Legal Issues on Divorce

Splitting Shared Assets when Divorcing

Divorce proceedings can be extremely stressful and traumatic for everyone involved, even more so when shared assets need to be split. When tying the knot, the last thing couples anticipate is divorce and as a result, few actually plan what would happen to their shared assets should they get divorced.

Over the years, you and your partner will have invested together, saved together and perhaps opened joint bank accounts, and in order to make financial settlements fair, there are a number of factors that have to be taken into consideration before splitting your assets.

Before we continue, it is important to note that how assets are split between a couple will be determined by the relationship. Simply put, the rights of a cohabiting couple will differ from those of a married couple, so bare this in mind.

Step 1:

The first thing you must establish is who legally owns what assets. If you’re in a cohabiting relationship then any investments or savings in your name will belong to you and your partner will not have access to these assets. Likewise, savings or investments made in your ex-partners name will be theirs and you will not be granted access.

However, there are exceptions to the rule. You may be entitled to beneficial interest if you have made contributions towards something in your ex-partners name, such as investing your own money into one of their projects. If this is the case, then you should seek legal advice.

On the flip side, investments or savings made throughout the duration of the marriage will be taken into consideration and divided as part of a financial settlement. Whilst assets amassed prior to the marriage aren’t typically subject to financial settlements throughout divorce proceedings, there is still a chance that your assets are at risk and you should seek legal advice to make sure your savings and investments are protected.

Step 2:

Next, it is time to find out what your savings are really worth in the eyes of the law. If you save money into a savings account such as a cash ISA or cash deposit, it should be pretty easy to get a rough idea of how much your savings are worth as you should be receiving regular financial statements.

However if you have invested in the stock market, or own shares and investment bonds, then it may not be as straightforward when it comes to determining the worth of your assets. This is solely because the value of your investments will differ from week to week, even day to day especially in a volatile and quick-changing market. You should talk to a financial adviser about finding out the value of invested assets tied up in the stock market.

Step 3:

It can be difficult to make sense of the whole process when splitting assets and couples often aren’t aware of how to split their savings and investments. Generally, it depends on where your savings are kept. Cash ISA, shares, investment property or savings accounts – there are a number of ways in which your money can be invested and each will differ when it comes to paying out financial settlements.

Cash ISAs

Cash ISAs can only be held in one individual name and therefore money cannot be transferred from one party to another. If the court has demanded you pay a financial settlement to your ex-partner you must withdraw the money from the account.

Shares

You have a bit more flexibility when it comes to shares as there are a number of different options in which you can pay off a financial settlement. Simply hand over control of the shares, sell the shares or give the value of the shares once sold to another party – it is your choice.

It’s easy to transfer shares, just fill in a J30 form which you can get from the company you initially brought the shares from. Alternativley, if you decide to sell your shares you will need to use the same service you used when buying those shares.

Investment property

If either you or your partner owns a property, then that asset is legally yours/theirs and the other party will have no claim to it – unless contributions have been made. In that case, you will both need to come to an agreement as to how the appropriate party will be paid back.

If you jointly own the property, then you may choose to sell your share to your ex-partner, or buy them out.

Savings accounts

If you plan to transfer money to your ex-partner as part of a financial settlement from a fixed-rate account, then you must first notify your bank so that you do not lose interest. If you are transferring from a normal savings account then you don’t have to give notice.

You should now be fully are of all your legal responsibilities and the claims you can make when it comes to splitting both shared and individual assets when divorcing. We understand how distressing divorce proceedings can be and that is why we have put together this comprehensive guide so that the process can be as amicable, straightforward and stress-free as possible for both you and your ex-partner.

Kerry Smith is the Head of Family Law at K J Smith Solicitors, specialist family law solicitors in Reading that deal with a wide range of issues, including divorce, domestic violence, civil partnerships, and prenuptial agreements. Kerry has over 15 years experience in family law and is recommended by the Legal 500 guide to law firms in the UK.

Cohabitation – Why The Law Needs Changing In Order To Protect Modern Families

While marriage is still popular, cohabitation outside marriage is indisputably on the rise. In fact, over the last twenty years, the number of people living together outside marriage has approximately doubled. The level of protection offered to unmarried couples in England and Wales in the event of a separation, however, has not. Scotland does have some recognition of unmarried partnerships, but even so it has nothing like the concept of “common law marriage” which many people believe does exist.

The rise and rise of cohabitation 

Back in 1996 there were about 1.5 million cohabiting couples in a UK population of about 58 million people. In 2017, there are about 3.3 million cohabiting couples in a UK population of about 66 million. It’s unclear what has fuelled this rise. Certainly living together no longer carries the social stigma it once did, but just because you can do something doesn’t mean you necessarily want to. Perhaps the (potential) expense of weddings or the prospect of having to go through a divorce is making people wait longer and think harder before they decide whether or not they want to “tie the knot” at all, let alone with whom. Whatever the reason, the fact remains that increasing numbers of couples are cohabiting rather than marrying or entering into civil partnerships and yet the law relating to such relationships is essentially conspicuous by its absence.

There is no such thing as “common-law marriage”

In legal terms, marriage is a contract between two parties, which creates duties and obligations between them. As part of the marriage contract, couples agree to pool their assets and hence when a marriage is ended through divorce, assets are divided between the separating halves of the couple on the basis of law and precedent. This is by no means a perfect system and in the real world, the nature of divorce may be that neither party feels completely satisfied that the deal was fair, but it does at least offer some level of protection for people in situations where there is clear financial disparity between the partners. Contrary to what about two thirds of people appear to believe (according to a recent ComRes poll), there is no such thing as common law marriage and hence there is, currently, practically no legal protection for those ending cohabiting partnerships in England and Wales and very little in Scotland.

Lack of legal protection exposes cohabiting partners to financial risk

When couples cohabit outside of marriage there is no automatic agreement to pool assets and there is no formal process to follow to disband the union. Hence, dividing assets can ultimately turn into a matter of proof of ownership plus practicalities of possession. This is probably most evident when it comes to property. If the house is in the name of one person, then there is a high degree of likelihood that, under current laws, they will keep full ownership of it, even if the other party has contributed to the mortgage. There are some circumstances in which a party could claim a “beneficial interest” in the property, but these are limited. Given the strength of the housing market and the rise in cohabitation, this in itself would seem a strong argument for the government to act on the urging of both members of the public and members of the legal profession, including Baroness Hale, the president of the UK’s supreme court and introduce much stronger legal protection for couples ending cohabiting relationships.

Author Bio Kerry Smith is the head of family law at K J Smith Solicitors, a specialist family law firm who deal with a wide range of issues including divorce, domestic violence, civil partnerships and prenuptial agreements.

Divorce Rates in the UK Rise But Stay Well Below Their Peak

The year 2016 saw the number of divorces amongst opposite-sex couples rise by 5.8% to 106,959, although this is still about 30% off its 2003 peak of 153,065. When considering the reasons for this, three possibilities clearly stand out.

Practical difficulties of divorcing

Marriage is intended to be a lifelong commitment and exiting that commitment can lead to all kinds of expensive and challenging complications. While some of these could be reduced by the introduction of “no-fault” divorce, possibly together with a greater awareness of and clarity around pre-nuptial agreements (pre-nups), others are far more difficult to resolve.

The most obvious example of this is the division of property and the practical consequences of dividing a household, many of which revolve around the fact that adults living as a couple can generally live more cheaply than two individuals living in their own homes. These difficulties can increase exponentially with the arrival of children, particularly in their pre-school years, when the need for childcare is at its greatest.

Rise in cohabitation

When couples cohabit outside of marriage, they can go their separate ways without having to enter into formal divorce proceedings but this has both advantages and disadvantages. On the one hand, it means that couples without children can simply agree to part company and move on, while couples with children can make their own arrangements for their future care and maintenance. On the other hand, when couples split on less-than-amicable terms, this can lead to difficulties in dividing assets fairly.

For example, while there are certain situations in which a partner whose name is not on the deeds of a property may be held to have a “beneficial interest” therein, there are certain, specific, requirements to be met in order for this to be recognized, general help, financial or otherwise, is highly unlikely to qualify. Because of this, it is strongly recommended for co-habiting couples to have formal agreements in place regarding ownership of assets, at least significant ones such as property.

Later marriage

For much of history, people have been encouraged to marry as early as possible for a number of entirely practical reasons. Women, in particular, often needed to marry for economic reasons, as the novels of Jane Austen show only too clearly. In modern times, however, women have much greater opportunities for earning an income and as such are under less economic pressure to marry.

Similarly, the fact that women can now reasonably expect to be able to have children well into their late thirties and even early forties also reduces the need to marry at a younger age as does the fact that having children outside of marriage is, by and large, socially acceptable. Putting all of this together means that instead of marriage being the time when couples can formally start to live together, in their first home, it is more likely to be a milestone in a relationship after couples have already lived together for some time and, in simple terms, have already established that they can do so successfully, hence are less likely to divorce.

Fletcher Day are a full service law firm based in Mayfair, London. There team of divorce solicitors in London can advise on a range of matters relating to family law including divorce, prenuptial agreements, civil partnerships and separation agreements.