• Text Only  |
•   Text Phone Service

 

Username  Password

 

forgotton your username? forgotton your password?

 

 

Matrimonial Home
Often, the most substantial capital asset owned by a couple is their house. Regardless of whether the house is owned by one of them or by them jointly, a sale of the property and a division of the sale proceeds may be necessary to meet their needs.

There may be sufficient funds available to buy them each a new home. That is the ideal solution. Where there is not enough money, the priority is to provide a home for the children, more often than not with their mother. The court does however recognise that it may not be fair to deprive the husband of his capital in the long-term and has a wide discretion to make whatever order it thinks fit.

Business Assets
Whether a spouse runs a business alone or in a partnership, or has shares in a private company, the courts are reluctant to make an order which will destroy that business or its viability. If the business generates income from which maintenance is paid, it is very unlikely that a court will force its sale.

If capital is required from the business, the aim will be to find out how it can be released without destroying the business, for example by selling off some assets, or using the business assets as security to increase borrowing.

The court will only reluctantly consider forcing a sale of the business if it does not make enough profit to pay reasonable maintenance and there is no other means of raising an appropriate lump sum.

The businessman or woman has particular problems about disclosure. It may be difficult to work out the profits of a business especially if the accounts are not up to date, the business is in a period of change, and the stress of marriage breakdown has affected performance at work.

Detailed valuations are discouraged - they can be expensive and controversial, and a paper figure for the valuation of a business is irrelevant if the business is not to be sold. Some form of agreement about the value is, however, generally necessary if a fair settlement is to be reached.

The court does not give great weight to strict partnership or company law when no-one has an interest in the business other than the husband and the wife. If the wife has been involved for tax purposes only, or has contributed little in terms of work or capital, she may receive less then the wife who has built up a business as a true joint enterprise with her husband.

Other Assets
All assets owned by the husband and wife, from cars to life assurance policies and from holiday homes to building society accounts, are relevant to the financial settlement. The court will readily consider the transfer or sale of free assets such as quoted shares or second homes. Some assets are more difficult to realise than others, for example, assets held as security for the deposits of Lloyd's members. Similarly, it can be difficult to enforce the sale or transfer of overseas assets, but a lump sum can be ordered which means that overseas assets have to be sold in order to pay it.

Trusts and Inheritances
The court cannot make orders against trustees. It will, however, look at the reality of the situation where the husband or wife is a beneficiary under a trust. Increasingly, trustees are being joined as third parties to financial proceedings involving beneficiaries so that the court can ascertain their views on how trust monies might be utilised directly or indirectly to assist a financial settlement. For example, if trustees have been paying income to beneficiary wife and providing capital on request, the court may make an order requiring her to sell her other free assets to meet her husband's claims.

Increasingly, trustees are being joined as third parties to financial proceedings involving beneficiaries so that the court can ascertain their views on how trust monies might be utilised directly or indirectly to assist a financial settlement.

Expectations of inheritance may be taken into consideration. The courts recognise that wills can be changed. Where potential inheritances involve foreign assets, the position may be different. In some foreign countries, rights of succession are determined by law. In such cases a divorce court may be more tempted to take that property into account.

Pensions and Insurance
On the final decree of divorce, the wife often loses her entitlement to a widow's pension or death in service benefits from her husband's employment. If the husband is approaching retirement age and has substantial pension provision, the wife may need to be compensated. These rights can be the single most valuable asset a couple own after their house.

Possible solutions include giving the wife maintenance or capital to fund her own pension, making alternative insurance arrangements or giving a proportion of a retirement lump sum to the wife when the husband receives it.

For couples who divorce after the 1st December 2000, it is possible to divide pensions through a pension sharing order. This will enable a wife to transfer out of a husband's pension scheme the investment value into a scheme of her own. This can be done at the time of divorce, even if retirement is some way off.

A wife should be aware of the fact that after divorce she is only able to rely on her husband's contributions to the basic state pension scheme during their marriage. After a divorce she must make her own contributions.

If the wife and the children are dependant on a substantial order, it is wise to consider insurance to cover them in the event of the husband's death.

 

Latest News
Updated Daily: Thursday July 24th 2008