Money money money
When you divorce or end a civil partnership the issue that can cause the most difficultly and misunderstanding is how to sort out your finances as Lesley Powell of Battens Solicitors explains.
The thorny issue of money can turn what was an amicable separation, into something far from that, if professional advice is not sought at an early stage.
So what needs to be sorted out?
The assets of the marriage fall into the following main categories:
How are they valued?
The value of property can be ascertained by an Estate Agent Valuation. Deduct any outstanding mortgage and estimated costs of sale and the balance will be what there is to distribute.
Savings and investments are relatively easily valued by reference to statements or the most recent share price.
Pensions are a different kettle of fish. The first step is to obtain a Cash Equivalent Transfer Value. This is a cash value placed on the pension benefits, which can be transferred to an alternative scheme. However, pensions are complex and other questions will need to be asked to ascertain what the CETV represents; it is a defined benefit or a defined contribution (money purchase) scheme?
An expert report from an Actuary may be necessary to calculate how any pension will be apportioned as part of the financial settlement on divorce.
What about debts?
It is crucial to account for each spouse’s debt, which will need to be deducted from the assets when calculating the overall financial position.
If the debt was incurred for the benefit of the family, it is likely, no matter whether it was taken out in one name or joint names, that both parties will be responsible for it.
If one spouse has incurred significant debt and has had the sole benefit of it the Court may consider that person should be responsible for it, this could include funding expensive hobbies etc. If one party brought significant debt to the marriage it is more likely they will be responsible for it.
How are financial settlements in divorce calculated?
Section 25 of the Matrimonial Causes Act 1973 sets out the checklist of factors that need to be considered.
The factors include:
- Income and earning capacity of the parties
- The financial needs and responsibilities of the parties
- The standard of living enjoyed by the couple
- The age of each of the parties and the length of the marriage
- Whether either has any mental or physical disability
- The contribution of the parties
- The conduct of the parties
- The loss of a benefit because of the divorce
Depending on the circumstances of the case some factors may be given more weight than others, one compelling consideration will be the needs of any children.
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