In last month’s edition I raised a number of questions that are often asked by clients seeking advice on divorce and financial settlements. I have had a lot of requests to answer those questions which I shall now try to do. The information set out below is an overview and should not be considered as an alternative to seeking advice on your own individual position as it will be after divorce.
Does the house have to be sold? There are numerous options for the parties and the court to consider. Ensuring that the children have a roof over their heads is an important factor. If there is a small mortgage only, it may be appropriate to sell the house and split the proceeds so that both parties can have a deposit for new homes. Alternatively, the property could be transferred into one party’s sole name with the mortgage being taken over by the person remaining and they may also increase the mortgage to buy out their spouse’s interest in the property. Another option is for one party to retain the equity in the property in exchange for other assets, for example allowing a spouse to retain their pension while the other retains the house. A deferred interest could result in one person remaining at the property, usually to provide a home for the children, but when the children grow up the house is then sold and the proceeds divided. Arrangements will have to be agreed regarding payment of the mortgage during the deferment period. This can create hardship if the non-occupying spouse cannot then get a second mortgage to get on the housing ladder again.
Can I stay in the house? Factors that will be considered include the need to provide a home for any children of the marriage; what arrangements can be made regarding the mortgage and what other assets are available. It is unlikely that one party will be able to retain a property if there is a lot of equity in it that could go towards rehousing both parties and children.
What about assets inherited before or during the marriage? Inherited assets can be retained by the party who brought them into the marriage provided that the parties’ needs, and particularly those of any dependent children can be met from other available marital assets. The longer those inherited assets are within the marriage and the more they have been treated as part of the matri-monial pot, the less likely it will be that they will be treated differently.
Who is responsible for repaying debts of the marriage? The legal responsibility is dictated by who the named borrower is. Debts are contracts between the lender and the borrower. If the debt is in joint names, it remains a joint contractual liability, but if in one party’s sole name and the debts are, nonetheless incurred during the marriage for the parties’ joint benefit, the court can make sure that the contractual borrower receives a financial settlement that takes into account the matrimonial debts they are left to pay.
Can I claim on my ex’s pension? Pensions should be considered as savings plans for the future, just like putting money into a bank account to pay for life after retirement. Pension savings are treated as matrimonial assets which can be shared on divorce. The most usual ways that pensions are dealt with are either a Pension Sharing Order or offsetting. A Pension Sharing Order will specify what percentage of one spouse’s pension should be taken out of the pension holder’s pension fund and invested in a pension in the name of their spouse to achieve equality of income and capital on retirement, taking into account also any pensions already held by the other party. Off-setting is where one party retains a greater share of available assets, allowing the other party to retain their pension fund. An actuary’s report is usually required to determine percentages and offsetting values.
Am I entitled to maintenance? If you are the primary carer of the children and the one who claims child benefit for any children of the marriage, the other parent will probably have to pay child support. Further guidance can be obtained from www.cmoptions.org.
Whether spousal maintenance will be relevant will depend on both parties income. Spousal maintenance is not a “meal ticket for life” and the recipient would be expected to maximise their income. If one party earns significantly more than the other, spousal maintenance may be relevant, although this can be paid as a one off lump sum so that a “clean break” is achieved between the parties. Circumstances such as the need to care for any minor children, or health issues that restrict earning potential, would be taken into account when determining maintenance levels.
Should I make a Will? You should always think about making a Will, regardless of whether you are separating or thinking of divorce, or whether you are happily married (or happily single). A Will ensures that on death, your assets pass to the person you want. If there is no Will, the assets in the deceased’s estate will pass under the rules of intestacy. First in line to inherit would be a surviving spouse and if you are separated, this may not be what you want. You should also bear in mind that if you die and your spouse inherits, then they remarry and don’t make a Will, then die, their new wife would get everything perhaps to the exclusion of your children. If you leave a Will, your loved ones who are left to sort out your affairs know they are carrying out your specific wishes.
Please remember however that everyone’s case is different and the resulting settlement will depend on facts unique to their own circumstances. The parties will have to provide disclosure of all income, outgoings, assets and liabilities, and either agreement will be reached, or the court will decide what is fair.
This article deals with the position at the ending of a marriage, and not the ending of a cohabiting relationship as the law is very different. We are happy to provide advice on all family law matters.
Please telephone 01792 456139 to arrange an appointment. We are currently offering a first FREE 30 minute consultation.
Sally Goldstone Family Law, 108 Walter Road, Swansea SA1 5QQ