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Financial Division

Witts Moloney provides their clients with a high quality service. We think that the following information may answer some of the more usual questions that clients ask us about financial matters.

In the initial interview we will have discussed the following, hopefully this information will confirm the options which are possibly going to apply to your case:-

1. Mediation

This is a possible way that you and your husband/wife can get together to sort out financial matters between you. You can sit around a table with a Mediator and hopefully resolve matters without the need for Court. There are agencies which offer this service. If you want further details, please ask.

2. Ancillary Relief

If the matter is not capable of settling through mediation or through just talking directly to your opponent, an Application for Ancillary Relief is made to the Court. This is only capable of being made if there are divorce, nullity or judicial separation proceedings ongoing. Your Application for Ancillary Relief will be supported by an Affidavit detailing your financial position to include income, out-goings, your capital position and your position in relation to property.

Normally when the Court issues the application, they will issue a Standard Directions Order which includes an order that both parties prepare an Affidavit (a Form E) detailing their respective financial means. This is usually prepared by his or her Solicitor; questionnaires then follow to find out any further information which may be needed and a valuation of the former matrimonial home if owned. The Affidavit and questionnaire will be accompanied by supporting documents to prove both parties financial status. This information is necessary for your lawyer to be able to advise you as to what would be a fair settlement.

Just because an application is issued, it does not mean that the whole issue of ancillary relief is not capable of settlement. Family lawyers almost have a duty to try and find solutions as early as possible; they are minded to keep costs to a minimum. Obviously, we may not be able to advise you on a proper solution unless all the information is already available. At any time of course, you can give instructions to try and settle by making a suitable offer.

If the matter is not capable of settlement, then a Final Directions Hearing will take place at the County Court. This is an opportunity to try and resolve matters at Court. However, if that is not possible, then the Court will list the matter for a full hearing and both parties will have to give evidence and the Judge will decide exactly who gets what.

There is almost a formula available, which Family Lawyers and Judges apply to this case, to enable them to assess who should receive what Order from the ancillary relief proceedings. This is governed by Section 25 of the Matrimonial Causes Act 1973. The Court has a duty to have regard to all of the circumstances of the case, first consideration being given to the welfare of any minor child of the family.

The Court will look at the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future, including

the case of earning capacity and any increase in that capacity;
the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;
the standard of living enjoyed by the family before the break down of the marriage;
the age of each party to the marriage and the duration of the marriage;
any physical or mental disability of either of the parties to the marriage;
the contributions which each of the parties has made or is likely to make in the foreseeable future to the welfare of the family;
the conduct of each of the parties, if that conduct is such that it would be in the opinion of the Court, inequitable to disregard it;
in the case of proceedings for divorce or nullity of marriage, the value to each of the parties to the marriage of any benefit (for example a pension) which each by reason of the dissolution of the marriage, that party will loose the chance for acquiring.

The Court also has powers to make Orders in relation to children and in such cases, they will have regard to the following matters:-

the financial needs of the children;
the earning income capacity, property and other financial resources of the children;
any physical or mental disability of the children;
the manner in which he was being, and in which the parties to the marriage expected him to be educated or trained;
the considerations mentioned to the parties to the marriage in paragraphs a, b, c, and d above.

When deciding whether or not any awards should be made to any child who is thought of as a child of the family, but not a child of that party, the Court shall also have regard to:-

whether that party assumed any responsibility for the child's maintenance, if so to what extent;
to whether in assuming or discharging such responsibility, that party did so knowing that the child was not his or her own;
to the liability of any other person to maintain the child.

So what Orders are available?

Periodical Payments: 1. An application for periodical payments for the spouse (commonly referred to as maintenance) can be made in an application as soon as the Petition for a divorce or judicial separation is filed. If the party making such an application has remarried beforehand, then the Court cannot award periodical payments to the remarried party. However, if the application is made before remarriage, then the application can be considered. An application for periodical payments can be made either as an interim application, before any final Orders are made, or when a final Order is made upon Decree Absolute.; The Court's position in relation to periodical payments for children is more complicated than it used to be, given that the Child Support Agency now has the jurisdiction in relation to child maintenance. The Courts can make Orders in relation to periodical payments for children, but these are limited to what they refer to as a "qualifying child". If you want further details about this, please ask.
Lump Sum: 1. This can be applied for either you and/or your children. A lump sum is usually allocation of an amount of savings, policies or any other capital. These Orders cannot be made until Decree Nisi in divorce, or upon the granting of the final decree in judicial separation. If the Orders are made in divorce, then they do not take effect until Decree Absolute.
Property Adjustment Orders: 1. Again these Orders can either be made in your favour or in your children's favour. Similar to the Lump Sum Orders, they cannot be made until Decree Nisi and do not take effect until Decree Absolute. Property Adjustment Orders refer normally to the former matrimonial home, and any other property that may be vested in either your opponent's name or your joint name. Orders include transfer of property from joint names to possibly your sole name. At this point, your husband/wife is either "bought out" by you, or a charge is put on the property, to be realised in the future.; Sometimes a trust is created, where you would be able to stay in the house with your husband/wife paying the mortgage either for life, or until your youngest child reaches 18 or leaves full-time education. Another alternative is of course, to sell the former matrimonial home and divide the proceeds. This is all governed by financial needs and resources. Normally, if you are the person whom the children live with, then it is likely that you will be able to stay in the former matrimonial home. Normally, in those situations, your opponent would receive his or her share of the property and the youngest child no longer needs a roof over his/her head, remarriage, cohabitation or death.; When the former matrimonial home is subject to a tenancy, again it will be decided who should be awarded the tenancy. Sometimes, it is wise, not to apply for Decree Absolute until the issue of the tenancy if sorted out, because such an application can sometimes be governed by the Matrimonial Homes Act 1983, which cannot be used once Decree Absolute has been granted. The advantage of using this procedure is if the tenancy prohibits an assignment or transfer, then the Court can override that.

All these Orders are available in either divorce, nullity or judicial separation. In judicial separation, there can be no clean break, because ultimately you would still be married. A clean break means that any settlement or Order granted would be in full and final settlement of all your claims against each other.

These Orders can either be made by consent, i.e. that negotiations have worked and a Consent Order is drafted, which is submitted to the Judge for approval. It would detail the agreement reached, and dismiss all future claims against each other in the future.

Alternatively, if the matter has gone to full trial, then the Judge will make a suitable Order after considering all of the evidence before him/her. Normally, there will be a clean break ordered.

Funding the Case/Costs

You will have been advised at the initial meeting whether or not you are eligible for Public Funding. As you are a privately paying client our charges are calculated mainly by reference to time spent by the solicitors and executive staff dealing with your matter. However, due to the administrative charges incurred at the start of a matter this firm has a minimum charge of £125 plus VAT.
Should it prove necessary to issue Ancillary Relief proceedings to determine matters the overall costs are likely to be £3,500 plus VAT for the first hearing, £7,000 plus VAT for the second hearing and £15,000 plus VAT for the third and final hearing.

This summary is intended as a guide only and may not necessarily relate to you own matter. Please speak with your lawyer over any points which concern you or over which you have a query.

Pensions on divorce

Financial Information

When considering the division of matrimonial assets the family home usually comes to mind first, normally being the asset of highest value. Second to that, in terms of value, is often the other parties' pension benefits, a fact about which increasing numbers of divorcees are fortunately becoming aware.

When looking at pension benefits one must consider not only how they are valued, but also how the value will then be treated in the division of assets. The following provides an overview, and hopefully allows you to determine whether your circumstances warrant further enquiries and action.

What are the Options?

Once the current value of future pension benefits have been agreed the following options are available.

Offsetting or "Trade Off" is where the value of the pension is "traded" for another capital asset. For example joint ownership of your home worth £250,000 after repayment of the mortgage, and your spouse's personal pension fund of £250,000. If offsetting is agreed, you might agree to keep the house and your spouse keeps their pension. This is never on a pound for pound basis.

Earmarking is where an agreed percentage of the pension is identified as yours, and "earmarked" as your benefit on your spouse's retirement. This should not be the option of choice in most circumstances as it does not allow for a clean break. In addition, the pension dies with your spouse, or your spouse elects to defer taking this particular pension until the age of 75, an action that is beyond your control.

Pension Sharing was introduced in 2000 for all types of pension except the basic state pension which can only ever be owned by the individual concerned. Pension sharing provides for the immediate pension to be split into two separate pots, each individually owned, thereby removing the dependency applicable to the earmarking arrangement.

Valuing Pension Benefits

CETV (Cash Equivalent Transfer Value) is a value produced by the Scheme Administrator and represents the value of the member's benefits assuming they are leaving pensionable service at that time. whilst this may be appropriate for a money purchase scheme, for more complex arrangements it does not take into account such additional benefits as death in service payments, spouse's rights and discretionary benefits provided by the Trustees. In other words the result is not a fully valued CETV.