New year: time for a new start?
One of the busiest times of the year for family lawyers is just after the new year. More clients approach us at that time of year than any other for a variety of reasons.
Some are keen to get Christmas out of the way, for the benefit of children or simply for themselves, and for many the break in normal routines around Christmas and New Year can highlight issues in relationships that may have lain dormant during the rest of the busy year. But for the majority, they approach us at this time because they see the new year as an opportunity for a new start and the time to make the hard decisions that ultimately might lead to a happier, better life for themselves and those around them.
If you’re looking for a new start this new year, there are a few things you should bear in mind from the legal point of view.
Does ‘no fault’ divorce mean no solicitors? Not at all.
The introduction of the new system of ‘no fault’ divorce has made the application process for divorce (or dissolution where there is a civil partnership) a lot more straightforward. The forms, which are now accessed through an online portal, simply require one or both spouses to confirm the marriage has broken down irretrievably and the language used has been simplified. No more Latin terms and no need to go into detail as to exactly why the breakdown has come about. Spouses can even apply jointly for the divorce/dissolution if they choose to, though an application by one spouse only is still possible.
But does this mean that using solicitors is now totally unnecessary? Not at all.
While the process itself is undoubtedly simpler, the fact is, when a relationship breaks down, the last thing on a person’s mind might be form filling. A solicitor can handle this side of things, leaving their client free to focus on themselves and their family.
With the new ‘no fault’ regime there came a lot of new rules around the process and new timescales. This means there is a lot of conflicting information out there. Taking advice from a solicitor, even if it’s only a single appointment early in the process, can make sure your application starts off correctly and stays on the right track so that it is ultimately concluded in a way that is as efficient and stress free as possible.
For most separating couples, the divorce application is only one part of the process. Sorting out finances can prove much more challenging. Family Law in England and Wales is based not only on legislation made by Parliament, it is also based on a wealth of case law that has developed over many years. Judges have a great deal of discretion to decide cases following the principles set down by Parliament but ultimately making a decision on the unique circumstances of each case that appears before them.
This means there is no set formula for what is ‘fair’ when separating finances. If there were, couples could easily calculate an end result themselves. But that is not the case. A solicitor can be very helpful in dealing with the many complex rules and guidelines that determine what a court would consider fair in that family’s particular circumstances.
Financial matters, particularly the daunting prospect of safeguarding your long-term financial future after separation, can be a hugely emotive topic. Many people find that having a solicitor as a ‘buffer’ between themselves and their former partner, can help them manage the separation and financial negotiation process a lot more easily.
It is clear that while many couples may feel they no longer need a solicitor to help them with a divorce, they will almost certainly benefit from using a solicitor to deal with the financial consequences that arise from that divorce.
Even couples who can negotiate and agree a financial settlement directly should still consult a solicitor to draw up the financial consent order. The online divorce process does not formalise the financial settlement and a separate court order known as a consent order will still be required. Consent orders are legally enforceable court orders which will formally dismiss your financial claims against one another (other than what has been agreed), often referred to as a ‘clean break order’.
To be approved by the court and to ensure you are protected should the other party not comply with what has been agreed, a consent order needs to be properly drafted by a solicitor and approved by the court. A solicitor will also ensure that you have considered everything as part of your settlement and raise anything they think may have been overlooked such a tax implications and pensions.
Does my pension really matter?
After bricks and mortar property, a pension is likely to be the most valuable asset a lot of people have. In the separation process, many people (quite understandably) focus on the here and now – where they will live, how they will meet bills – but not necessarily how their needs will be met in retirement. However, to ignore this important long-term issue could be a big mistake. If your mind is turning towards ending your marriage/civil partnership, it is important to be aware of how pensions factor into that process.
When a court considers financial matters arising from the breakdown of a marriage/civil partnership, it must assess whether the parties’ pensions should be shared within that process. This will also be the case where the parties are sorting things out on a voluntary basis without the assistance of the court.
The first step is to understand what the value of the pensions are. Each year you should receive a statement which tells you what your pension is expected to be worth in retirement and the Cash Equivalent Transfer Value (CETV). Both figures are important for working out how pensions should be shared so as soon as possible both parties should ask their pension administrators to give up to date figures.
In most cases, it is sensible to obtain a report from an actuary specialising in pensions on divorce. This report will deal with two factors: what the values of the pensions actually are, and how they can be shared fairly.
It is possible that the CETV may not be reflective of the true value of a pension (for a variety of reasons). Having an actuary examine the true value carefully can lead to a more accurate valuation, and therefore a fairer end result. One leading actuary recently highlighted a case they dealt with where a pension had been undervalued by over £200,000 by the scheme administrators. So in that case, the fee for the pension report, which is generally a few thousand pounds, was justified many times over.
Different types of pensions, and even different schemes of the same type, will have different rules for what and how they pay out on retirement. This means dividing pensions fairly isn’t as simple as adding up all the CETVs and dividing by two. A specialist actuary will be able to advise on how each scheme’s rules will impact on fairness and what will give the most fair result in the circumstances.
Pension companies can take a while to respond to requests for information, particularly in times of financial turbulence, so the sooner you request the information you will need, the sooner it will be possible to take an expert view on pensions can be shared most fairly and appropriately in your particular case.
Couples should also be aware that the division of any pensions cannot be implemented without a consent order and other documents having been approved by the court.
One of the key concerns our clients have is their children, both in terms of how they will deal with the relationship breakdown and what arrangements will be for the time spent with each parent.
A solicitor can negotiate on your behalf in relation to child arrangements and help you through the court process if this becomes necessary. But for most families, mediation will be the most suitable route for resolving matters concerning children.
Mediation is a process where discussions are led by an independent third party who has been specially trained to help people reach a mutually agreed compromise. There are various formats to mediation from the typical approach of the parties sitting down together in a room, to online mediation via video conference to shuttle mediation where the parties are in separate rooms and the mediator moves back and forth between the rooms with the parties never meeting face to face. This means mediation is suitable for a wider range of cases than ever before.
The Government is currently running the Family Mediation Voucher Scheme which gives families £500 towards mediation about where there is a dispute concerning a child. An initial meeting with a mediator will be needed to determine if mediation is indeed suitable, and if the parties are eligible for the voucher scheme. You can find out more here: https://www.familymediationcouncil.org.uk/mediation-vouchers/
If you are worried about how children are coping with the changes and emotional challenges brought about by separation, a solicitor or mediator will be able to signpost you to a specialist family therapist who can help.
Co-operation is key
For the most part, despite their differences in terms of the relationship, separating couples want the same thing: a fair division of their finances to be completed swiftly so they can move forward with their lives.
Instructing solicitors who are committed to resolving disputes in a swift, constructive and, if possible, amicable way can make a huge difference to outcomes, costs and stress levels. Resolution is a body of over 6,500 family lawyers in the UK who are committed to resolving family law matters in a constructive way that avoids unnecessary conflict. Resolution lawyers all commit to a Code of Practice designed to resolve disputes effectively but without increasing hostility.
If you’re thinking of separating, check the Resolution database to find a lawyer who can help: https://resolution.org.uk/find-a-law-professional/
Everyone in the Family Law team at Furley Page is a Resolution member.
If you are thinking of separating, now or at any point during the year, telephone us on 01227 763939 to speak to one of the team. We can assist with divorce/dissolution, finances arising from separation, child arrangements and cohabitation issues.