Clients are often in an emotional turmoil when they are either served with divorce proceedings (if they did not know that this was to occur), or have made the decision to divorce but are unaware of exactly what is involved. By this article we set out ten points to note when considering or starting divorce proceedings that must be attended to:-
- Most parties are very concerned about how the children will be told that the divorce is to occur. This is the subject of another article that we have written and to be found on our website. The main issues in relation to this are: –
- That the children should be told in a calm and sensible environment preferably by both of you together.
- That they should feel that they are not in any way to blame since it is vital that they should feel that both parties will continue to love them and that this is a separate issue from anything that they as children have done.
- Consideration should be given to how the care of the children should be shared. If as is normal, the wife is the primary carer, then the husband should not try to impose contact regimes that are unworkable and will undermine the stability of the children.
- Clients should be aware that it is for the clients to work out arrangements between them and that the courts will only intercede if agreement cannot be reached at all between the parties or their solicitors and that applications to the court over these issues can be costly.
- That before any application for children or money can be issued, one or other of the parties has to undergo what is known as a MIAMs (or mediation and information session) which is not full blown mediation but is a session with the mediator to write off the forms to allow an application to be made if appropriate.
- The more that you are aware of your partner’s finances the better it is for you to be able to give relevant information or direction to your solicitor to ensure that all the financial information is properly investigated.
How should I proceed?
- That whether matters proceed through mediation, voluntary disclosure by the parties through solicitors or court application or otherwise, parties will make disclosure on what is known as a Form E document of disclosure. This is quite a large form which your solicitor will assist you to complete. Parties should be aware that failure to complete these forms correctly or properly can lead the court to believe that you have something to hide or in extreme cases can lead the court to believe that you are guilty of what is known as “litigation misconduct” ie not cooperating in the proceedings. Be prepared to fill in all sections sensibly and properly but do not necessarily use the Form E as a chance to denigrate your partner as the courts are not interested in those issues unless it goes to the dissipation of any of the assets ie your partner getting rid of them to your detriment.
- If you have joint bank accounts or subsidiary cards on your partner’s credit card account, then you should consider whether these should be closed with agreement of the other party. If you are the primary holder, do not simply stop these without taking advice from your solicitor as it may lead to your partner applying to the court for interim provision. The law in relation to this is that the status quo that pertained or existed before the divorce should continue until the divorce proceedings are settled. This means that if you paid monies into a joint account from which the outgoings were paid, you should continue to do so. If you put your salary into the same account, you should continue to do so unless advised by the solicitors otherwise.
Items should not be cut off from the other party without very careful consideration and advice. If you are the person that usually received housekeeping or maintenance monies that has been cut off, then it is open to you after your solicitors have written to the other side requesting the amounts concerned to apply to the court for interim provision.
Do be careful of the timing of this since if your partner is claiming that they do not have any funds, there would be little point in applying for an interim provision if they do not have the money to pay for this and could end up with you paying the costs of the application.
The time to consider interim provision is if payments have stopped and Form Es have been exchanged, this will give your solicitor the ability to know whether this is the time to apply or to hold fire until further notice. If you are without funds, then obviously this will speed up the process of your application but ensure the timing of this is the correct one.
What should you do with a joint mortgage when you divorce?
- This is a question that often comes up when clients come to see us but reality is if your partner has always paid the mortgage and is in a financial position to do so then (aside from Covid-19 when they may ask for a mortgage holiday for a short period), they should continue to pay the mortgage. It is unwise to fail to pay the mortgage other than by sensible reason and discussion with the mortgage lender, since it is going to be the case that in the future you may need to either share a mortgage capacity or have our own mortgage to purchase an alternative property. Accordingly, sensible discussions with the mortgage lender are vital and there should not be a rush to contact them with derogatory stories about the other party, as the mortgage lenders will take the view “a plague on both your houses”, and may not assist at all. Do resist the desire to immediately pay off the mortgage, unless you take advice from your divorce lawyer and/or barrister since to do so may prejudice your position.
- The other issue that parties are concerned about is can I get my partner out of the house, is he or she under an obligation to leave? Be very wary about going down his route during the lockdown caused by Covid-19. The courts do not want to oust partners out of the house and unless the case is very extreme and you have very clear and unequivocal evidence of violence, threats etc you will not succeed in your application. This will then amount in the house being divided up in a way that you may not have wished. Be very cautious about this approach particularly now, but do consider if the behaviour of the other party is untenable, asking your solicitor to write to them to ask if they are prepared to move from the home in view of the circumstances.
Selling the house
- Should you or shouldn’t sell the home immediately when commencing divorce proceedings. This is a matter upon which you should very careful advice. Some parties sell their house immediately and then are left with in invidious position of those monies being held on account by either their own solicitors or the conveyancing solicitors pending a solution of the matter. This means that the funds will have to be utilised for legal fees and/or expenses in the interim of renting and can eat away at the equity causing a problem to the parties at the end. It is wise to consider very carefully when you sell or if you sell since it may be possible for another alternative. If you do wish to sell the home, and the house is in joint names, you must seek the consent of your partner or spouse, and the courts will rarely intercede with making an order for sale of the property until the end of the matter. Whilst it is technically possible to apply to the court for this to occur, without the full picture, often the courts do not wish to make interim orders to that affect. However do be careful that you do not intentionally lead yourself into an allegation of financial misconduct if you unreasonably refuse to sell the property where there is no other alternative and that you will cause a loss to the family by refusing to do so if there is a very good offer. Take legal advice in relation to this at all times.
Buying out your spouse or ex-partner
- As part of any overall settlement it is always possible for you to consider purchasing the other assets from your spouse or partner. This should be carefully considered as part of an overall settlement and do take into account that there will be tax consequences if you leave any transfers to after the year of your separation. Please refer to your solicitor to check what is meant by an arm’s length transaction with your spouse and transfers between spouses. It should be noted that transfers between spouses are exempt from capital gains tax, whereas after the year of separation they will be regarded as arm’s length transactions as if you are selling to a third party and tax will attract. It is important therefore that you ensure that you do not make a mistake by leaving it too late to affect any transfers that are required and again take very clear and unequivocal advice from your lawyers about the timing of this.
- People often get confused about their rights in respect of pensions. Pensions are an asset that can be divided on divorce either by a proportion of the partner’s pension being transferred to them or deferring that to a later date. Further, pensions should not be ignored because they can also be used as a bargaining chip in obtaining perhaps more from the house or other assets in exchange for letting your partner retain the whole of the pension. These are issues that must be carefully dealt with through proper advice but it is important that both you and your spouse do disclose the full extent of your pensions and when they were acquired. It is possible to ringfence or ignore part of the pension if it was acquired before the marriage or after separation.
Values of companies and assets
- One of the biggest issues between parties when divorcing is the true value of any of their assets. Please remember that court orders can be obtained for independent valuations of any of the assets that cannot be agreed upon. This not only includes properties, shares, and pensions where a pensions actuary can advise on percentages to be transferred, but also to companies or sole traders. Quite often couples will be concerned about how to value companies but there are specific forensic accountants that can be instructed to value the company itself, its income and capital streams and what a wife or husband will lose the benefit of on divorce. If the company is one of the major assets involved, then do not be tempted to ignore it altogether but know your ground work for the purposes of negotiation. The Courts will not automatically award a spouse shares in a company owned by the other particularly if it may interrupt the smooth running of that company, but its value and the income and capital that can be derived from it will not be ignored.
As can be seen, there are many issues that have to be addressed when undergoing divorce, but with the right advice, assistance and strategy, this minefield can be easily negotiated.