According to the Office for National Statistics, in June 2016, 3.6 million households in Britain held wealth of more than £1M in June 2016. There are about 27.8 million UK households. So what follows could apply to as many as 1 in 8 UK households, at least, those households where one spouse (or civil partner) is considering ending the marriage.
There are pros and cons to being that wealthy when divorce proceedings start. The most obvious advantage is: there should be enough to go around. You should be able to house two new families from the resources of the original family unit. But on the downside: there is more to argue over. Big things can be hard to value. Sometimes wealth comprises a string of assets (e.g., several rental properties); things can get rather complicated, if a couple argues about what every asset is worth, or where the money came from in the first place.
Appoint a lawyer who is on your side, but has a conciliatory approach
All good family lawyers will tell you, that what makes many divorce settlements difficult, is prolonged/unnecessary conflict. Where someone is able to consider the costs of , versus the benefits of, continuing a particular argument, they often avoid long/intense legal conflict. So the first step is: appoint a lawyer who is on your side, but has a conciliatory approach. Make sure they understand what a good compromise is. Compromise is not simply repeating what you want in the hope that the other person will change their mind. It involves two people, each giving up something they would ideally prefer, to achieve an outcome that is workable.
The disclosure process
Having selected the right lawyer, the couple should go through the process of disclosure. It sets the right tone if that is done voluntarily, e.g. within mediation, or collaborative law. It involves compiling a list of what that couple own, owe, earn and spend. At this point, they may not agree, what their assets are worth. Let us take the example of houses. A and B own a sting of rental properties. There is no point A and B arguing between themselves, what these properties are worth. Early on, they should instruct a ‘single joint expert’ in line with the court’s rules. The expert will charge a fee, but (s)he is under a legal duty both to provide an accurate valuation, and to be impartial. It is no longer right to turn up at Court with the husband’s expert, and the wife’s expert, arguing.
Hiding assets can and will likely back-fire on you
Disclosure is based on openness; do not try to be too clever about hiding things. If things are unclear, your ‘ex’ may simply ask more and more questions, delaying settlement and adding to cost. Courts have the power to force disclosure. They can even reverse transactions that have been done intentionally to put property out of the other party’s reach. So there is no point transferring assets to a family member/related company, and saying ‘I do not own that asset anymore’.
It’s not about who acquired the property or who did more school runs
Couples often forget, that Divorce Judges do not pay much attention to where property came from, or whose name is on the property register etc. They are much more concerned with need. So couples should be encouraged when settling, to come up with outcomes that leave each of them properly housed and provided for. A Judge is not going to examine in too much detail (if at all), who earnt more, who cooked more meals, who did more school runs etc. during the marriage.
Don’t forget about the Tax Man – consult a good tax accountant
Valuers are not the only experts that are needed. Divorce, and the transfer/sale of assets, involves taxes. Consider particularly the application of capital gains tax. There are some exemptions from CGT, when you dispose of a family home. Those exemptions do not apply to company shares, or investment property. Get specialist tax advice from an accountant, on what tax you might have to pay when you divide your family’s assets. You need to know what you will end up with ‘net’ after the tax man has taken his bit.
How Hopkins Solicitors Can Help You
As a progressive law firm we understand, that these cases are not only expensive in terms of legal fees, they can take up valuable time (which would often be better spent on your business or family), and can be really upsetting. To that end we promote Collaborative Law. You can discuss what that means, and any of the issues raised above, during your initial appointment with us. We offer an initial consultation for a fixed fee of only £180 (inc VAT), during which we will discuss your personal circumstances and what outcome you would like to achieve. Afterwards you will receive from us: detailed written advice on the law, potential costs, what options you have and our professional legal recommendations on what to do next.
For more information on either collaborative law or the issues raised in this article, please contact David Winnett at our Nottingham office on 0115 9068 078 or email him directly at email@example.com
Alternatively our highly experienced Family Law Team are located across our Nottinghamshire offices in Mansfield, Sutton and Kirkby and they can be contacted on 01623468468 or via the web enquiry form below.Request a Callback
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