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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Our latest blog on The Divorce Magazine focuses on what you can do if your ex is ignoring a Financial Consent Order. Below is the article in full.

If your ex is ignoring a Consent Court Order, certain parts of it might be enforceable immediately. They also risk being in contempt of court and possible severe penalties such as a fine, imprisonment – or both.The order is made by a judge in situations where both parties undergoing divorce agree on financial settlements which can entail paying a sum of money, transferring ownership of a property, maintenance, pension sharing and provision for debt.

Refusal to adhere to the terms of an order is thankfully, unusual. But when the agreement is broken, the court has the power to take action.

Consent orders cannot be appealed unless there is evidence of significant facts not being disclosed when the original agreement was made.

If the default relates to a payment of money, such as maintenance or a post-divorce lump sum, it can be enforced through the court system as an ordinary debt and recovered by bailiffs through enforcement powers which may include seizure of assets. An attachment of earnings can also be obtained. Where one party refuses to transfer an interest in a property then a judge can be requested to sign all the transfer papers in place of the defaulting party.

It is particularly important to act early in relation to late maintenance payments, because if the arrears are over 12 months old, permission is necessary from the court to enforce them – and judges have in the past been known to write off historic arrears.

As well as enforcement action, the courts also have the authority to punish those who fail to comply with terms of an order. If a party is instructed to take a certain action and refuses, they may find themselves in contempt of court which is extremely serious and may result in an offence punishable by fines, imprisonment or both.

Every financial consent order is different and if, and how, it is enforced depends very much on the specific circumstances of the case. It is vital to obtain expert advice at the first possible opportunity from experienced family lawyers who can guide and support you though the process.

For more information about divorce and finances, children’s issues or any aspect of family law, call Jones Myers 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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Our latest blog on The Divorce Magazine puts the spotlight on how to avoid a financial settlement being rejected. Below is the article in full.

Separating or getting a divorce [Splitting up] from a partner can be an emotional roller coaster and planning your future finances may be the last thing you feel like doing.

However, it is vitally important for the long-term wellbeing of both you and your ex that on divorcing a financial settlement is reached that is mutually satisfactory and will stand up to legal scrutiny.

Generally speaking there are three areas to be considered when working out who has what proportion of the joint finances – and for how long.

• Assets – including savings, investments, property or shares
• Income – the amount and length of time any post separation payments should be made
• Pensions – the type of scheme and its value

The first step in ensuring a robust financial settlement for a divorce is arranging an exchange of all the financial information. Only by doing this will all parties gain an insight into the whole financial landscape.

The next priority is building a detailed picture of the needs of each party, both now and going forwards. This often involves a process of quid pro quo – for example one of you might seek the security of a home while the other may want to be the sole beneficiary of a future pension pay out. Crucially, the rationale for any trade-off will need to be clearly explained in the court document so that it can be scrutinised by the judge. Care should also be taken to ensure there are no hidden difficulties such as penalties on settlement of a mortgage or tax problems.

The next stage is drawing up a timetable that ensures all transactions such as maintenance payments, property transfers or lump sum payments have an agreed cut off date. This will also be checked by the court, to ensure that it is deemed fair for both parties.

When making its judgements, the court will take into account a range of factors for both parties including financial resources, financial obligations, standard of living, age, health and the contributions made to the marriage.

Creating an agreement that will stand the test of time is a complex task and it always pays to seek advice from a highly experienced divorce and family lawyer who can ensure that everything is encapsulated in an agreement which is in a format that is acceptable to the court.  Once the agreement is approved, it will give clarity and certainty to each party enabling them both to look forward into the future with security and optimism.

Jones Myers’ financial remedies team have vast experience in resolving financial issues and disputes relating to divorce. As a member of resolution they are experienced in mediation and collaborative law as methods for resolving finances.

For more information about divorce and finances, children’s issues or any aspect of family law, call Jones Myers 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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By Liz Bell, solicitor

Following on from our earlier blog, which highlighted how a high percentage of cohabiting couples wrongly believe that they have legal protection when their relationship breaks down, we answer more of your most commonly asked questions.

My partner and I are splitting up and all our joint savings/investments are in their name. Can I access them?

No. Couples in England and Wales who live together, as opposed to marrying or being in a civil partnership, have no automatic access to, or control of, assets or property held in their other half’s name.

I’m unable to work. Can I secure maintenance if my relationship breaks down?

Not without a cohabitation agreement which includes provision for maintenance.

Is this all very unfair? 

Many people think so. While current legislation requires family courts to establish what is ‘fair’ for divorcing couples, when it comes to cohabitees, the courts must determine the couple’s shared intentions.

My partner has a large pension pot, but I don’t. What would happen if we split up before they retire?

An unmarried person cannot claim on their ex’s pension without written agreement.

What will happen regarding their pension if they die before me?

Most pension companies will not pay out to cohabiting partners upon death – particularly occupational schemes. However there are some limited circumstances where the pension arrangement, with the agreement of the partner, can make limited provision.

Furthermore, unlike married couples, cohabitees are not entitled to receive the state pension or bereavement allowance for dead partners. This makes it even more important to scrutinise carefully the terms of every private pension scheme partners contribute to – as well as agreeing the entitlement of each to a share of the other’s in writing.

What financial protection is there for our children?

This is one area where there is equal treatment under the law. The children of unmarried parents have the same rights to financial support as those of married ones. The Child Maintenance Service (CMS) is responsible for assessing and enforcing maintenance. However, where a parent’s income exceeds the CMS’s jurisdiction, the other can apply to the family court to increase payments.

Who gets to look after our children and decide their upbringing/education if we part?

Ideally, childcare can be agreed between former partners, but either party can apply to the family court to settle disputes. Decisions about where the children should reside and the contract rights of each parent are always based on the children’s best interests.

Alternatively, a couple can enter into non-confrontational collaborative law, mediation or arbitration. These are reduced conflict, cost-effective and less stressful routes to resolution that any responsible family lawyer should suggest.

Is statutory protection for cohabitees likely to be brought into line with married couples and common law partnerships?

There is increasing pressure on the government to improve rights for cohabiting couples and Jones Myers is very active in the campaign, however it is difficult to know if, and when, anything will change.

The shifting political landscape and uncertainty makes it particularly important to secure sound legal advice before, during and after the relationship

Our highly skilled family law specialists are adept at dealing with issues arising from cohabitation – whether advising you on your rights before you cohabit – or if your relationship has broken down.

For more information about any aspect of cohabitation or family law, call Jones Myers 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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By Liz Bell, solicitor

Cohabiting couple families remain the fastest growing relationship in the UK, but many mistakenly believe that they have the same legal rights as married couples in critical areas such as savings, income, pensions or business interests.

In fact, cohabiting couples are the second largest family type after married or civil partner couples, but the law does not offer them any protection should their relationship turn sour and separate becomes inevitable.

Become are some of the questions we are asked by cohabitees

My partner and I are thinking of living together – is there anything we can do to protect ourselves should we split up?    

A cohabitation or ‘living together’ agreement, to record who owns what at the outset, provides some security to unmarried partners. It encourages people to think clearly about what they want to happen not only while they live together, but also if their relationship ends, setting out who owns what – and in what proportion.

Cohabitation agreements set out how you will divide property (as well as paying off debts), personal belongings, savings, pensions and other assets should you split up – along with how your children will be supported, plus how to deal with bank accounts, debts and joint purchases such as a car. They can also cover more day-to-day matters including pets.

It is important that each party seeks independent legal advice and discloses all financial information in the lead up to signing the agreement, which should be reviewed regularly.

Can a cohabitation agreement be set up while we’re living together?

Yes. It can be drafted either prior to or during your time together. It can also be amended, as long as both parties agree that the original agreement should be changed and how.

I’ve paid into our mortgage for many years, but the property is in my partner’s name. What happens if we go our separate ways?  

Cohabitation gives no automatic rights to the home you share if the property is solely in your partner’s name, no matter how long you have lived there. However, if you can show that you have contributed to it and there was ‘an intention to share’, you may be able to make a claim. This is a very complex process, though – and legal advice is essential.

Relating to the above, what happens if my partner dies?

If they die either without having made a Will, or having made one, without making reasonable provision for you, as the surviving partner you would have a potential claim as a cohabitee – providing you have lived together for at least 2 years ending with date of death. Under current law, if you cannot satisfy the 2 year requirement, you may be able to make a claim on part of your deceased partner’s estate as a dependent. It is important to bear in mind that a dependent’s claim ranks lower in priority than the cohabitee’s claim.

If your partner dies without making a will, the law says that a property in their sole name – or their share of it – must go to their next of kin. First among these are any spouse, and then any children, followed by the next closest group of living relatives. You will not be a surviving spouse for pension purposes as you were not married. You might be able to make a claim against your deceased partner’s estate if they have not made reasonable provision for you, and subject to other conditions imposed by law. To avoid this potential issue, you and your partner should make wills and/or consider transferring any property into joint names.

For more information about any aspect of cohabitation or family law, call Jones Myers 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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According to a new study, one in three (35%) of this year’s retirees have experienced a divorce. They could lose £2,100 in retirement income, and one in five will retire with outstanding debts averaging £22,100.

The research, which also found that divorced people are more likely to delay retirement, follows hot on the heels of legislation allowing over 55s to access their pension funds.

On paper the new pension rules seem to give people greater flexibility on how to use their money – and up to 25% of the fund can be drawn down tax free.

Some financial advisers have even suggested that the pension changes will benefit those whose marriages have broken down – particularly the so called ‘silver separators’. They argue that the fact that older people can access their entire pension pot could help to prevent the sale of a house, or provide the cash to buy a new property.

However, not only does pension money spent earlier reduce income for later in life, but the tax implications for taking out cash could be substantial – calculations in the Daily Telegraph show that more than £50,000 in tax could be payable on a £200,000 pension pot.

A pension fund can be one of the most complex assets separating couples have, and the issue of how – and if – it might be divided can be very complicated. The main options are:

• Offsetting – where the value of the pension is balanced against another asset – usually the family home. The person accepting the house then gives up all future rights to their partner’s pension.
• Attachment is where a percentage of a pension is set aside for an ex-spouse.
• Pension sharing is a way of having a clean break with a percentage of a pension being transferred into a separate scheme in the name of a former wife or husband.

Will the supposed flexibility offered by the pension reforms give financial advisers and family lawyers greater freedom to find a solution that works best for both parties in a divorce? Might courts take the view that pension pots are just another form of savings accounts?

Our experienced team of specialist lawyers at Jones Myers will be looking at the full implications of the new pension reforms for divorcing couples over the coming months.

If you have any queries about an existing divorce settlement, or need advice on any financial aspect of separation or divorce please call us on 0113 246 0055, leave us a comment below or drop us an e-mail.

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Steadman divorced film director Mike Leigh, with whom she has two sons, after a 28-year marriage and expressed the hope that her new role would encourage unhappy couples to ‘appreciate each other’ rather than walking away.

The plotline explores the emotional issues that lead a retired woman, played by Steadman, to leave her husband and children. As figures from the Office of National Statistics show, the ‘silver separators’ are no longer just the stuff of drama, but a growing group.

If art is to mirror life with some accuracy it will be interesting to see how the writers tackle some of the critical financial issues affecting older couples if their relationship falls apart. These include:

Who held the purse strings?

It is often the case that one partner has taken the lead on managing the couple’s financial affairs and the other party has been happy for them to do so. If they separate it is important that both parties know how much they own and owe.

It is often the case that despite not making major financial decisions during the marriage, after divorce, in addition to dealing with the emotional side of break up, one party may need support and advice to make important decisions about their economic future for the first time.

Downsizing

Often, by retirement a couple will have repaid their mortgage but dividing the equity equally will mean that both parties need to adjust to the idea of each living in a smaller property.

Pension entitlement

During the working years one party in the marriage may have built up a sizeable pension, whilst the other stayed at home to bring up children. The wife – and it usually is the wife -can make a claim to a share of that pension which is income they could rely on if they are facing later life as a single person.

Making a new will

If one, or both partners, end up re-marrying or cohabiting, there is a need to ensure that the family assets are properly protected and in any split it is sensible to re-visit your will. Any will made prior to a divorce becomes invalid in respect of any gift to the spouse, once the divorce is granted.

Making later life divorce the stuff of drama suggests that conflict will lead the action. As champions of collaborative law we know that, by offering couples a less adversarial and often cheaper way forward, we can help avoid potentially costly courtroom battles.

With our help, most people are able to work through the divorce process with minimal emotional and financial stress. Taking the drama out of a life-changing break up is what we do best.

Putting the drama in is best left to the writers and actors of works of fiction like Love and Marriage.

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Mr Aldrin is not alone in divorcing late in life.  According to recent figures from the Office of National Statistics more and more people in their 60s are walking away from their partners.

Retirement is supposed to be a time for relaxation, travel and spending quality time with grandchildren. Sadly for increasing numbers of people, it signals the end of a marriage and the prospect of spending their dotage alone – and often financially challenged.

So what are the prospects for ‘silver separators‘ facing divorce? If you find yourself in this position, here are some things to consider:

• One partner often manages the financial affairs of the house – this is particularly the case with older couples.  So when it comes to separation, many people do now know how much they own or owe. It is important to try and get to grips with your household finances before the divorce.  In circumstance where the divorce is started by the other spouse full details can be established at that time so all is not lost.
• Silver separators may well have paid off their mortgage  –  although this means more equity to divide between the couple,  they may both have to settle for a smaller property going forward.
• One party will have built up a healthy pension, while the other – usually the wife – stayed at home to bring up children.  If you’re in that position make sure that you make a claim to a share of the pension so that you have enough income for your twilight years.
• If one or both partners ends up re-marrying or cohabiting there is a need to ensure that the family assets are properly protected.
• Re-visit your will. Any will made prior to the divorce will be invalid in respect of any gift to the spouse once the divorce is granted.

Why do you think more people are divorcing later in life? Do you have any tips for those that find themselves alone after spending many decades with a partner? Let us know with a comment below, e-mail us, or send us a tweet @HelpWithDivorce.

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The headlines make for grim reading: long term unemployment is at its highest level since 1996; income growth has slowed to 0.6 per cent, well below inflation; the Eurozone crisis deepens and the Bank of England has cuts its growth forecast to around 0.8 per cent, indicating that the economy won’t return to its pre-crisis status until 2014.

Add to that the withdrawal of interest-only mortgages and increases in Standard Variable Rates from major mortgage lenders, and each month adds to the tally of households which are feeling the squeeze to an unbearable degree.

So where does this leave couples whose relationships have already hit the rocks, for whom the financial climate brings the Catch-22 of heaping further stress on the pair whilst also leaving them with difficult financial decisions for the future if their marriage ends in divorce?

There’s no doubt that reaching a financial settlement affordable to both parties is more challenging than it was even five years ago. Here at Jones Myers, we’ve always endeavoured to find solutions that don’t rely on the wholesale selling of assets. This approach has paid off for our clients, especially now that the property market is in the doldrums and couples can no longer rely on the immediate sale of the family home to give them both enough to live on post-divorce.

Divorces are on the rise, with an increase of almost 5 per cent from 2009 to 2010. In addition, couples are splitting later in life – the average age for men divorcing has leapt to 44 in 2010 from 38 in 1990. This puts a much greater emphasis on pensions as a key element of the settlement as the pension pot has had more time to grow.

More than one in ten divorce settlements includes a pension sharing order – where the pension pot is split between the pair – and this can be applied not just to personal pensions but also to the top-up State Second Pension and its predecessor SERPS. Another solution is offsetting where one partner keeps their pension in exchange for giving up a greater share of other assets such as the house.

Pensions have always been in the mix, now it just requires a more innovative approach to maximise the benefits to both parties. Deals can be struck that incorporate delays or staged payments, working on the assumption that the economy will recover and individuals’ circumstances will improve.

Good negotiation is key: however sore couples are feeling, we would always urge them to think long-term, try to set aside their differences in the interests of finding the best solution all round. Disagreements invariably result in a protracted battle and higher costs, whereas a process such as mediation can be hugely beneficial not just in relation to the settlement but to agree residence and contact arrangements.

A good family lawyer will always identify the best solution for clients, no matter how challenging the financial climate is. The economic storm clouds may be swirling above but the silver lining can be found with a little ingenuity from the lawyers and compromise and understanding from the couple.

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