“Common Law Property Rights?” 6 Things You Must Include In A Cohabitation Agreement

 

Ever wondered about “Common Law Property Rights”?

Moving in together? You’re spending all your time unpacking boxes and finding a home for everything. Or maybe you’ve been living together for a while and everything’s rosy.

But did you know there’s no such thing as Common Law Marriage? And you don’t have the same rights as a married couple? This may come as a shock to you but don’t worry, there’s something you can do about it.

Do you want an equal and sharing relationship with your partner? Do you want to protect your property from a claim should you split up? A Cohabitation Agreement is the answer.

Here are six things you will need to think about for your Cohabitation Agreement.

1. How about property you owned before you moved in together?

Couples often agree it will remain separate. They can also agree their partner can’t make a claim over it.

For example, you own your own home and your partner moves in. What if your partner makes payments on the mortgage? Or does work on the property? This could give them a claim over it. If this is not what you want, you really do need to be explicit about it.

2. You also need to think about property you acquire after you move in together

If you buy it jointly, you’re equally entitled to it. If one of you puts more towards the purchase than the other, you might still want to own it in equal shares.

Or do you instead want to own it in unequal shares? You should talk to your lawyer about owning as “tenants in common”, and entering into a “Declaration of Trust”. Alternatively if the property is in the sole name of one of you, you need to address the issues raised in paragraph 1 above.

3. There’s also the basic but essential question of household expenses

What if you don’t own your home jointly, or if one of you earns more than the other?

Maybe you will agree unequal contributions. Maybe your partner will agree to contribute to the mortgage, and acknowledges this will give them no claim over the property.

4. Did you know unmarried couples don’t automatically inherit each other’s estates if they die?

Life assurance can be important for the survivor if you’re not planning to make wills benefiting each other. But if you do want to leave your estates to each other, make sure you both have wills, and you keep them up to date.

5. If you have children already, you can provide for co-parenting if you split.

You can think about where the children will live, who will pay child maintenance and how much. You might want to consider the ownership of your home. After all, the children will need a roof over their heads.

You can also agree payments to the parent with whom the children will live if their earning capacity is likely to be reduced as a result.

6. There will be a clause in your Cohabitation Agreement to say you have both taken independent legal advice

This means you will have no doubts about what you are agreeing, and it will make your Agreement binding. Additionally, if things unravel between you, the Court will take notice of it and put it into effect.

But please remember a Cohabitation Agreement must be revisited as your relationship evolves. Say if children arrive? Or your financial situation changes radically? Additionally there could be health issues, inheritances, and issues concerning aging and elder care.

Find out more about how a Cohabitation Agreement can protect you and your property. Phone Joanne Houston on 01962 217640 for a free 20 minute consultation.

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JUST FAMILY LAW are specialist divorce and family law solicitors offering personalised legal solutions.

We offer collaborative law which is especially relevant in providing solutions tailored to your family’s needs. This includes same sex couples and their families.

Visit our website just-family-law.com

The topics covered in this blog post are complex and are provided for general guidance only. Therefore if any of the circumstances mentioned in this blog have application to you, seek expert legal advice.

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6 Reasons Why You Need A Cohabitation Agreement

  1. Did you know there’s no such thing as Common Law marriage? In addition, did you know cohabitees don’t have the same rights as married couples? A Cohabitation Agreement can protect you and your property. It can also set out what will happen in the event of your separation, or death. The Court is likely to be guided by your Cohabitation Agreement if there’s a dispute.

A Cohabitation Agreement Can Protect You And Your Property 

  1. If your relationship ends you can literally find yourself out in the cold. This is because unless you are the owner, or joint owner, of your shared home you have no automatic legal right to it. You may have sunk a lot of money into its purchase. Or perhaps you have paid for improvements. But if your name is not on the title you could come away with nothing.
  1. In the Cohabitation Agreement you can agree how you own property. This may be in equal or unequal shares, or you may agree to keep your property separate.

A Cohabitation Agreement Can Protect You And Your Property  On Death

  1. What happens if your cohabitee dies and there’s no Will? Their estate is distributed under the intestacy rules. But these rules do not mention a surviving cohabitee. So in other words you could be left with nothing. But don’t worry, you can agree what will happen to your property after death in your Cohabitation Agreement. In addition, it’s vital to make Wills and regularly review them.
  1. Furthermore you need to make sure you know your entitlement to your partner’s pension. A surviving cohabitee might be entitled to benefits under a late partner’s pension scheme. But this is not guaranteed. You might need to agree to nominate each other in respect of death in service payments.

Regularly Review Your Cohabitation Agreement

  1. A Cohabitation Agreement can address many of these concerns, and more. It can also cover household bills, debts, businesses. But if there is a change in circumstances such as the arrival of children please make sure you review your Cohabitation Agreement with your solicitor.

Find out more about how Cohabitation Agreements can protect you and your property. Phone Joanne Houston on 01962 217640 for a free 20 minute consultation.

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JUST FAMILY LAW are specialist divorce and family law solicitors offering personalised legal solutions.

We offer collaborative law which is especially relevant in providing solutions tailored to your family’s needs. This includes same sex couples and their families.

Visit our website just-family-law.com

The topics covered in this blog post are complex and are provided for general guidance only. Therefore if any of the circumstances mentioned in this blog have application to you, seek expert legal advice.

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Collaborative Family Law Protects Divorce Finances And Property

How Can Collaborative Family Law Help You?

Collaborative Family Law protects divorce finances and property. Could this apply to you and your family?

Divorce is the final straw for many. Hence numerous unhappy couples stick together for fear of the emotional and financial fall out. Because splitting up will just make everything even more difficult – won’t it? And in addition, seeing a lawyer – how can anyone afford that?

The solution to protecting your finances and your children on Divorce may be to instruct a Collaborative Family Lawyer.

Collaborative Family Law Prioritises The Family’s Interests

Everyone involved focusses on ensuring your relationship remains amicable and respectful.

And the process is much quicker and cheaper than Court. Also much less rigid because you can come to an agreement individually tailored to your family’s needs.

Some find Collaborative Family Law even better than mediation. This is because you have your own Collaborative Family Lawyer at your side at every four way meeting.

What Makes The Collaborative Family Law Process So Successful?

An expert always by your side …

Your Collaborative Family Lawyer will advise you at every four way meeting. Most importantly, she will speak for you if you so wish.

You and your partner agree to be open, and not to blame …

Both of you, and your lawyers, start off with a Participation Agreement. You will agree upon:

  • Openness
  • Full Disclosure
  • Constructive Discussion
  • An Absence Of Blame

You commit yourselves to avoiding court…

That’s both you and your partner, and both of your Collaborative Family Lawyers. In fact if the process doesn’t work, you will both have to find new solicitors. This is because they can’t act for you in a Court process as well. So that’s a tremendous incentive to make it work.

You and your partner will not be dwelling on the past …

Your Anchor Statements set out the issues you want to address, and your aspirations for the future. Both of you will look forward rather than dwell on the past.

Collaborative Family Law Protects Divorce Finances And Property

Legal costs are limited …

Detailed agendas control each four way meeting. Legal work in between meetings is limited. Costs are under control.

You won’t have to go to Court …

You won’t have to face the lottery of going to Court. Most importantly, a Court Order won’t be imposed on you.

Phone Joanne Houston on 01962 217640 for a free 20 minute consultation on how Collaborative Family Law protects divorce finances and property.

JUST FAMILY LAW are specialist divorce and family law solicitors offering personalised legal solutions.

We offer collaborative law which is especially relevant in providing solutions tailored to your family’s needs. This includes same sex couples and their families.

Visit our website just-family-law.com

The topics covered in this blog post are complex and are provided for general guidance only. Therefore if any of the circumstances mentioned in this blog have application to you, seek expert legal advice.

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Collaborative Law & Divorce: The Importance Of Assertiveness

I have guided many clients through the collaborative law divorce process and I have noticed a common theme. Many simply do not know how to assert themselves. Perhaps this is because they have lived for years with a forthright and dominating partner? Maybe it’s been easier to acquiesce?

But with the marriage over, and the rest of their lives to deal with, the time for acquiescence has gone. It’s time to be assertive.

A Collaborative Law Divorce Can Forge A Positive Future For Families

It can also provide a life changing learning experience in assertiveness.

I remember in particular a client I will call Rebecca. She travelled the world with her husband, Geoffrey. They rarely stayed in one country, let alone one home, for long. Her family – her husband and three tiny children – were her entire life.

But she told me Geoffrey had left her and was eager to negotiate a quick settlement. He wanted to put the marriage behind him. She was tearful and anxious because she simply had no idea what to do. Where would she live? Where would the children go to school? Would their father remain a positive influence in their lives? Would she have enough money?

Collaborative Law Divorce: The Process

I told her about the collaborative process and how I could help her as her collaborative lawyer. She would be able to resolve the issues that concerned her, negotiate the necessary arrangements, and make the right decisions for her family.

I would sit at her side in meetings with her husband and his collaborative lawyer as her voice, support, and legal adviser.

Collaborative Law Divorce And Life Coaching

Rebecca was interested in a collaborative law divorce but said she feared conflict with Geoffrey. She would never find the courage to stand up to him. Furthermore she feared he would simply turn his back on her and the children forever.

And she was anxious about the cost of the divorce. Would the outcome leave her and the children in penury?

I gently reminded her she must try to think long term. Would she consider consulting a life coach? I could recommend one who specialised in the difficulties arising from marriage breakdown. Other clients had found new confidence as a result. They had been able to deal with painful issues, and achieve a level playing field.

Rebecca thought about my suggestion. A few days later she got back to me and said yes, she would like to go ahead.

The Power Of Assertiveness In The Collaborative Process

I introduced Rebecca to a life coach. They made great strides together. It wasn’t long before we were able to start the collaborative process.

Rebecca was now able to face all the issues head on, and state her point of view with conviction. In addition she now realised she had the right to express her views, refuse settlement proposals, and offer her own ideas. It was a pleasure to sit by her side and guide her.

If in the collaborative process you are assertive, and focussed on your needs, you will achieve the best settlement for yourself and your family, long term. And as a result the experience will help you manage your family better after your divorce. In particular the unreasonable demands and expectations of others.

The assertiveness you have learned during the collaborative law divorce process will help you plan financially for the future.

In Conclusion

The experience of your collaborative divorce will be your first step to developing your independence and autonomy in your newly formed, separated family.

Phone Us For A Free Consultation …

Phone Joanne Houston on 01962 217640 for a free 20 minute consultation on these important issues.

JUST FAMILY LAW are specialist divorce and family law solicitors offering personalised legal solutions.

We offer collaborative law which is especially relevant in providing solutions tailored to your family’s needs, including same sex couples and their families.

Visit our website just-family-law.com

The topics covered in this blog post are complex and are provided for general guidance only. Therefore if any of the circumstances mentioned in this blog might have application to you, you should seek expert legal advice.

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Brexit, Family Law And Divorce

How Will Brexit Affect Divorce?

Brexit and family law. What is the significance?

Brexit will affect international families involved in family law disputes. Are you part of an international family?

Let’s use the example of Sarah and Pierre. She was born in England, he in France. They married ten years ago and have two children, both of whom were born in France. The marriage has broken down and Sarah has returned to England and, with Pierre’s agreement, she has brought the children with her.

You are part of an international family if you live in the UK but were born in another EU country. Or if you were born in the UK but move to another EU country. Or perhaps your ex was born in another EU country or moves to another EU country.

Brexit And Family Law: What Is The Significance?

Many of the important steps in Sarah and Pierre’s divorce are determined by EU rules. For example EU rules ensure court decisions made in one EU country are recognised in other EU countries.

Vital EU rules apply to divorces and family law in the UK.

Brexit And Family Law: EU Rules Decide Where To Start Court Cases

The importance of these rules cannot be overstated. Otherwise there can be family law cases in courts in two different countries at the same time.

Sarah and Pierre can’t agree in which country to start their divorce. Pierre urgently needs an order setting out when he can see the children. Sarah urgently needs a maintenance order. She starts divorce proceedings in England, which means Pierre can’t ask the French courts to make decisions. All the issues that concern them – the divorce proceedings, questions about the finances, how much time the children are going to spend with Pierre – are decided in England. But the English orders are enforceable in France.

Without EU rules, Sarah and Pierre could have proceedings going on in England and France at the same time leading to tremendous confusion, expense and delay.

EU rules decide in which country you can start your divorce and obtain a financial order. Without these rules couples who can't agree upon a country could face lengthy and expensive court cases. 

EU rules decide in which country you can start cases about your children, too. And these rules say it's where the children live. Without these rules there could be court proceedings about the children in two different countries at the same time.

Brexit And Family Law: EU Rules Streamline Child Abduction Cases

Do EU rules have anything to do with the Hague Convention’s role in child abduction? Yes, they are very significant. EU rules ensure a court in the child’s home country makes the final decision. This can mean the difference between a child returning home or not.

So if Pierre doesn’t return the children from France after a contact visit, Sarah knows a court in England will review any decision made in a French court.

EU rules will soon tighten up the Hague Convention by allowing the court to hear evidence from the child. EU rules will also impose a time limit of six weeks for the court to give its judgment.

Children who have been abducted are likely to be traumatised. Any delays and uncertainty in the procedure are to be avoided.

Without EU rules child abduction cases under the Hague Convention would take much longer. They wouldn’t take into account the child’s wishes. Furthermore there wouldn’t be an automatic review in our courts of the decisions of other EU courts.

Brexit And Family Law: EU Rules Allow Enforcement Of Family Orders In Other EU Countries

Sarah obtains a maintenance order against Pierre. Because of EU rules, this order can be enforced in the French courts. Pierre will have to pay Sarah maintenance even though she lives in England, and he lives in France.

If you obtain a court order you need to know it will work in other EU countries. 

These are orders concerning children, who sees them and where they are to live, maintenance, financial orders, and domestic abuse. And in particular orders made by consent.

Sarah and Pierre are able to agree the matrimonial finances which means they have avoided the stress and expense of court proceedings. They have a “consent order” made in the English court setting out what they have agreed. Under EU rules this is enforceable in France.

What Are The Options for Protecting International Families on Divorce After Brexit?

The Government is steering the European Union (Withdrawal) Bill through Parliament. This will bring all EU family law rules onto our books. 

But we will need new agreements to ensure EU family law rules remain reciprocal with other European countries.

When the European Union (Withdrawal) Bill becomes law,  we will absorb all EU family law rules into our system. This means we will be bound by them. So we need the remaining EU countries to be bound by them as far as this country is concerned, too. But this isn’t automatic because, of course, we will no longer be a member of the EU.

If both this country and the remaining EU countries are bound by the same rules, they will be reciprocal. But there must be agreements to ensure reciprocity as we will no longer be part of the EU.

The Government will need to enter into fresh agreements with the remaining EU countries to ensure the rules are reciprocal. It is vital we use this opportunity to knit our family law system and the EU family law system together. Because this will keep it fully functioning for international families.

But it is by no means guaranteed we will enter into these new agreements. The Government is concentrating on trade and other important agreements. Family law is, perhaps understandably, low on the agenda. But various family law organisations are lobbying Parliament about this important issue.

The Family Law Bar Association, the International Academy of Family Lawyers, and the family law solicitors’ association, Resolution, have published a paper, Brexit and Family Law. This paper sets out the options available to the Government, along with their recommendation to retain full reciprocity.

Why Parliament Needs To Enter Into Fresh Agreements For Brexit and Family Law Rules 

What could go wrong if there aren’t reciprocal agreements for Brexit and Family Law rules.

Imagine a situation where Sarah starts the divorce in England and shortly afterwards Pierre starts the divorce in France. The French court would not recognise Sarah’s proceedings in England, or any of the orders made. But the English courts would recognise the orders made in the French court. Both Sarah and Pierre would be involved in protracted and expensive court cases in both countries to sort out the resulting confusion.

Without reciprocal agreements we would lose the straightforward enforceability of orders in EU countries concerning maintenance and children. 

And the question of where to start your divorce case or your case about the children will be unnecessarily complicated.

What About The Court of Justice of the European Union?

The Court of Justice of the European Union has an important role in the updating and interpretation of EU family law rules. But the Government wants to end all links with it.

What are the implications of merging EU family law rules with our laws, but ending our links with the Court of Justice? Changes in interpretation of these rules, and amendments to these rules, will apply to all the remaining EU countries, but not to us.

This will cause confusion for international families. Here again Sarah and Pierre may become involved in lengthy and expensive court cases simply to decide fine points of legal interpretation.

Family law organisations are proposing to Parliament we maintain links with the Court of Justice of the European Union. This means we would be able to have our say in EU family law procedure and interpretation, and keep our laws and rules up to date. This would ensure continued fairness for international families in this country. It has no implications for sovereignty.

Should I crack on with my divorce or wait a bit?

If you are keen to divorce in a particular country for financial reasons you should seek legal advice without delay

I’m not sure what to do in the meantime. Can you help?

Yes of course. Here at Just Family Law we’re closely monitoring the situation and are up to speed with all changes as they occur.

Phone Joanne Houston on 01962 217640 for a free 20 minute consultation on these important issues.

JUST FAMILY LAW are specialist divorce and family law solicitors offering personalised legal solutions.

We offer collaborative law to provide you with solutions tailored to your family’s needs – including same sex couples and families.

Visit our website just-family-law.com

The topics covered in this blog post are complex and are provided for general guidance only. If any of the circumstances mentioned in this blog might have application to you, you should seek expert legal advice.

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Ring Fence And Protect Assets On Divorce

 

Is it possible to ring fence and protect assets on divorce? In other words, keep certain assets out of the pot for division? It depends on the asset, and it depends on all the circumstances. But yes, there are assets that can be protected. And there are one or two prudent steps you can take.

I have a friend who’s a magician. She puts on brilliant shows, and her husband of ten years is her glamorous assistant. She binds him securely with magic ropes and manacles, and covers him with a magic tablecloth, and he disappears. But none of this seemed to bother him much until lately.

However now he says he’s had enough. He says he’s fed up with sharing the limelight with a bunch of rabbits. He wants a divorce and furthermore he wants half of everything.

Ring Fence and Protect Assets On Divorce: Is It A Matrimonial Or Non Matrimonial Asset?

“Everything?” my friend asks. “Can he really claim half of everything?”

I advise her that non matrimonial assets can sometimes be kept out of the pot for division. Unless ‘needs’ predominate.

So what are ‘non matrimonial’ assets? They can include:

  • Assets built up before the marriage
  • Inheritances
  • Businesses

But if there aren’t enough matrimonial assets left to fulfil her husband’s needs for example for housing, non matrimonial assets can be used to plug the gap.

Ring Fence and Protect Assets On Divorce: Inheritances

My friend throws up her hands with relief. “Thank goodness!” she cries. “I won’t lose my magic cabinet.” She’s particularly fond of this extraordinary antique as her grandfather left it to her in his will. Her magician ancestor, The Great Mirando, is famous for disappearing within the depths of this very cabinet during a lost weekend in Blackpool.

My friend has never used this cabinet in her performance. It’s too fragile. She’s always kept it in storage. I advise her it’s unlikely her husband would be successful in claiming against its value.

If she had sold the cabinet, and for example bought the family home with it, that would have been an entirely different question. Her husband would have a much stronger claim.

I have written previously about Protecting Inheritance On Divorce.

Ring Fence and Protect Assets on Divorce: Businesses

I advise my friend that her husband might make a claim over her business.

“What business?” she wants to know, looking puzzled.

“You’re the sole proprietor of a magician’s business. Your husband might ask for a valuation of your business assets. He might make a claim for maintenance if your income is significant.”

She laughs. She tells me her assets comprise trick cards and scarves and table clothes, magic chains and manacles, and, of course, three rabbits and a rather malodorous hat. They really have no value at all. And as for income, there isn’t any. She does it all for charity. My friend and her husband live off their wages from their respective jobs. He works in a shop. She works in an office.

I have written a recent post about Protecting Your Business On Divorce.

Ring Fence and Protect Assets On Divorce: Transfer Them To Someone Else?

My friend has a savings account and some shares. She’s thinking of transferring them to her sister. I advise her not to do this. Both she and her husband must give full and frank disclosure of their finances. A Form E Financial Statement is usually used for this purpose, and a statement of truth is signed.  She risks a court order freezing her assets, and a hefty costs order if she starts to transfer her assets to her sister. And if she hides assets, that could lead to imprisonment for contempt of court.

Even though my friend has taken a course in advanced escapology, it’s advisable not to run this kind of risk.

How Are Assets Split On Divorce?

My friend doesn’t need to worry about the magic cabinet she inherited, nor her magician’s business. And she realises she must be upfront about her assets and income. But she wants to know what will happen to their house, their savings and shares and pensions, and their caravan in Morecambe.

I advise her the starting point for division is a fifty fifty split although there are special considerations. These include the care of children, the extent of the couple’s wages and their earning capacity. Also their standard of living during the marriage, and their ages. The length of the marriage is important, too. As is their health. Lastly what the couple put into the marriage financially, and their individual financial needs.

I advise her I would need to consider all their financial details, and all their circumstances, to give her an idea of the final outcome.

Ring Fence and Protect Assets On Divorce: Is there Nothing To Be Done?

The good news is she has met someone new, a fellow magician. It’s early days, and she wants to get her divorce sorted out first, but who knows, this could be the real thing. I advise her if they decide to tie the knot, she ought to think about a prenuptial agreement. She says she will certainly keep this idea up her billowy sleeve along with her magic cards and scarves.

Contact Joanne Houston of Just Family Law on 01962 217640 for a free telephone consultation on this or any other family law issue

JUST FAMILY LAW are specialist divorce and family law solicitors offering personalised legal solutions.

We offer collaborative law to provide you with solutions tailored to your family’s needs – including same sex couples and families.

Visit our website just-family-law.com

The topics covered in this blog post are complex and are provided for general guidance only. If any of the circumstances mentioned in this blog might have application to you, you should seek expert legal advice.

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Special Contribution On Divorce: How To Get A Bigger Share Of The Assets

What has Special Contribution on Divorce got to do with football?

We've been known to get a bit obsessed about football here at Just Family Law. But what has football got to do with Special Contribution On Divorce you may ask? The answer is it’s very important indeed. This is because it raises a vital question. And that’s not whether the England team is a “work in progress”.

Special Contribution On Divorce: How To Get A Bigger Share Of The Assets

I expect your days are busy with work or raising a family. Or perhaps both. But did you know that some people say their contribution to family life goes well beyond the everyday. They say they’ve made a special contribution to the family finances because they are uniquely gifted. In family law circles we call this a “stellar contribution”. And it’s important as it means a bigger share of the finances on divorce.

But what has this got to do with football?

Ryan Gigg’s marriage has sadly broken down. His lawyers are already saying he made a stellar contribution and he’s claiming a greater share of the finances.

Special Contribution On Divorce: Is It Just Plain Wrong?

Some say it’s unfair as marriage should be equal. And that it devalues homemaking and childrearing.

The case of Randy Work and Mandy Gray is a prime example. Their marriage lasted for eighteen years and they had two children. Randy worked for Lone Star in Japan. Mandy relocated to be with him. But their marriage failed after they returned to the UK. He said he wanted sixty one percent of the family’s wealth because he had created it. He claimed he was a very special individual.

Special Contribution On Divorce: Is It Discriminatory?

There was indeed a multimillion family pot for division, earned mostly by Randy Work. Mandy Gray argued the whole concept of special contribution was discriminatory. She said her contribution had been to make a home for the family. Homemaking and childrearing are not, of course, jobs that are paid.

But how are assets usually split on divorce? The starting point is equal division although there are special considerations. These include the care of children, the extent of the couple’s wages and their earning capacity. Also their standard of living during the marriage, and their ages. The length of the marriage is important, too. As is their health. Lastly what the couple put into the marriage financially, and their individual financial needs.

Had Randy Work Made A Special Contribution On Divorce?

The Court of Appeal said Randy Work’s contribution wasn’t all that special. It did not arise from his “exceptional and individual quality”. He was, basically, an employee, even if an extremely highly paid employee. He received only a half share of the assets.

The Court of Appeal said the concept of special contribution, in other words, of stellar contribution, only rarely applies.

Did Ryan Giggs Make A Special Contribution, A “Stellar Contribution”? Is It Enough To Be A Footballing Legend?

Ryan and Stacey Giggs married in 2007 and have two children. Does he have an “exceptional and individual quality?” His lawyers say his career has been like no other.

The stats say it all. Over 1,000 competitive senior appearances. 13 league titles. Four FA Cup winner’s medals. Three League Cup winner’s medals. Two UEFA Champions League winner’s medals.

Giggs was loyal to one club throughout his career, namely Manchester United. His legend status grew from his debut goal in the Manchester derby of 1991. But it was only set to increase with his career defining goal at Villa Park in the FA Cup semi final against Arsenal in 1999. This outstanding success lead to the treble of that year. And then there was his supreme class in defeating Juventus in the 2003 Champions League campaign. Not to mention his stunning destruction of City in the 2009 derby.

Did Ryan Gigs Make A Special Contribution, A “Stellar Contribution”, Or Was He Simply In The Right Place At the Right Time?

But there’s something everyone needs to remember. Ryan Giggs was employed from the age of fourteen by Manchester United, and was part of the exceptional Class of ’92. Was he simply in the right place at the right time?

The Court has to decide whether Ryan Giggs is truly a genius, and deserves to be compensated for his stellar contribution. Or was he simply a highly paid employee of an extremely successful football team?

And so the debate goes on.

It’s a tricky one, isn’t it? What do you think?

Contact Joanne Houston of Just Family Law on 01962 217640 forFREE telephone consultation on any family law issue

JUST FAMILY LAW are specialist divorce and family law solicitors offering personalised legal solutions.

Visit our website just-family-law.com

The topics covered in this blog post are complex and are provided for general guidance only. If any of the circumstances mentioned in this blog might have application to you, you should seek expert legal advice.

image credit: Ryan Giggs and Federico Macheda of Manchester United wait to kick off against the MLS All Stars, July 2010 by Allison Pasciuto on Wikimedia Commons

 

 

 

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How To Protect Your Business On Divorce

 

A client came to see me the other day. Let’s call him Ted. He and his wife were fine, he assured me. But he wanted to know what would happen to his business if they split up. “Would she get her hands on it?” he said. They both enjoyed the highlife: holidays in Florida, villa in Spain. But it was all down to him, wasn’t it. There was no way she was getting a share.

“It all depends,” I said.

    Is The Business Shared Out On Divorce?

I told him his wife, let’s call her Sheila, wouldn’t automatically get a share of the business on divorce. Or rather I should say “his” business, as he was keen to remind me. But there were questions I needed to ask him first. Was it a partnership? A limited company? “No,” said Ted, “I’m a sole proprietor. Like I said, it’s my business.”

It was doing brilliantly, he told me, never better.

“So what is your business?” I asked him. “IT,” he said. He is responsible for the IT systems of a number of large businesses. One’s even a household name. He has an office full of “youngsters”, or so he calls them. They run the help desk. “Does Sheila have a role in the business?” I asked. No, she stays at home and spends the money.

Each morning brings a van load of online purchases to their front door.

    Business Valuations On Divorce

I advised him Sheila would want the business valued if it had assets. Valuations can be controversial and expensive. Maybe his company accountant could provide a valuation? Sheila might agree it. But if she didn’t, she would want a forensic accountant involved. Ideally they would jointly instruct one.

If it had a significant value Sheila could receive a larger share of other assets. Such as the savings or the family home. This would compensate her. And she’d have a hefty claim for maintenance too.

That’s if Ted’s eye watering boasts of his income were to be believed.

    Dealing With A Family Business On Divorce

He told me he had one final question. What difference would it make if he merged his business? A company was sniffing around. The managing director was planning his retirement. He’d promised Ted a shed load of shares. And a role for Sheila, too. And she reckoned she could make an even better job of running the business than Ted.

I advised Ted this could change everything. If the two of them ran it together she might want a share of it if they divorced. This applied to a limited company or to a partnership. But what would happen if the business couldn’t be split? The options were for one or the other to buy the other out. Or they could sell the business. They would need a valuation.

I reminded him about capital gains tax. The full tax implications should be considered if they decided to sell.

Ted wasn’t happy.

I told him maybe it wasn’t that bad. Perhaps he should consider a postnuptial agreement. He and Sheila could decide how all their assets should be split. And this could include their business assets and income. Collaborative law could help if they had trouble agreeing.

He said he liked the sound of that and would have a word with Sheila.

Contact Joanne Houston of Just Family Law on 01962 217640 for 

a FREE telephone consultation on any family law issue

JUST FAMILY LAW are specialist divorce and family law solicitors offering personalised legal solutions.

Visit our website just-family-law.com

The topics covered in this blog post are complex and are provided for general guidance only. If any of the circumstances mentioned in this blog might have application to you, you should seek expert legal advice.

Image by Pierre Dalous on Wikimedia CommonsClick to visit our website.

How To Protect Your Inheritance On Divorce: is a Prenuptial or Postnuptial Agreement the answer?


         A client has contacted me for urgent advice. She wants to know how to protect her inheritance on divorce. Her partner has whisked her away to Rome for the weekend, gone down on one knee, and proposed. She has accepted but now blames this on the champagne. She’s having cold feet because what happens if it doesn’t work out? She doesn’t want him to get his hands on the fortune she inherited from her family.

On marriage breakdown every asset is up for grabs. But it has to be a "matrimonial asset" unless there is a strong case based on need.

      Is An Inheritance A Matrimonial Asset?

It depends. Often an inheritance is regarded as non matrimonial and so not up for grabs, particularly if it’s a short marriage. And timing is important. Was the inheritance received before or during the marriage, or as the couple separated? Even though my client inherited before getting married it could be bad news if they split up after a long marriage. It depends on what happens to the inheritance in the meantime. Will the couple mix it with their matrimonial assets? Will they keep it separate?

The more separate it’s kept the better, but still that’s no guarantee.

      What About “Needs” When Assets Are Divided On Divorce?

The starting point for division of matrimonial assets is an equal split but certain circumstances are taken into consideration. These include the care of minor children, the couple’s wages and earning capacity. Also the standard of living during the marriage, their ages, the length of the marriage, and their health. Lastly their contributions to the marriage, and their financial needs.

What if an equal division doesn’t provide enough for a suitable home for one of the couple? They are likely to get a larger share of the assets. And if there aren’t enough matrimonial assets? Non matrimonial assets can be thrown into the melting pot to meet needs. This includes an inheritance.

      The Millionaire Who Lived In A Three Bed Semi

An unusual case back in 2011 throws some light on how to protect your inheritance on divorce. It’s called K v L. We don’t know the couple’s names or where they lived as the court agreed to protect their anonymity for the simple reason that they wanted their three children to lead normal lives.

This is the story of an extremely wealthy wife. Neither of the couple ever needed to work but despite the wife’s millions they lived modestly in a three bed semi worth £225,000. They ran an inexpensive car and no single item in their home was worth more than £500.

The wife had inherited shares in an Israeli company when she was fifteen. When the couple first cohabited in 1986 the shares were worth £300,000. When they married in 1991, £700,000. When they separated in 2007, £28m. By the time of the court hearing in 2011, £57m.

After twenty one years of marriage the wife left the husband in 2007 taking the children with her. She bought another modest property in the same London suburb, close to the husband who remained in the family home.

The husband told the court he wanted £2m to buy a house in central London, and £450k to buy a house in Israel. Also £60k to buy a new car. And maintenance. All in all he claimed £18m. But the court said the wife’s inheritance was a non matrimonial asset and on a generous assessment of his needs he would only get £5m. He was not otherwise entitled to share in her inheritance.

      Will A Prenuptial Agreement Protect An Inheritance on Divorce?

K v L was an unusual case and relied heavily on the modest lifestyle of the couple. I told my client not to worry. She could take steps to protect her inheritance on divorce with a prenuptial or post nuptial agreement. She liked the idea and said she would talk it over with her fiancé. I have written an earlier blog on the topic of agreements.

Contact Joanne Houston of Just Family Law on 01962 217640 for 

a FREE telephone consultation on any family law issue

JUST FAMILY LAW are specialist divorce and family law solicitors offering personalised legal solutions.

Visit our website just-family-law.com

The topics covered in this blog post are complex and are provided for general guidance only. If any of the circumstances mentioned in this blog might have application to you, you should seek expert legal advice.

Image  A Baby Wild Boar by Sander van der Wel on Wikimedia Commons

 

 Click to visit our website.

Tax And Divorce – Whether UK Or Non UK Resident, You Need To Consider Income Tax, Capital Gains Tax and Inheritance Tax Liability

Our guest blogger, Megan Saksida 

"The impact of tax on divorce can be critical, especially for international families. It's vital to take expert advice from an accountant when considering a financial settlement. I've set out the main points to consider in this blog, and a brief Summary at the end," says guest blogger Megan Saksida, Chartered Accountant, of Meganomics

Divorcing? There are likely to be tax implications. But firstly, where do you both live?

How long have you been non resident? Do either of you intend to return to the UK? All these questions have tax consequences.

An expat who doesn’t work may find on a “day count” basis he or she is tax resident in the UK despite living elsewhere in Europe. This could be because you go back and forth to the UK.

And did you know you can be resident for tax purposes in more than one country? It could be necessary to consider the Double Tax Treaty to determine which residence takes precedence.

How does Non-Resident Capital Gains Tax (“NRGCT”) apply to your residential property in the UK on divorce?

Residential property is usually the major asset in a divorce settlement. For both resident and non resident tax payers there can be tax implications.

“NRGCT” is charged on gains accruing on disposal of UK property if it is not exempt under main residence rules (see below), and you are not resident in the UK in the tax year in which the transfer occurs.

Please note – the NRCGT rules take precedence over the temporary non-residence rules (see below).

What are the tax rates? Eighteen and twenty eight percent (depending on your personal circumstances), and only gains made since 6 April 2015 are taxed.

There are three methods for calculating NRCGT gains:

  • The default method, which applies unless you elect otherwise. This uses the market value as at 6 April 2015;
  • Apportionment of the whole of the gain/loss over the time the property was owned;
  • The whole gain or loss (which is only advantageous for a loss).

Can UK property be elected as a non-resident couple’s main residence in order to reduce tax on divorce?

Yes, you can make an irrevocable main residence notification on the NRCGT Return. This can apply retrospectively to any period of prior ownership.

Is there an existing nomination? The nomination on the NRCGT Return is treated as superseding it.

Please remember it is essential both of you affirm this nomination to HMRC, irrespective of which party legally owns the property.

If only one of you owns the property you must submit a Return with a written notification from the other confirming agreement to the nomination. This is because the rules state a couple can only have one main residence between them.

What qualifies as ‘the main residence’ in order for the gain to be exempt?

The property needs to be occupied as your permanent residence.

If you are non resident, you will have an additional burden of proof which is the “day count” test. What’s the “day count” test? This is where you are present in the dwelling for at least ninety midnights in a year. And if your spouse or civil partner was in the property instead, this will count towards your total.

Do you have more than one UK residence? All stays at both dwellings count towards the ninety day test.

If the “day count” test is reached and the home is eligible for main residence relief, no chargeable gain arises for UK tax purposes irrespective of your country of residence at the time of the divorce.

But be warned –  your tax position in your country of residence also needs to be considered.

Is the former main residence for CGT purposes still owned by either of you? What’s the significance of the 18 months rule?

If the property was your former main residence for CGT and it continues to be owned by either you or your ex more than eighteen months after the other leaves the property, then tax may be payable when the property is sold.

This means the leaving spouse should take tax advice if you continue to own the former marital home even though you no longer live there.

Don’t forget the NRCGT time limits

An important practical point to note is if you make a NRCGT disposal you must report the disposal to HMRC within thirty days. Tax on NRCGT gains is generally due thirty days after sale.

What about tax on divorce on everything other than residential property? What are the rules?

  • UK residents are taxed on worldwide income and gains.
  • Non UK residents are only taxed on income generated in the UK.
  • Non UK residents are not taxed on capital gains unless they become “temporarily non resident” (see below), although the rules for gains on residences and businesses are different.

Are you resident, or non resident, in UK for tax purposes?

What is the test for residence?

It’s complicated but boils down to day counts, working hours, the availability of a home in the UK, or your personal ‘ties’ to the UK.

How does this apply in practice?

I’ll give you an example. Say if you live in France, own a home in the UK, and don’t work. Your minor children are at a boarding school in the UK and you spend the school holidays with them in the UK. For tax purposes you might be defined as resident in the UK. How is this relevant to divorce? You could be liable in the UK for your worldwide income and gains under the terms of your financial settlement.

During the marriage you may have been non UK resident for tax purposes, but you now wish to return to live in the UK. What does this mean for tax on divorce?

It depends how long you have been out of the UK and a non UK tax resident, and when the marital assets are sold or transferred.

Are you “Temporarily Non-Resident”?

A non UK tax resident living outside the UK is not taxed on their capital gains unless they are deemed “temporarily non-resident”. This happens when you live outside the UK for less than five years, and you were a UK tax resident for at least four of the previous seven tax years prior to leaving.

If this applies to you, any capital gains made while living outside the UK, on assets held before you departed the UK would become chargeable in the year of your return to the UK. This means even if there was no initial liability to CGT because you were non resident for tax purposes, the charge would now apply.

What is the significance of the date of separation on tax on divorce?

It’s crucial.

A trial separation is not relevant, but permanent separation is relevant for both income tax and capital gains tax.

But when is a couple officially separated? For both income tax and CGT there are three possibilities:

  • There’s a Court order;
  • You have a Deed of Separation;
  • You are separated in circumstances in which the separation is likely to be permanent.

The third option depends on your individual circumstances. You will need to provide evidence to show when the decision was made to separate permanently, and it’s not necessarily the date one of you left the marital home.

Sometimes a decision may be made by one partner and not communicated to the other.

The date is crucial, especially for CGT.

What happens when matrimonial assets are distributed in the same year as the permanent separation in the case of a UK resident? 

First of all, income –

Both of you are taxed independently on income earned in the UK, and worldwide, and you have your own personal allowance.

It may be during your marriage you decided to share income from assets unequally to maximise tax efficiency. But on divorce the Court has wide powers to divide assets irrespective of ownership. The assets can be split equally or in other ways.

Please note – any prior declaration of beneficial interest to HMRC ceases to have effect after permanent separation, and you will be taxed according to your actual beneficial ownership.

Secondly, capital –

In the case of CGT, if you transfer assets to each other under the financial settlement in the tax year of the permanent separation, this is on a “no gain, no loss” basis, just the same as during the marriage.

But there’s a rule – you must have lived together at some point during the tax year.

Assets are distributed in a tax year after permanent separation, but before divorce. What are the implications for tax on divorce for a UK resident?

In the case of CGT, if assets are exchanged in a tax year during which you are not living together, but before decree absolute (which brings your marriage to an end), it’s bad news.

This is because the assets will be deemed to be transferred at market value, and CGT could be payable. This is the case even if no money has been exchanged.

What happens if a non UK resident permanently separates in the same year as the assets are distributed?

You are not liable for CGT for any capital disposals in the divorce settlement except residential property (see above) and business assets.

Even if you return to the UK during or after the divorce, the rules for “temporary non-residence” are not relevant, as the transaction is excluded under the “no gain, no loss” rules.

What is the liability of a non UK resident when assets are distributed in a tax year after permanent separation, but before divorce?

Any assets transferred in a tax year during which you are not living together, but before the decree absolute, would not be subject to CGT if you are non UK resident (except for residential property).

But there could be a tax charge in the country in which you live, and local tax advice should be sought.

If you choose to return to the UK and are rendered “temporarily non-resident” (see above) CGT could be chargeable.

What about Inheritance Tax?

Liability to Inheritance tax depends on the date of the decree absolute. Before, transfers on divorce are not chargeable. After, they are only chargeable if there is intent to confer gratuitous benefit.

But be careful if one of you is domiciled UK and the other not. There are restrictions on how much can be transferred and tax advice must be taken.

What about your, or your ex’s, unused IHT nil rate band?

If one of you dies after divorce and hasn’t remarried any unused nil rate band will remain unused.

Maintenance to children and former spouses, and gifts to children. Liable to IHT?

Maintenance to children and former spouses is exempt from IHT, but gifts to children not for their education, maintenance or training, could be chargeable if not habitual, and out of income. It’s best to take tax advice in these circumstances.

In Summary

Always consult an accountant

Whether you live in the UK or elsewhere, always consider your potential liability to tax on divorce. Consult an accountant.

Even if you don’t live in the UK, you can be liable to CGT on the sale or transfer of UK  residential property

Can you claim exemption under main residence relief?

Beware the 18 month rule …

Beware of either or both of you retaining a property, nominated as a main residence, for eighteen months after divorce – you can find yourself with an unexpected CGT liability.

… or being deemed a UK resident …

Even if you don’t habitually live in the UK, the Statutory Residence Test legislation may consider you do for tax purposes. You could end up being liable to pay CGT on the sale or transfer of assets in the UK and elsewhere.

… or temporarily non resident

Think you are excluded from CGT liability because you were non resident for UK tax purposes? If you return to the UK you may become liable because HMRC may consider you were only “temporarily non resident”.

Liable to pay tax in more than one country?

The Double Tax Treaty is helpful on this point.

WARNING – date of separation and date of divorce

The date of permanent separation, and the date of the decree absolute (which brings your marriage to an end), are crucial when considering liability to CGT. Whether you live in the UK or elsewhere, you might find yourself with an unexpected tax bill. You need to consult an expert family law solicitor to navigate these tricky points.

And Inheritance Tax?

Divorce can have consequences for Inheritance Tax liability.

Contact Megan Saksida on +44 7521 082 546 or Email: meg@saksida.com

Contact Joanne Houston of Just Family Law on 01962 217640 for a FREE telephone consultation on any family law issue

JUST FAMILY LAW are specialist divorce and family law solicitors offering personalised legal solutions.

Visit our website just-family-law.com

The topics covered in this blog post are complex and are provided for general guidance only. If any of the circumstances mentioned in this blog might have application to you, you should seek expert legal advice.Click to visit our website.