Decree Absolute he had received from the court meant he was now formally divorced.

Norman replied that, while the marriage was now legally over, there may be dangers if there is no financial order dealing with each party’s claims – with the serious risk that a former spouse can make a claim against their ex, often years after the divorce is finalised.

You can listen back to the programme on Radio Leeds if you missed it live.

If you have any comments, queries or concerns on pre-nups, post-nups or any divorce related issue, leave a comment below, call the Jones Myers team on 0113 246 0055 or tweet us on @helpwithdivorce.

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