On 20 July 2022 the government published a policy paper on new legislation regarding capital gains tax for those going through separation or divorce.
A financial settlement on divorce is an agreement between spouses on how to split their assets and liabilities, including pensions. Here is a guide on the legal process.
Final Divorce Order | It is a common misconception that a final divorce order (formerly decree absolute) brings divorce matters to an end.
When looking at how to deal with the claims of any couple on divorce, the court (and a solicitor advising outside of the court process) is governed by section 25 of the Matrimonial Causes Act 1973. This lists the matters that the court has to take into account. At the top of the list is the needs of any child under 18 years, followed by the needs of the parties, the resources they each have jointly and separately, their ages, health, the length of the marriage and the standard of living they enjoyed together. The “sharing principle” is not found in this list but is a judicial gloss and a principle that can be quite strictly applied to marital assets.
The existence of family business assets tends to complicate divorce proceedings. Those running the business are anxious to know how the Court will treat their business and their other half of course wants to know if they are entitled to a share of the ‘business’ and if not why not?
Discretionary trusts are where the beneficiaries and / or their entitlements to assets are in a trust fund but are not fixed. They are determined by the person who set up the trust (the settlor). Where the trust is a testamentary trust (i.e. made in a Will), it is common for the settlor to sign a Letter of Wishes which relates to the exercise of the discretion.
The payment of spousal maintenance is often a tricky issue in divorce cases. It becomes even trickier when the receiving party, usually the wife, starts to cohabit and the husband feels that it is not fair that he should be expected to continue to support his ex. Is the fact of cohabitation grounds for the maintenance to come to an end and the wife’s claims dismissed once and for all?
It is not an uncommon situation that the extended family can be significantly wealthier than the couple who are separating. Sometimes, the parents of one spouse have provided assistance to the couple during their marriage and the other wants to argue that this is likely to continue to be the case …
The Courts rely upon the 3 principles of needs, sharing and compensation when deciding upon the allocation of financial assets in divorce cases. Each principle is considered in every case but in the majority of cases it will be the needs of the parties which will be the driving factor determining how the financial pot is shared between the parties.
Divorce can be bewildering for clients. Should they try and sort things out with their partner? Or should they go to mediation or would going to court likely mean a better result? This is a massive decision and the needs of each client can vary dramatically.