Family Law experts say that the process of divorce, negotiating over finances and family arrangements, is becoming ever more complex, and suggest couples should be more open to making agreements and understanding finances from the outset.

The value of family assets is on the increase particularly for middle-aged couples, which means when couples come to hammer out a fair division after a marriage breakdown there is more at stake.  Wealth statistics from ONS show that by 2014 half of all households had total wealth of £225,100 or more.

Pensions are increasingly important in divorce negotiations

Family property tends to be thought of as the biggest asset.  However, thanks to stock market increases pension values have surged and the Wealth Statistics show private pension wealth was the largest component of aggregate total wealth.

In addition, recent changes in legislation have opened the door to greater flexibility in accessing pension pots which makes them increasingly significant in divorce negotiations.

Many more partners are seeking a share of pension arrangements on divorce.  The Ministry of Justice report a 43% increase in pension sharing orders, at 11,503 in the 2016-17 tax year, compared to 8,027 in 2015-16.

Pension sharing orders are issued by the court, setting out the share of a pension an ex-wife or husband will receive from their former spouse.

Can a spouse expect an equal share?

In recent years spouses divorcing after a long marriage have come to expect an equal share of all assets, irrespective of any decision on needs, and whether or not one was the home maker.

However some have seen the recent case of Hart v Hart as a shift in attitude. After a 23 year marriage the wife was awarded £3.5m, out of total resources of just under £9.4m.

Despite the long marriage the judgement gave greater weight to the pre-marriage wealth of the husband. The wife’s settlement was based on a calculation of needs, rather than equal sharing of assets.

Advanced preparation may prevent future uncertainty

This case was a complicated one, and it is unusual to see pre-marital wealth being given such consideration after a relatively long marriage, during which finances may have mingled.

But, together with the increasingly complex finances of those embarking on late, second or subsequent marriages, it’s an outcome that may encourage more new couples to seek pre-nuptial agreements, or sometimes post-nuptial.

While such agreements are not automatically legally binding in England and Wales, they are likely to be upheld, if done properly, following the 2010 landmark case of Radmacher v Granatino.

It’s a way of clearly setting out what each person has brought into the relationship, in case of any later division of assets and final payout.

What is important is open communication and understanding of financial affairs, and making such an agreement can help couples to have a more frank discussion at the outset.

Often, one partner may take the lead on finances, or some couples may just avoid it, as they think it’s a tricky topic.  But understanding what you have today, in a positive, settled relationship, may mean you can better cope if the worst happens and things become difficult in future.

ABOUT DANIEL RUSHTON

Daniel has over 20 years’ experience as a specialist family law solicitor. He is Head of the Family Law team at Grindeys Solicitors based in Stoke on Trent.

Daniel has a particular interest and experience in dealing with business owners, company directors and members of the medical profession in matrimonial situations. For this type of work a solicitor who understands your business accounts and business structure is vital to obtain the best financial settlement possible.

Recent cases include one involving an international business and extremely valuable assets and pensions, as well as property abroad.

He has acted for numerous doctors and other medical professionals, council workers, police officers and serving members of the armed services. In twenty-three years, Daniel has dealt with all walks of life and will adopt a professional yet caring approach to your situation.

Email: daniel.rushton@grindeys.com

It is easy to see how getting divorced can have a negative impact on an individual’s finances, whether it be those of the wife or the husband.

Having two houses and cars to pay for and run, where once there may have only been one, additional childcare payments, holidays and the countless other extra costs of no longer living under one roof can put serious pressure on standards of living.

Little wonder then that many divorcing couples do not focus on retirement planning when going through a divorce.

According to a study by insurer Prudential, divorcees planning on retiring this year are likely to be 16% worse off than those who have never divorced, and face a shortfall of £3000 in their annual income in comparison.

And around a third of people who have been divorced can expect to retire with debts to their name, compared with one in five who have never divorced.

So when it comes to splitting family assets, the home and its contents are not the only things to consider.

Pension plans can form a substantial part of the divorcing couple’s assets and with the lengthening periods before individuals can draw their state pension, coupled with longer life-expectancy, pensions funds are becoming more and more central to divorce settlements.

Dividing a pension fund can be problematic in that an arrangement that suits one party may not be of advantage to the other.

There are three main ways to deal with a pension in the event of a divorce. The first option is offsetting, where one party simply transfers assets of a certain value, such as the family home, to their former spouse in lieu of their share of the pension. Whilst this is a straightforward solution it may not always be the best – you may have somewhere to live, but no longer any retirement income.

Pension sharing is often favoured as it offers a clean-break solution. In this instance any pension funds are valued and shared between the divorcing parties in accordance with a court order, leaving both parties with a pension in their own name.

The difficulty with pension sharing lies in setting a value on the pension and using a Pension Actuary to value and explain how you need to share your pension to reach your objectives and the effect is fundamental.

Another solution but the least popular is a Pension attachment order in which once the pension becomes payable the pension arrangement pay part or a lump sum to the ex-spouse. Downsides to this sort of arrangement are there is no clean break, and it is impossible to predict either party’s needs at the time the pension becomes payable or the value of the asset to be divided.

Everyone’s circumstances are different and the solution is to think through the options carefully and to get the best advice possible.

About Heidi

Heidi qualified as a Solicitor in England and Wales in 2009. She initially practised in Yorkshire and then as a Solicitor overseas in Gibraltar. She was subsequently called to the bar in Gibraltar in 2015. Heidi relocated to St Albans in late 2016 to join Bretherton Law‘s Family Department as a Senior Associate.

Heidi specialises in Family Law advising on high net worth Divorce, Nullity, Cohabitation, Financial Remedy, children matters and domestic violence cases.

Heidi also has experience in representing children, parents and other relatives in public law proceedings involving social services.

She is a member of the Law Society’s Children’s Panel and is able to represent Children within Private and Public Law proceedings.

When it comes to divorce, pensions are treated just like any other asset.

However, unlike bricks and mortar, it can sometimes be difficult to establish whether a pension exists and what it might be worth. This can become even more difficult in an acrimonious split, when one partner refuses to divulge the financial details of their pension arrangements.

If this situation arises, there are number of steps you can take with the help of a specialist solicitor.

First, you need to find out if a pension exists.

A useful first step is to take advantage of the Government’s Pension Tracing Service – an online database containing details of all workplace and personal pension schemes.

Although you won’t be able to search your partner’s details, you can make an application to the court for them to be forced to make search by putting in all of their past and current employers, together with any personal pension providers that might be relevant.

This won’t give you the value of the pension, but it will tell you who the provider is and give you details of where to write for more information.

The next step in securing a fair allocation of assets is to find out how much the pension is worth by obtaining a calculation of the Cash Equivalent Value (CEV) of the pension benefits that have accrued.

Under normal circumstances, this information is put on the table along with any other assets in order to work out what each spouse is entitled to. However, it does happen occasionally, when relationships have completely broken down, that this information is not produced.

In cases of a refusal to provide CEV information about a known pension fund, there is provision in law for the court to require the member spouse to obtain information and also for the court to order the pension provider to supply that information to the court.

To make that happen, the non-member spouse’s solicitor would send a copy of the application for a pension sharing order direct to the pension supplier. It is then obliged to provide certain information to the member, including the value of the pension benefits.

If the member spouse refuses to disclose that information, an application can be made to the court for a separate order for this information to be provided.

Once all of the information is before the court, it enables a decision to be made about how the pensions should be split equitably between the parties. This split can take a number of forms, of which the most usual are:

• Pension sharing – where you receive a percentage share of any one (or more) of your ex-partner’s pensions. This is either transferred into a pension in your name or you can join your ex-partner’s pension scheme, depending upon the pension scheme rules and independent financial advice;
• Pensions offsetting – where the value of any pension(s) is offset against other assets, for example, you might obtain a bigger share of the family home in return for your ex-partner keeping their pension.

Amid the stress and emotional turmoil of divorce, it can be difficult to think beyond the day-to-day. However this is precisely the time to focus on planning ahead and avoid later regrets about failing to make adequate provision for the future.

About Peter Jones

Peter Jones is one of the country’s leading divorce and family lawyers. A qualified arbitrator and mediator, Peter set up Jones Myers as the first niche family law firm in the north of England in 1992 and has acted for a string of high-profile clients.

Renowned for his sympathetic approach, he is a former national chairman of Resolution, a former Deputy District Judge – and instigated the D5 Group of law firms that promotes excellence in family law.

Leeds and Essex based Jones Myers, consistently top-rated Yorkshire family law firm by Chambers and the Legal 500 Legal Guides, has been one of the pioneers of collaborative family law – known as the ‘pain-free way to divorce’ – which advocates a more amicable, and often speedier, route to divorce, without resorting to the courts.