FAQs

Absolutely. A party can propose settlement before litigation commences or at any during the dispute. In fact, the court actively encourages this by making early offers for settlement. In the context of TOLATA (Trusts of Land and Appointment of Trustees Act 1996), this is done through a Part 36 offer. This refers to a formal offer to settle the dispute between the parties outside of court proceedings, which is by Part 36 of the Civil Procedure Rules (CPR) for the procedure for making and accepting such offers.
A Part 36 offer in a TOLATA claim typically outlines terms for resolving the dispute, such as a proposal to buy out one party’s interest in the property, a division of the property’s proceeds upon sale, or other terms aimed at achieving a settlement.

If a Part 36 offer is made and accepted within the specified time frame, it can have significant cost consequences for both parties. For example, if a party rejects a Part 36 offer and later fails to obtain a more favourable outcome at trial, they may be required to pay the other party’s legal costs from the date the offer was made. Conversely, if a party rejects a Part 36 offer but later achieves a better outcome at trial, they may be entitled to receive enhanced costs and interest.

Parties involved in TOLATA disputes should therefore carefully consider any Part 36 offers made and seek legal advice to assess the potential implications and determine the most appropriate course of action.

The cost implications of losing a TOLATA (Trusts of Land and Appointment of Trustees Act 1996) claim can vary depending on several factors, including the complexity of the case, legal fees, court costs, and any potential adverse orders made against the losing party. Some potential cost implications may include:

• Legal Fees: The losing party may be required to pay their own legal fees as well as a portion of the other party’s legal costs. Legal fees can accumulate quickly, especially in complex or protracted cases.
• Court Costs: The losing party may be ordered to pay court costs, which can include fees for filing court documents, expert witness fees, and other associated expenses.
• Damages: In some cases, the court may order the losing party to pay damages or compensation to the other party for any losses incurred as a result of the dispute.
• Adverse Orders: The court may make adverse orders against the losing party, such as requiring them to sell the property or granting exclusive possession to the other party. These orders can have significant financial implications.
• Appeal Costs: If the losing party decides to appeal the court’s decision, they may incur additional legal fees and court costs associated with the appeal process.

Overall, losing a TOLATA claim can result in substantial financial consequences, so it’s essential for parties involved in such disputes to carefully consider their legal options and seek professional advice to minimise potential costs.

If the parties are able to settle their differences out of court by direct or solicitor negotiation or there is a successful mediation then the likely timeframe is a few months. If a TOLATA (Trusts of Land and Appointment of Trustees Act 1996) claim is issued in court then it can take between 9 to 18 months to resolve depending on the nature and complexity of the matter as well as the the capacity and caseload of each specific court.

The primary difference between TOLATA (Trusts of Land and Appointment of Trustees Act 1996) and matrimonial laws MCA 1973 (Matrimonial Causes Act 1973) lies in the nature of the relationship they govern and the assets they address.

TOLATA deals specifically with disputes over property ownership and interests among cohabiting or non-married partners, family members, or business associates. It focuses on establishing beneficial interests in property and resolving disputes related to land ownership, trusts, and trusteeship.

Matrimonial laws, on the other hand, govern the division of assets and responsibilities between spouses during divorce or separation. These laws address issues such as property adjustments (sale or transfer), lump sum order, spousal maintenance, pension adjustments and/or clean break orders.

In summary, while TOLATA focuses on property disputes outside of marriage or civil partnership and is subject to stringent statute and case law; the MCA 1973 specifically addresses the division of assets and responsibilities within the context of marriage or civil partnership and typically offers the court more discretion to divide the assets based on ‘fairness’.

Under the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA), claims can be issued by a range of persons, this can include co-owners of a property, individuals with a beneficial interest in the property, trustees, those with an interest in the land, unmarried couples, cohabiting partners, family members, or business partners who have a stake in the property. 

In circumstances where a property is registered in the name of only one party, under TOLATA, you may be able to make a claim for a beneficial interest in the property if you can demonstrate that you have made significant contributions to the property, such as paying towards the mortgage, renovations, or household expenses, and have a legitimate expectation of benefitting from the property. Establishing a beneficial interest in a property under Trust Law, is principally achieved using one of the following methods: – 

1. Constructive Trust: If you can show that there was an agreement or understanding between you and your partner that you would have a share in the property, even though it is in your partner’s name, you may be able to argue for a constructive trust. This would entitle you to a share in the property’s value corresponding to your contributions and expectations.
2. Resulting Trust: Similarly, if you can demonstrate that you contributed financially to the property with the intention of acquiring a beneficial interest, you may be able to claim a resulting trust, which would entitle you to a share in the property’s value proportionate to your contributions.
3. Proprietary Estoppel: You may also have a claim under the principle of ‘unjust enrichment’ if you can show that it would be unfair for your partner to retain sole ownership of the property without compensating you for your contributions.

It’s essential to seek legal advice from a solicitor experienced in property and family law to assess your individual circumstances and determine the strength of your claim. They can provide guidance on your legal rights and options for pursuing a claim to the property or its value

TOLATA stands for the Trusts of Land and Appointment of Trustees Act 1996. It’s a piece of legislation in England and Wales that deals with disputes relating to the ownership and occupation of land. 

TOLATA primarily focuses on resolving disputes between co-owners of land, particularly in cases where there is a dispute over the sale, management, or use of the property. It provides a framework for the resolution of such disputes through court proceedings and aims to ensure fair and equitable outcomes for all parties involved.

Under Schedule 1 of the Children Act 1989, a claim can be made for financial provision for a child, including claims related to property. This provision allows the court to make a variety of orders regarding property in order to provide for the welfare of the child. Some of the claims that can be made under Schedule 1 regarding property include:

• Transfer of Property: The court may order the transfer of property to provide a home for the child or to meet their financial needs. This could involve transferring ownership of a property from one parent to another or from a parent to the child.
• Settlement of Property: The court may order the settlement of property for the benefit of the child, such as placing property in trust or creating other arrangements to ensure the child’s financial security.
• Sale of Property: In some cases, the court may order the sale of property and distribution of the proceeds to meet the child’s financial needs, particularly if other options are not feasible or practical.
• Financial Assistance: The court may order one parent to provide financial assistance to the other parent or the child to help meet housing or other needs, which could indirectly involve property-related arrangements.

These orders are made with the primary consideration being the welfare of the child. The court will take into account various factors, including the financial resources and needs of the child and both parents, as well as any other relevant circumstances. It’s important to seek legal advice from a solicitor experienced in family law to understand your rights and options under Schedule 1 of the Children Act 1989 regarding property matters concerning children.

If the property is solely owned by your partner, but you have lived together for years and contributed financially or otherwise to the property, you may still have a potential claim to the property’s value or an interest in it under certain circumstances.

Applications of this nature would be issued under the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA). Under TOLATA, you may be able to make a claim for a beneficial interest in the property if you can demonstrate that you have made significant contributions to the property, such as paying towards the mortgage, renovations, or household expenses, and have a legitimate expectation of benefitting from the property. Establishing a beneficial interest in a property under Trust Law, is principally achieved using one of the following methods: –

• Constructive Trust: If you can show that there was an agreement or understanding between you and your partner that you would have a share in the property, even though it is in your partner’s name, you may be able to argue for a constructive trust. This would entitle you to a share in the property’s value corresponding to your contributions and expectations.
• Resulting Trust: Similarly, if you can demonstrate that you contributed financially to the property with the intention of acquiring a beneficial interest, you may be able to claim a resulting trust, which would entitle you to a share in the property’s value proportionate to your contributions.
• Proprietary Estoppel: You may also have a claim under the principle of ‘unjust enrichment’ if you can show that it would be unfair for your partner to retain sole ownership of the property without compensating you for your contributions.

It’s essential to seek legal advice from a solicitor experienced in property and family law to assess your individual circumstances and determine the strength of your claim. They can provide guidance on your legal rights and options for pursuing a claim to the property or its value.

Yes, in the UK, you can seek an order for sale on a property even if you are not married. This can apply in various situations, such as if you jointly own a property with your partner and are unable to reach an agreement on what to do with the property following the breakdown of your relationship.

Under the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA), individuals who own property together, whether as joint tenants or tenants in common, can apply to the court for an order for sale if they are unable to agree on the division or disposition of the property. This legislation applies to cohabiting couples as well as married couples.

When considering an application for an order for sale, the court will take into account various factors, including the interests of any children, the financial contributions made by each party to the property, and the circumstances surrounding the breakdown of the relationship.

It’s important to seek legal advice from a solicitor who specialises in family law if you are considering applying for an order for sale on a property owned with a partner outside of marriage. They can provide guidance on the process and help you understand your rights and options.

In the UK, unmarried partners generally do not have an automatic right to claim maintenance from each other in the same way that married couples do. However, there are certain circumstances in which a partner may be able to claim financial support from the other:

Children: If you have children together, you may be able to claim child maintenance from your partner to help support the children’s upbringing. This can be arranged privately or through the Child Maintenance Service (CMS).

Cohabitation Agreement: If you and your partner have a cohabitation agreement in place that includes provisions for financial support in the event of separation, you may be able to enforce those provisions.

Property Rights: Depending on your contributions to property owned jointly or solely by your partner, you may have rights to a share of the property or financial compensation if the relationship ends.

Financial Dependence: In certain circumstances, if you can demonstrate that you were financially dependent on your partner and have suffered a financial disadvantage as a result of the relationship ending, you may be able to make a claim for financial support. This is typically less common and depends on the specific facts of the case. This is often referred to as a claim for “financial provision” or “financial remedy.” It’s important to note that claims for financial provision for unmarried partners are generally less straightforward than claims for spousal maintenance in divorce proceedings.

An application for financial provision from a former partner in an unmarried relationship would typically be made under the provisions of the Family Law Act 1996. Specifically, Part 2 of the Act deals with financial relief for parties to a cohabitation agreement or for former cohabitants. This part of the Act allows individuals to apply to the court for various financial orders, including lump sum payments, property adjustment orders, and maintenance orders, following the breakdown of a cohabiting relationship. Each case is assessed on its own merits, and the outcome can vary depending on the specific circumstances involved.

In such cases, the partner seeking financial support would typically need to demonstrate:

• They were financially dependent on the other partner during the relationship. This could include relying on the partner for housing, living expenses, or other financial support.
• They have suffered a financial disadvantage as a result of the relationship ending. This could involve loss of income, loss of housing, or other financial hardships.
• Courts may consider various factors when determining whether to grant financial provision, including the length of the relationship, the contributions made by each partner (financial and non-financial), the financial needs and resources of each party, and any children of the relationship.

It’s important to seek legal advice tailored to your individual circumstances if you are considering making a claim for maintenance from a partner you are not married to. The laws and procedures regarding financial support for unmarried partners can be complex and may vary depending on the jurisdiction.

If you believe you may be entitled to financial provision from a former partner, it’s advisable to seek legal advice from a family law solicitor who can assess your situation and provide guidance on the options available to you.

In the UK, there is no legal recognition of “common law marriage” or “common law spouse.” Regardless of how long a couple has lived together or whether they have children together, unmarried partners do not have the same legal rights and protections as married couples.

This means that in the event of separation or death, unmarried partners may not automatically be entitled to a share of each other’s assets, property, or pensions, unless specified in a legally binding agreement or through other legal means.

As a result, it’s important for unmarried couples to consider creating a cohabitation agreement to outline their rights and responsibilities, as well as any arrangements for property, finances, and children. Additionally, individuals in such relationships may wish to explore other legal mechanisms, such as drafting wills or creating joint ownership arrangements, to protect their interests and provide for their partner in the event of unforeseen circumstances

This depends on the complexity of a couple’s finances and what you seek to achieve. A straightforward agreement with modest assets and finances will be relativity inexpensive. A complex cohabitation agreement will be more as each case is costed on an individual basis.

The costs of entering into such an agreement to definitively establish a parents ‘common intentions’, can potentially avoid significant sums been expended on contested court proceedings if there is a future dispute.

Yes, you can enter into a cohabitation agreement at any point during your relationship in England and Wales, whether you’re just starting to live together or have been together for some time.

It assists in ensuring that there is cohesion between your separation agreement and other legal documents that may reflect ownership, to avoid any situations where there is ambiguity over the parties common intention.

It is important therefore to have open and honest discussions with your partner about your intentions and expectations before entering into such an agreement. Additionally, seeking legal advice can help ensure that the agreement is drafted properly and meets the necessary legal requirements to be considered if needed in the future.

The amount of time necessary to construct a Cohabitation Agreement will largely be dependent on how complex your affairs are.

Preparing a Cohabitation Agreement for first-time buyers with modest savings and no children for example will take a few weeks to negotiate, draft and conclude. Conversely if the finances are complex and involved then it could take significantly more time.

Consideration will need to be given to how assets are to be divided upon separation, and ideally independent legal advice should be secured to ensure both parties have been advised on the merits and pitfalls of any agreed terms may mean for them.

A well-drafted cohabitation agreement should complement and not compete with other legal documents. For instance the provisions of a Will should mirror the terms of the cohabitation agreement so that there is consistency of the common intention of the agreement of your financial affairs.

Another example may be in terms of the division of property upon separation, that due consideration be given to registering a Declaration of Trust, which is then to be lodged with HM Land Registry.

The construction of a Cohabitation Agreement, ultimately carries more weight the more up to date it is, therefore, it would assist to review and amend the terms of the document every 3-5 years to ensure it reflects and addresses your current financial arrangements.

In the UK, a cohabitation agreement is a legal contract between two parties and can carry significant weight in legal proceedings if certain criteria are met:

Voluntary Agreement: Both parties must enter into the agreement voluntarily, without coercion.

Full Disclosure: Both parties must provide full and honest disclosure of their financial circumstances and any other relevant information.

Fairness: The agreement must be fair and reasonable at the time it is made, considering the circumstances of both parties.

Legal Advice: It’s advisable for each party to seek independent legal advice before signing the agreement.

A couple cannot oust the jurisdiction of a Judge or a court but a well-constructed agreement should prove to be compelling in the event of a future dispute and will give a judge an understanding of their common intention in relation to finances. So while not strictly legally binding, courts in the UK may take cohabitation agreements into account when resolving disputes between unmarried couples, particularly if they were made with the intention of being legally enforceable and meet the criteria outlined above.

However, each case is considered on its merits, and courts have the discretion to set aside or vary agreements if they are found to be unfair or if circumstances have changed significantly since the agreement was made.

A cohabitation agreement is not a legal requirement. However, whether a cohabitation agreement is ‘necessary’ depends on the circumstances and preferences of the individuals involved, and there are several situations where having a cohabitation agreement can certainly be beneficial for: –

Protection of Assets: A cohabitation agreement can clarify ownership of assets acquired during the relationship and protect each partner’s interests in the event of separation or death.

Financial Clarity: It can outline financial responsibilities and contributions during the relationship, reducing misunderstandings or disputes.

Childcare Arrangements: If the couple has children or plans to have children, a cohabitation agreement can establish arrangements for custody, visitation, and financial support.

Dispute Resolution: It can establish procedures for resolving disputes that may arise during the relationship, minimizing the need for costly and adversarial legal proceedings.

While cohabitation agreements are not legally required in most places, they can provide peace of mind and clarity for couples. It’s important for each couple to consider their individual circumstances and consult with legal professionals to determine whether a cohabitation agreement is appropriate for them.

A cohabitation agreement is a legal document entered into by unmarried couples who are living together or planning to live together. It outlines various rights and obligations of each partner during the relationship and in the event of separation or the death of one partner. These agreements typically cover matters such as:

1. Property ownership and division of assets acquired during the relationship.
2. Financial responsibilities and contributions during the relationship, such as mortgage and utilities.
3. Rights to assets and property in the event of separation or death.
4. Arrangements for any children of the relationship, including custody and financial support.
5. Decision-making processes during the relationship.
6. Dispute resolution procedures in case disagreements arise.

Cohabitation agreements help provide clarity and certainty for both partners and can be particularly important in jurisdictions where the legal rights of unmarried couples are not automatically recognized to the same extent as those of married couples. Ultimately, the purpose of the agreement is that it evidences a cohabiting parties’ common intention of the above to hopefully prevent the need to issue expensive court proceedings in the future.

What is cohabitation?

Cohabitation is a term used to describe unmarried couples who are in a relationship and live together. If you and your partner share a home, and are not married or in a civil partnership, you are a cohabiting couple.

Do unmarried couples have the same rights as married couples?

Despite what many believe, couples who live together do not have the same legal rights as couples who are married or in a civil partnership. They may have limited rights, such as:

• Claims arising from financial contributions they may have made towards their partner’s property;
• Rights to financial support for any children of the relationship;
• Claims on the death of their partner (depending on circumstances).

However, in general, couples who live together may be unprotected. What should an unmarried couple do if they do not wish to marry or enter into a civil partnership, but do wish to put in place financial arrangements in the event of changes to their circumstances such as the birth of a child, inheritance, purchase of several properties or their relationship breaking down? The answer is to enter into a cohabitation agreement.

How can cohabiting couples protect themselves?

A Cohabitation Agreement is a way to protect the financial interests of you and your partner. The agreement is a comprehensive and bespoke contract that formalises what cohabiting couples wish to happen in the event of separation or a death. It sets out mutually agreed plans for jointly and individually owned assets, property, finances, child arrangements and any other personal arrangements that couples wish to include.

The number of cohabiting couples has increased by 144% since 1996, meaning Cohabitation Agreements are becoming increasingly popular. In addition to providing security, Cohabitation Agreements are designed to:

• Provide financial protection for both parties
• Establish responsibility for jointly and individually owned assets including property, pensions and savings
• Define provisions for children
• Agree how financial obligations such as rent, mortgage and other household bills will be maintained

What is a Cohabitation Agreement?

A cohabitation agreement is a form of legal agreement reached between a couple who have chosen to live together. The purpose of a cohabitation agreement is to provide clarity for the duration of a relationship. Cohabitation agreements are legally binding contracts, provided that they are drafted and executed properly, and are signed as a deed.

Do my partner and I need a cohabitation agreement?

Laws relating to the separation of cohabitees are entirely different to those which apply to married couples, so it would be sensible to draw up a cohabitation agreement. Dealing with the financial consequences of the breakdown of a relationship between unmarried parties can be extremely stressful and expensive. Seeking legal advice and entering into a well drafted cohabitation agreement can alleviate many of these issues. 

What can a Cohabitation Agreement cover?

Provisions that couples may wish to feature in a cohabitation agreement include, but are not limited to:

• Property owned before moving in together—if one partner owns property, a cohabitation agreement can agree for this to be kept separate and prevent the other partner from having a claim over it. However, if the partner who does not own the property but makes contributions to the mortgage or carries out renovation work, they could have a claim to the property in the future.
• Property bought while living together—if you buy a property while living with your partner and only one of you is named on the agreement, this will need to be addressed in the same way as above. If you are named as joint owners, you are both legally entitled to stay in the property if you should break up. You will therefore need to think about what will happen to the jointly owned property upon separation.
• Household bills—if you and your partner are not joint owners of your home, or one of you contributes more than the other, one of you could agree to contribute to the mortgage but acknowledge that this will not give that person any claim over the property.
• Financial provision for children – whilst agreements can be entered into regarding child maintenance this does not prevent either party from applying to the Child Maintenance Service for a calculation. Whilst the parties are free to enter into a written agreement, after a period of one year has passed either party can make a referral to the Child Maintenance Service.
• Child arrangements – whilst arrangements for any child of the family post separation can be provided for in the arrangement, if the couple later end up going to court the terms of the agreement may not be strictly enforced. The terms may, however, provide guidance or context in any dispute.
• Inheritance and wills—it’s important to remember that if you are not married or in a civil partnership, you will not automatically inherit each other’s estates if one of you dies. If you want to leave anything to your partner, you will need to draw up a will and keep it up to date.
• Personal possessions – these can often be overlooked but thought should be given to who owns what and who will keep what in the event of separation. 

Key considerations when setting up a cohabitation agreement 

1. Obtain legal advice – A cohabiting family should obtain independent legal advice. This means each party will need to see a separate solicitor. One party cannot advise two people on the implications of the terms of an agreement as it is likely there will be a conflict of interest.
2. Financial disclosure – Parties in a cohabiting relationship should exchange ‘financial disclosure’ (full details of their finances) to ensure that they are fully aware of the other parties’ financial circumstances. This will assist in drafting a comprehensive agreement.
3. Provisions for children – If there are any children, provision should be made for them in the agreement.
4. Reviewing the agreement as circumstances change – The agreement should be reviewed regularly, particularly if a child is born or one party’s circumstances change, because, for example, they cease working or receive a large inheritance.
5. Ensuring a fair agreement – cohabitation law – Proper consideration should be given to whether the terms of the agreement are fair and are in line with the kind of order a court would make. The whole agreement may be deemed void if the outcome would be unjust: if, for example, a term dismisses either party’s claim for child maintenance.

Get in touch with a cohabitation lawyer from McAlister Family Law for advice on how to set up a cohabitation agreement with your cohabiting partner.

The house that a couple live in during the marriage is known as the matrimonial home in divorce proceedings. Whether the property is owned by the couple jointly or it is owned by one of them, neither of them have an automatic right to keep the property as part of their divorce settlement.

The matrimonial home is one of the assets that will fall into the matrimonial pot that will be distributed between the couple as part of their divorce settlement. A value will need to be attributed to the property within the divorce. If the couple cannot agree a value it will have to be valued by a surveyor, who is usually appointed jointly by the couple.

The housing needs of any young children (under 18) will be the primary concern of the court. If the assets are limited, the main carer of the children will often keep the matrimonial home, and the other spouse will have to use what is left of the assets to buy a property for themselves, even if this means that they are unable to buy a property of a similar value or are even unable to purchase another property immediately.

It should be noted that if there is a mortgage secured upon the property, the mortgage company will have to agree to the mortgage and the property being transferred to one spouse, if it is owned by the other spouse or it is owned by them jointly. If the mortgage company does not agree to this, it would leave one spouse responsible for a mortgage for a house that they are no longer living in and it will impact their ability to borrow money to fund the purchase of a property for themselves. In this scenario the house will usually be sold, unless it is the only way of meeting the housing needs of the spouse who is the main carer of the children. If this is the case, there is usually an order for sale of the property when the youngest child becomes an adult, with both spouses sharing the equity at that stage. This is known as a Mesher order.

Unless there are limited assets, most judges will consider that both spouse’s housing needs are the same. Therefore if the children live with one parent for most of the week and see the other parent at weekends, a judge will say that the housing needs of both spouses are the same. It is considered best for the children if they are able to have the same facilities at both houses, for example their own bedroom, if there is sufficient money to afford this.

Often the house is the most valuable asset that the couple own. If the equity in the house (its value less any mortgage secured upon the property) is significant and there are few other assets, the house may have to be sold to allow both spouses to receive their fair share of the matrimonial assets. This would enable both spouses to purchase less expensive properties.

If either spouse can afford the keep the matrimonial home and they both want to keep, if the children live with one spouse more of the time a judge is likely to say that that spouse should keep it. If there are no young children, a judge would be more likely to sell the house in this scenario, so that neither spouse keeps it. Whilst many who divorce are concerned about what will happen to the matrimonial home, in most divorces the couple agree what should happen to the property.

An FDR Hearing is the Financial Dispute Resolution Hearing. It is generally the second hearing within financial remedy proceedings and is listed following the First Directions Appointment (FDA hearing).

The FDR hearing is known as the ‘negotiation’ hearing as it gives both yourself and your ex-partner the opportunity to negotiate a financial settlement with the assistance of a Judge.

It is a ‘without prejudice’ hearing. This means that any offers put forward at the hearing cannot be disclosed to the Judge at the final hearing. This encourages the parties to put forward more reasonable offers and to have more productive negotiations. This in turn makes it more likely that the parties will settle at the FDR hearing, without saves the costs incurred in going to a final hearing. However, it is important that the parties have all of the relevant information required in advance of the FDR hearing in order for such negotiations to be possible.

It is more common now for this type of hearing to be listed in person. All parties to the proceedings and their legal representatives will need to attend Court an hour before the hearing for pre-hearing discussions. This usually allows for the parties and / or their legal representatives to get an idea of what the other party’s position is and for any outstanding issues to be raised.

The parties and their legal representatives will then go before the Judge. They will be given the opportunity to put forward their case, however, it does not usually include giving evidence. The Judge will have the opportunity to look at all of the relevant information, which includes the parties’ financial disclosure and may include documents such as property or business valuation reports if applicable. In addition to this, the Judge will consider the without prejudice offers that have been put forward by the parties in preparation for the hearing.

The Judge will then give an indication of what they would consider to be a fair outcome in terms of a financial settlement. This tends to be accurate in terms of what a Judge would order at a final hearing. This provides the parties with a good starting point for negotiations on the day of the FDR hearing. They will then have the opportunity to go away and consider the Judge’s indication and to put forward various offers.

If you are able to agree a financial settlement at the hearing, the agreement will be drafted into a financial consent order and will have to be approved by the Judge.

If the parties are unable to reach an agreement on the day, the Judge will not be able to impose a decision on the parties. The case would have to be listed for a final hearing. The Judge that dealt with the case at the FDR hearing will have no further involvement in the case and the final hearing Judge would also not know what indication was given by the Judge at the FDR hearing.

If you have any questions about this issue, please contact our specialist divorce and finance team who would be happy to assist.

This is an important narrative statement which sets out your case within financial remedy proceedings. The statement is typically used as your ‘evidence in chief’ at the final hearing. This means that it must only include evidence rather than any arguments.

It is called a ‘Section 25 Statement’ because it should refer to the various applicable factors under Section 25 of the Matrimonial Causes Act 1973 that you would like the Judge to take into account when deciding what Orders to make at the final hearing.

This includes the following:

• the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future, including in the case of earning capacity any increase in that capacity which it would in the opinion of the court be reasonable to expect a party to the marriage to take steps to acquire;

• the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;

• the standard of living enjoyed by the family before the breakdown of the marriage;

• the age of each party to the marriage and the duration of the marriage;

• any physical or mental disability of either of the parties to the marriage;

• the contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family;

• the conduct of each of the parties, if that conduct is such that it would in the opinion of the court be inequitable to disregard it;

• in the case of proceedings for divorce or nullity of marriage, the value to each of the parties to the marriage of any benefit (for example, a pension) which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.

A Section 25 Statement is typically ordered by a Judge at the Financial Dispute Resolution (FDR) hearing, to be filed with the Court and served upon your ex-partner a few weeks before the final hearing. This provides you with the opportunity to review your ex-partners statement prior to the final hearing so that they can be cross examined on the contents of the statement.

If you have any questions about this issue, please contact our specialist divorce and finance team who would be happy to assist.

A pre-nuptial agreement is a contract between a couple that regulates what will happen to a couple’s assets if they divorce. It is negotiated and signed by a couple before they get married. A couple can only have a pre-nuptial agreement if they both agree to sign one.

Couples usually decide to have a pre-nuptial agreement for one or both of the following reasons:

1. To provide certainty if their marriage ends, which will avoid the potential for acrimonious and expensive court proceedings if they divorce.

1. To ring fence assets that either or both of the couple own before they marry, essentially taking them out of the matrimonial pot that is divided if they divorce and protecting those assets.

Legal Certainty

Since the Supreme Court case of Radmacher v Granatino in 2010, the divorce courts in England and Wales consider a pre-nuptial agreement one of the factors that must be taken into account when deciding what a fair financial settlement is when a couple divorce, provided that it has been properly entered into and the couple’s intentions are clear.

A judge is likely to follow the terms of a pre-nuptial agreement or at least order a lesser financial settlement for one spouse, as a result of the pre-nuptial agreement, provided that both spouse’s needs are met by the terms of the agreement.

For a pre-nuptial agreement to have legal weight and therefore be considered a factor if a couple divorce, the following should be followed regarding its preparation:

• The agreement should be prepared and signed at least three months before the couple’s wedding date.
• Both of the couple should instruct their own solicitor, so that they each receive independent legal advice upon the agreement and are fully aware of the implications of the agreement if they divorce.
• Both should provide details of their assets, income and liabilities to the other. This information is usually attached to the agreement in schedule form.

Protection of Assets

Pre-nuptial agreements are not just for the very wealthy. Whilst a certain level of assets is needed to make them relevant on divorce, as the terms of the agreement do need to meet the needs of both spouses on divorce, these agreements are often used to ring fence specific assets. For example inheritances or businesses can be ringfenced, so that they do not form part of the matrimonial pot to be distributed between the couple if they divorce. Need itself is open to interpretation. How much someone needs to buy a house on divorce may be less generously interpreted as a result of a pre-nuptial agreement.

Pre-nuptial agreements are not just there to protect the wealthier spouse. For those that have been married before, pre-nuptial agreements are often used to protect the assets that both the couple bring into the marriage, so that they are each able to keep these if they divorce. This is particularly important to those who have children from previous relationships and want to protect their assets for their children’s benefit.

Financial disclosure

When a married couple are divorcing and want to resolve their financial matters, the starting point is that there has to be an exchange of financial information. This process is referred to as disclosure. There is a duty for each spouse to provide full and frank disclosure to each other.

The Form E is a court document which spouses are required to complete to show to each other that they have provided full disclosure. The Form E is a comprehensive document which covers your financial position including assets, pensions, income and debts.

When completing the Form E, there is also a requirement to provide documentary evidence in support. The Form E helpfully sets out a list of the documents which are required. This includes but is not limited to the following documents: –

• Property valuation
• Mortgage redemption statement
• Bank statements covering the last 12 months
• Statements for any investments and savings
• Life insurance documentation
• Company accounts if you have an interest in a business
• Pension valuations
• P60 for the last financial year and payslips for the last three months
• Latest tax assessment

If the Form E is completed accurately, it will help resolve your finances quickly and it will also help with reducing legal costs. Once financial disclosure has been provided, it will help family solicitors to advise what is in the ‘matrimonial pot’ so they can advise on an appropriate financial settlement.

Is it compulsory to complete the Form E?

The court will direct you to complete a Form E if financial remedy proceedings have been issued. However, the Form E is commonly used if you and your spouse were to exchange disclosure voluntarily and want to negotiate a settlement outside of the court process.

If you and your spouse have completed Form E on a voluntary basis but are unable to reach an agreement and financial remedy proceedings are later issued, then it will give you and your spouse a head start as the groundwork will have already been done and it will simply be a case of updating the figures.

Failure to provide financial disclosure 

You and your spouse are under a duty to provide full and frank disclosure. There can be serious consequences if a court has directed you to complete a Form E and you fail to do so. If you fail to comply with a court order you may be in contempt of court which is a criminal offence. If you are found to have been deliberately untruthful or provide incorrect information, then this may be treated as fraud. The court also has the power to make an order for costs against you if you fail to comply with a court order. Adverse inferences may also be drawn from any non-disclosure which could result in an undesirable outcome for you.

There is no obligation to provide financial disclosure if financial remedy proceedings have not been issued. However, if you are not willing to provide financial disclosure voluntarily then this may lead your spouse to issue financial remedy proceedings and the court will order you to provide financial disclosure.

It is therefore extremely important to provide full and frank financial disclosure. For advice on financial disclosure on divorce, please contact a member of our Team.

If a couple divorce, all the assets that both spouses have an interest in are considered relevant assets. This includes any interests that either spouse has in a business, including shares in a private limited company or a partnership interest. A value will need to be ascribed to these business interests in a divorce.

Businesses come in all shapes and sizes. Some are small businesses that have very limited assets and are just an individual working on a self-employed basis, for example an IT consultant who works through a limited company. It is unlikely that this type of business will have a value, as the business is just a vehicle through which that person earns an income. If you take that person away the business has no value, save for any money held in its bank accounts.

Other types of businesses are likely to have a value and will need to be valued within the divorce, unless a value can be agreed by the couple. If a business valuation is needed, it is usual for the couple to jointly instruct an accountant, who is an expert in business valuations, to prepare a valuation report. Valuing a business is an art, not a science, so different accountants will attribute different values to the same business. Some accountants are more conservative than others with their valuations. It is therefore important that you take advice upon the right accountant to instruct before going down the valuation route.

Most businesses are valued in one of two ways – a net asset basis or an earnings basis.

Net Asset Basis

Businesses that have significant assets, such as properties, are often valued on a net asset basis. This is the value of all the assets owned by the business less all of the debts. Where the business owns assets such as properties, it may be necessary to obtain up to date valuations of these before the accountant prepares their report.

Earnings Basis

This method is usually appropriate where a business is trading and generating a profit from that trade. Typically, this method requires the assessment of the likely level of Future Maintainable Earnings and the application of an appropriate multiplier. To do this recent trading performance is considered. Often for the last three full trading years.

Usually the jointly instructed accountant will undertake both calculations and use the highest figure. Therefore, a trading company could be valued on a net assets basis if its assets have a very high value or alternatively if the recent trading performance has been poor and therefore the Future Maintainable Earnings are low.

Once the accountant has valued the business, they must also consider the tax that would be payable by the business owner if their interest in the business were sold. This is because the divorce court uses the net value of the spouse’s business interests, when considering what a fair financial settlement is.

If the spouse does not own the whole business, the accountant will consider whether the spouse’s interest should be valued on a pro-rata basis or whether a further discount should be applied. Often a discount is applied if the spouse has a minority interest in the business.

The accountant will also need to consider liquidity. This is the amount of money that can be taken out of the business by the spouse, without impacting its ability to function as a business. The tax consequences of taking this money out of the business must also be considered. If a business has limited or no liquidity, this is a factor that will have to be taken into account when considering what a fair divorce settlement is.

If it is considered appropriate for the business owning spouse to pay money to their spouse as part of the divorce settlement, the payment of this money may take place over a few years if insufficient money can be raised through the business or from elsewhere to pay it upfront in one payment.

A judge does have the power to order the transfer of shares from one spouse to another within divorce proceedings. However, it would be fairly unusual for this to happen if only one spouse has ever worked in the business. A judge can also order a sale of shares in a business, but this would be very rare and could not happen if there was a third party with an interest in the business.

Divorces can be amicable, but they can also come with a huge breakdown in trust. Spouses can be worried that their former partner is hiding something to defeat their financial claims and seek advice on what they can do to ensure a fair outcome. Concerns can include deliberate devaluation of businesses, assets being transferred to third parties or offshore, and simple non-disclosure of bank accounts, luxury goods, or investments. With these issues in play, how can you be sure of a fair settlement?

Firstly, there is an obligation for people to provide full and frank information about their assets and income to obtain a financial order. If you are in court proceedings, you have to sign statements of truth to confirm that you have set out your financial position accurately to the best of your knowledge. Signing a statement of truth whilst knowingly being dishonest can lead to prosecution for contempt of court. This is not always enough to deter people from behaving deceitfully, but it is a start.

There are plenty of ways for experienced solicitors to find hidden assets. These include forensic examinations of bank statements and company accounts, requesting data from His Majesty’s Land Registry on all property owned in your former partner’s name (or associated names), and seeking disclosure from third parties. Depending on the assets in your case, your legal team may work in conjunction with forensic accountants or private investigators.

The court also has one more tool at its disposal – the ability to draw adverse inferences. If there is a lack of disclosure or co-operation from your spouse, the court may infer that they have something to hide. They may award you more of the known assets on the presumption that your former partner has more.

If you suspect that your spouse is in the process of hiding assets, it may be possible to get a court order to prevent this – a freezing order. If you do not know about the transaction in time, you may be able to persuade the court that the value of the asset transferred should be added to your former partner’s side of the balance sheet. This means they are effectively credited with the item they have tried to get rid of/hide. Transactions within three years of divorce proceedings commencing are presumed to be an attempt to defeat a financial remedy claim so may have to be justified if questioned.

Finally, if your proceedings conclude and assets you did not know about surface, you may have a claim for your financial order to be set aside. This is not guaranteed, but it should provide some reassurance that there is recourse. Further, there is a possibility that someone hiding assets could be prosecuted for fraud, so the penalties are substantial.

Suspecting that your former partner is hiding assets and trying to cheat you out of a fair settlement can be extremely distressing. If you think this could be happening to you, or you simply have concerns that something is missing, speak to one of our experts today.

A lot of the time bonuses are not guaranteed and are discretionary. The court can however determine when looking at patterns of previous bonuses and the current financial position of the company, that a person they are likely to continue to earn bonuses (or not as the case may be) If the court assesses that a bonus will be continued to be earned and paid, they can be taken into account by the court on divorce.

Whether there is any entitlement by the other party to share in a bonus will on a number of factors to include when the bonus was earned (ie was it during the marriage or after separation) and the court will assess the answer on the basis of ‘need’.

Taking into account the first point (and focusing on when the bonus was earned), bonuses that are acquired whilst the couple are together are usually considered to be “matrimonial assets”. This is the case if the bonus is received after separation but relates to a financial period whilst the couple were together. In these circumstances the bonus received will count as part of the “matrimonial pot” alongside other assets that are to be divided.

If the bonus received relates to a period of work after the couple have separated, it is not the case that bonus is automatically excluded (“ringfenced”) from the division of the matrimonial assets. In this instance the court would look at whether the other spouse has financial “needs” that are required to be met. “Need” can include monies required to purchase a property or to meet outgoings/living costs and the court will look at whether or not the bonus is required to be taken into account for there to be a fair settlement.

In cases with larger assets, and in circumstances where bonuses acquired post separation (and are not required to meet ‘need’), there may be an argument that they should be “ringfenced” on the basis that the bonus relates to a period outside of marriage and relates to that individual’s sole contributions.

What about bonuses earned in the future? Once the appropriate division of assets has taken place, if there is to be no ongoing spousal maintenance (ie financial support to the other party) there will be a “clean break” implemented. This means that neither party could make any further claim against the other for income, pension, lump sum or property. So, this includes future bonuses and where there is a clean break, there can be no further claim against those and they will remain with the spouse that has earned them.

Whilst the law says that there should be a financial clean break between a couple if this is possible, in some cases one spouse cannot manage financially without spousal maintenance from the other. The court will assess this by looking at two questions. Firstly, whether there is a shortfall between their income and their reasonable outgoings, and secondly whether the financially stronger spouse can actually “afford” to make up any shortfall and pay it to the other party. If there are regular large bonuses, a judge will not ignore those. The court can order a percentage of a net bonus to be paid to the other spouse in addition to other payments when assessing a fair outcome and when looking at the “need” and “affordability” test.

If however, reasonable needs can be met without recourse to bonuses, then recent case law says that there is no automatic sharing of future income (to include bonuses). This means that when needs can reasonably be met without having to look to income that will be received in the future there is no “automatic” right on the other party to share in that bonus.

It can therefore be seen that each case will be determined on its own facts, taking into account the timing of the bonus payment and most significantly needs.

In short, the answer to this is “no”. There is no automatic sharing of a person’s income on divorce.

There is a possibility that spousal maintenance could be paid to the other party in some circumstances, however, this would be determined by the court on the basis of;

1.  Need (ie does the other person actually “need” some additional income to meet their outgoings)?
2. Affordability. Can the person being asked to pay spousal maintenance actually afford it after meeting their own outgoings?

In the absence of an agreement on this issue, the court would have to assess what outgoings are reasonable, whether there is a shortfall between a spouse’s income against those outgoings and whether there is any surplus income from the other person left to pay over to them.

The court has an obligation to put into place a “clean break” wherever appropriate (ie that all financial ties with the other person be severed at the earliest point in time) so even if spousal maintenance was appropriate the court would look to do this for the shortest time required (known as a “term order”).

Case law over recent years has focussed on the principle that there is no automatic sharing of income after divorce. This is because income resources after divorce are not considered to be a “matrimonial asset”. With matrimonial assets, the starting point would be that they should be shared equally, unless evidence could be provided to the contrary as to why that should not to be the case. With income, the court look to other options such as whether income needs can be met from capital resources for example.

If there was a situation where the other spouse does not have an income at all or is unemployed, rather than simply getting half of the other spouse’s income, the court will look at needs, affordability and the time the other party might need to be able to “get back on their feet” (and spousal maintenance should only be paid for that amount of time).

Each case has to be determined on its own merits and facts and the court has to determine what is fair having taken into account all of the circumstances. There is no automatic entitlement and there is a steer away from this in recent case law.

I am worried my spouse will give away assets what can I do?

It can be a real worry on divorce if the majority, or all, of the family assets are controlled by your spouse. You might worry about them giving assets away, selling them at an undervalue or moving them out of the jurisdiction.

Section 37 Matrimonial Causes act 1973 is a powerful weapon if any of these scenarios should occur.

Setting aside transactions and freezing injunctions

Section 37 gives the court the power to set aside a transaction (un-do it) if it is satisfied that that transaction was made with the intention of defeating the other party’s financial claim on divorce. If the disposition has taken place within the last 3 years and the consequence would be to defeat the financial claim, then the intention is presumed and it is for the other party to show why that was not the case.

The court also has the power under this section to make “freezing orders” which prevent one party from dealing with certain assets until the financial issues on divorce have been resolved. It is also possible in certain circumstances to have a more wide-ranging freezing order.

The general principle is that the court will only protect assets up to the maximum value of your financial claim- and so not 100% of the total assets. This can sometimes be a difficult calculation if you do not know the total extent of the assets and one which requires the input of a family law solicitor.

The need for speed

The key with these types of applications is to act quickly. Sometimes once monies have moved out of the jurisdiction, for example, it may well be difficult to get it back.

It is always better in these circumstances to be proactive rather than reactive.

Often, if there is cause for concern, the first step will be to write to the other party and/ or their solicitors to ask for further information and an undertaking (formal promise) not to do certain things and/ or for monies to be held to the joint order of the parties. If they will not do this this may strengthen any application under section 37 (above) and make the court more inclined to order that they pay the costs of that application.

Having said that, in some circumstances this may do more damage than good as you may “tip-off” the other party about a potential application and they make take the exact action you were hoping to prevent. Careful consideration therefore needs to be given.

What if they just won’t stop spending? 

Section 37, whilst useful, is not always helpful where rather than transferring or disposing of large sums one party is just over-spending on a day-to-day basis.

It is possible, however, to argue that as part of any financial settlement these monies should be “added back” as notional cash which that person still has access to. The general test is whether the court considers that the spending is “reckless or wanton”.

If you are worried about any of the above issues, then you should take advice as soon as possible from one of our specialist divorce and finance solicitors.