Family Law Cafe | What kind of financial orders can the divorce court make?

Back in January we reported here about a survey carried out by the consumer magazine Which?, that found that only 15% of divorcing couples include pensions in their financial settlement, and that 58% of the people they surveyed said pensions weren’t even discussed within their divorce proceedings.

Now another survey has made similar worrying findings, suggesting that many people are missing out on their pension entitlement when they get divorced.

The survey, carried out on behalf of the insurance company Aviva, found that one in six divorced people said they did not realise their pension could be affected by splitting up, and that more than a third said they made no claim on their former partner’s pension.

The survey, of more than 1,000 divorced people, also found that 8% of divorcees do not have their own pension savings, having been relying on their partner to finance their retirement. As a result of divorce, 19% say they will be, or are, significantly worse off in retirement.

Commenting upon the survey, the head of savings and retirement at Aviva said:

“It’s critical that, as part of the separation process, couples take time to think about and discuss one of their single most valuable assets – their pension.

“It’s common that one party will have significant pension provision, and the other party may have little or none. Clearly, this could be a relevant factor in any divorce.”

Invisible asset

So why are people missing out on their pension entitlement?

Perhaps the single biggest reason is that a pension is an ‘invisible asset’. Unlike the former matrimonial home, the existence and value of which is obvious, pensions cannot be seen. They exist only ‘on paper’, and often one spouse will have little, or even no, knowledge of the other spouse’s pension.

Another problem with pensions is that people often have no idea of their true value, often underestimating their worth by a huge amount. But pensions can be very valuable, and can easily be worth hundreds of thousands of pounds, making them usually the second most valuable asset on divorce, after the matrimonial home.

So as we stated in our previous post, it is absolutely essential that you take proper expert legal and financial advice upon your possible entitlement to a share of your spouse’s pension. We can find you an expert lawyer that works with you on our digital platform, and can also find you a financial expert to advise you. For more information, call us on 020 3904 0506, or click here, and fill in the form.

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Last week the consumer magazine Which? reported the result of a survey its members carried out, that found that only 15% of divorcing couples include pensions in their financial settlement, and that 58% of the people they surveyed said pensions weren’t even discussed within their divorce proceedings.

The findings have been met with some surprise within the family law community. Certainly, family lawyers should always advise their clients of the importance of including pensions in divorce settlements. Pensions are one of the most valuable assets in many divorces, and anyone entering into a settlement that doesn’t take them into account could be missing out very significantly.

Whether or not the findings indicate the true picture nationwide, they do seem to show that more needs to be done to ensure that those going through a divorce are aware of the importance of pensions, and of their possible entitlement in relation to them.

In particular they should ensure that before they enter into any divorce settlement they first require their spouse to make full disclosure of the value of all of their financial assets, including pensions.

Pensions are usually valued by reference to their ‘cash equivalent transfer value’, being the amount that could be transferred from the pension into another pension fund. To give an idea of the possible value of pensions, it is not at all unusual for a pension to have a transfer value running into several hundred thousand pounds.

Pensions can be dealt with on divorce in one of three ways: by an ‘offsetting’ arrangement, whereby the party holding the pension keeps it, but the other party receives more of the other assets to compensate them; by a pension attachment order, which states that one party will receive part of the other party’s pension, when the other party receives it; or, most commonly, by a pension sharing order, which transfers all or part of one party’s pension into a pension belonging to the other party.

It is absolutely essential that you take proper expert legal and financial advice upon which of these arrangements is best for you, and how exactly to implement it. We can find you an expert lawyer that works with you on our digital platform, and can also find you a financial expert to advise you. For more information, call us on 020 3904 0506, or click here, and fill in the form.

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Family Law Café offers a modern, agile and compassionate approach to family law, giving you a helping hand when you need it and guiding you through the complexities of this difficult and stressful area. Family Law Cafe is your start-point for getting matters sorted with strategy, support and security.

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It has recently been reported in the national media that there was a dramatic drop in the number of pension sharing orders made by the courts last year: 10,500, down from 15,000 in 2019, and the lowest number in ten years.

There may be a number of reasons why the figure was so low last year.

Some of these reasons may be of no great concern, such as the temporary effect of the pandemic reducing the number of cases dealt with by the courts, more wives having their own pensions and not needing a share of their spouse’s pension, and increased house prices resulting in more people taking a greater share of the matrimonial home, rather than of their spouse’s pension (although there have also been significant recent increases in the values of pensions).

But there could be a more worrying reason: that more people are doing their own divorce without a lawyer to advise them upon their entitlement to a share of their spouse’s pension, thereby missing out upon an extremely valuable and important asset.

Just to recap for the benefit of those who don’t know, a pension sharing order is an order transferring all or part of one spouse’s pension into a pension belonging to the other spouse. A common arrangement is for pensions to be ‘equalised’ between the spouses, so that each spouse ends up with a similar pension entitlement.

The importance of pension sharing on divorce comes into focus when one realises that pensions are often the second most valuable asset on divorce, with only the former matrimonial home being worth more. And it is still often the case that one spouse, usually the husband, has far greater pension provision than the other, leaving the other spouse at risk of having to manage with far less income in retirement.

It is therefore essential that anyone going through divorce is advised as to their entitlement regarding pensions. Obviously, such advice comes at a cost, but that cost could easily be outweighed by the value of a pension share.

We can find you an expert family lawyer to provide you with the advice you need, working with you on our digital platform. For more information, call us on 020 3904 0506, or click here, and fill in the form.

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It goes without saying that pensions are one of the most important assets on divorce. In fact, in many cases they are one of the most valuable assets, often second only to the former matrimonial home.

It is therefore essential that anyone going through divorce fully understands the issue of pension rights, and what they are entitled to.

But sadly not everyone does understand, with the result that many do not receive their full entitlement.

This applies especially to wives, as demonstrated recently by research undertaken on behalf of the pension provider Legal & General.

The research found that wives are significantly more likely to waive their rights to their husband’s pension as part of their divorce, with 28 per cent of wives doing this, compared to 19 per cent of husbands.

Legal & General rightly say that this could have a significant long-term impact upon wives, particularly as they tend to have less personal pension wealth.

According to the most recent findings from the Office for National Statistics, men currently below the State Pension age have higher (£25,300) median active pension wealth than women (£20,000), and for those aged 65 years and over, median pension wealth for pensions in payment for men is double that for women (£223,933 for men against £112,967 for women).

Unsurprisingly, the research showed that wives are more likely to face financial struggle post-divorce (31 per cent, against 21% of husbands), and worry about the impact on their retirement (16% per cent, against 10% of husbands).

These worrying figures indicate the vital importance of obtaining the best legal and financial advice regarding the issue of pensions on divorce. Clearly wives, especially those at or approaching retirement age, should not be disadvantaged in this way.

In particular, wives need to know the true financial effect of waiving their rights to their husband’s pension, rather than seeking a share of the pension. This is not a step that should be taken without proper advice.

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All divorcing wives (and indeed husbands!) should seek expert legal and financial advice regarding pension rights. We can find you an expert that works with you on our digital platform. For more information, call us on 020 3904 0506, or click here, and fill in the form.

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Family Law Cafe offers a modern, agile and compassionate approach to family law, giving you a helping hand when you need it and guiding you through the complexities of this difficult and stressful area. Family Law Cafe is your start-point for getting matters sorted with strategy, support and security.

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Divorcees who plan to retire in 2018 can expect their yearly income to drop by £3,800 compared to those who’ve never divorced, according to new research from Prudential. For those retiring in 2018, expected annual retirement income is £17,600 for those who have previously been divorced, compared with £21,400 for those who have never experienced a marriage break up.

The research also found that those who have been divorced are more likely to retire in debt than those who have never been divorced, and that divorcees are more likely to have no pension savings at all when they retire than those who haven’t been through a divorce.

Clare Moffat, pensions specialist at Prudential, said:

“Divorce can have a huge financial impact on people’s lives. Many may not realise that the cost of divorce can last well into retirement, as divorcees expect retirement incomes of nearly £4,000 less each year than those who have never been divorced.

“The stress of getting through a divorce can mean people understandably focus on the immediate priorities like living arrangements and childcare but a pension fund and income in retirement should also be a priority. A pension fund is one of the most complex assets a couple will have to split so anyone going through a divorce should seek legal and financial advice to help them do so. For many more couples, the increase in value of pensions mean that it is often the largest asset. It goes without saying that advice is crucial as early as possible in any separation where couples have joint assets.”

Family Law Cafe strongly agrees that anyone going through a divorce should seek the best legal and financial advice available, as soon as possible. Family Law Cafe can help you find the advice you need. To contact us click the Contact link above and fill in the form, or call us on 020 3904 0506.

For an outline of how pensions are dealt with on divorce, see this post.

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Seven in ten couples don’t consider pensions during divorce proceedings, leaving women
short-changed by £5 billion every year, according to new research by the life, pensions and investment company Scottish Widows.

The research shows that more than half of married people (56%) would fight for a fair share of any jointly owned property, and 36% would want to split their combined savings, but fewer than one in 10 (9%) claim they want a fair share of pensions. This is despite the average married couple’s retirement pot totalling £132,000 – more than five times the average UK salary. In fact, say Scottish Widows, more married people would be concerned about losing a pet during a settlement than sharing a pension (13% vs 9%).

The research also indicates that almost half of women (48%) have no idea what happens to pensions when a couple gets divorced, a fifth (22%) presume each partner keeps their own pension and 15% believe they are split 50-50, no matter what the circumstances.

Scottish Widows say that they would like to see a Government-led education campaign to address this issue, and help men and women better understand the legalities.

You can read the report here.

If you are going through divorce it is essential that you receive the best possible advice regarding the issue of pensions. Family Law Cafe will ensure that you receive that advice, not just from lawyers but also from financial experts.To contact us click the Contact link above and fill in the form, or call us on 020 3904 0506.

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Confused by the jargon? Family law, just like all other areas of law, is full of legal jargon, so here are some plain English definitions for some of the terms that you are likely to come across if you are involved in family court proceedings:

Arbitration – A process whereby the parties agree that their case will be decided by a trained arbitrator. For further details, see this post.

Ancillary Relief – An older term for Financial Remedies – see below.

Cafcass – The ‘Children and Family Court Advisory and Support Service’ – look after the interests of children involved in family court proceedings.

Child Arrangements Order – An order setting out arrangements relating to with whom a child is to live, spend time or otherwise have contact, and when a child is to live, spend time or otherwise have contact with any person. For further details, see this post.

Clean Break – A financial settlement that dismisses all financial claims (in particular for maintenance) by either spouse against the other, thus achieving a ‘clean break’ between the parties.

Consent Order – A court order made with the agreement of both parties. Usually refers to an order setting out an agreed financial settlement following divorce. Note that the order must still be approved by the court, which is not obliged to approve it merely because the parties agree.

Co-Respondent – The person named by the Petitioner as having committed adultery with the Respondent. The Co-Respondent is a party to the divorce proceedings.

Cross Petition – A document filed by a Respondent to a divorce who wishes to defend the divorce and petition themselves, alleging that the breakdown of the marriage was due to a different reason to that alleged by the Petitioner.

Decree Absolute – The order finalising the divorce.

Decree Nisi – The order stating that the Petitioner (or the Respondent, in the case of a divorce proceeding on a cross petition) is entitled to the divorce.

Desertion – Separation without consent or good reason, and where the deserting spouse has no intention of returning. Desertion is actually very rare.

Directions – Orders of the court, usually setting out how the case will proceed.

Financial Dispute Resolution Appointment – A hearing within an financial remedies application, at which the parties should use their best endeavours to settle the matter by agreement, with the help of the judge.

Financial Remedies – The financial settlement in connection with divorce proceedings.

Injunction – An order requiring a party to do, or to refrain from doing, certain acts. In family law, most commonly refers to orders restraining domestic violence or abuse.

Irretrievable Breakdown (of marriage) – The ground for divorce. Must be shown by proving adultery, unreasonable behaviour (see below), two years’ desertion (see above), two years’ separation with the other party’s consent, or five years’ separation. For further details, see this post.

MIAM – A ‘Mediation Information and Assessment Meeting’. A meeting at which it is assessed whether the case is suitable for mediation (see below). In most cases, it is necessary to attend a MIAM before making an application to the court.

Mediation – A process whereby a trained mediator will help couples agree arrangements for children and/or a financial settlement.

Non-Resident Parent (‘NRP’) – The parent with whom the child or children is/are not residing. A term usually used in connection with child support.

Parental Responsibility – For an explanation of what parental responsibility means, see this post, and for details of how it is acquired, see this post.

Parent With Care (‘PWC’) – The parent with whom the child or children is/are living. A term usually used in connection with child support.

Periodical payments – Another term for maintenance.

Pension Sharing Order – An order transferring all or part of one party’s pension to the other party. For further information, see this post.

Pension Attachment Order – An order stating that one party will receive part of the other party’s pension when the other party receives it. Again, for further information, see this post.

Petitioner – The party who issues the divorce proceedings.

Property Adjustment Order – An order adjusting the ownership of matrimonial property, for example increasing a party’s share in the matrimonial home from 50% to 75%.

Respondent – The party who did not issue the proceedings. Note that the Respondent to an application for financial remedies could also be the Petitioner in the divorce proceedings.

Unreasonable Behaviour – Behaviour by one party such that the other party cannot reasonably be expected to live with them. This is one of the five ways of proving that the marriage has irretrievably broken down, for the purpose of divorce proceedings. For further details, see this post.

Without Prejudice – Words used in an offer of settlement to ensure that the offer cannot be shown to the court if it is not accepted. If the offer is accepted the protection of ‘without prejudice’ is gone.

Of course, if you are in any doubt as to what a word or phrase means, then you should seek legal advice.

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It may have attracted media headlines because of its connection with a ‘hell-raising’ earl who was notorious for being Britain’s “most-married peer”, but the divorce of The Honourable Henry Wyndham Wodehouse raises some important questions regarding trusts and pensions.

Henry Wodehouse is the son of Lord Wodehouse, the fourth earl of Kimberley, who was married six times and who was said to have “frittered away millions through high living and trips to the divorce courts”, as a result of which he had to sell the family seat, Kimberley Hall in Norfolk, prior to his death in 2002. Henry, however, has lived rather more modestly, sharing a semi-detached house with his wife, and having worked as a Metropolitan Police officer.

In the course of his divorce proceedings Mr Wodehouse was ordered to pay a lump sum of £90,000 to his wife, who was also awarded a half share of his police pension. The order stipulated that if he failed to pay the lump sum the money should come out of a £600,000 trust fund his father left for the family.

Mr Wodehouse sought permission to appeal against the order. He claims that the lump sum is more than the entire liquid assets that he and his wife had when they separated, and that the court did not have the power to make an order against the trust. In any event, he says that the trust is wholly discretionary, so he has no entitlement to any capital from it. As to the pension sharing order, he claims that his wife is not entitled to a half share, as it was built up before they even met.

The reports indicate that Lord Justice McFarlane has given permission for Mr Wodehouse to appeal to the Court of Appeal on the trust point, although it is not clear whether he has also been given permission to appeal on the pension point. It would be useful for the Court of Appeal to provide further clarity on both points.

Whatever, Family Law Cafe looks forward with interest to the hearing of the appeal, the date for which has not yet been fixed.

Image of Kimberley Hall by Gareth Hughes [CC BY-SA 2.0], via Wikimedia Commons

As we have seen, one of the ways that you can show that a marriage has irretrievably broken down for the purpose of divorce proceedings is by proving that you and the other party (the ‘respondent’) have been separated for five years. There is no real defence to a five year separation divorce petition (unless the respondent can show that they have not been separated for five years). However, the respondent may oppose the divorce on the ground that the dissolution of the marriage will result in grave financial or other hardship to them, and that it would in all the circumstances be wrong to dissolve the marriage.

When a divorce is opposed on this basis the court must consider all the circumstances, including the conduct of the parties to the marriage and the interests of those parties and of any children or other persons concerned. If it is then of the opinion that the dissolution of the marriage will result in grave financial or other hardship to the respondent, and that it would in all the circumstances be wrong to dissolve the marriage, it will dismiss the divorce petition.

The question, then, is: what constitutes ‘grave hardship’? Most of the reported cases relate to loss of benefit under the other party’s pension. However, such cases are less likely now that the court has power to deal with pensions on divorce. Another type of hardship is where the divorce causes the respondent to be regarded as a social outcast in their community, although this is very difficult to establish.

It is very unusual for a divorce to be refused on the grounds that it will cause grave hardship to the respondent. However, respondents to separation divorce cases who are worried about the financial effect of the divorce upon them can also ask the court to delay the divorce until it has considered their financial position as it will be after the divorce. For further information about this, see this post.

If you want to oppose a five year separation divorce on the grounds of grave hardship then you should seek expert legal advice. Family Law Café can help you find this. To contact us click the Contact link above and fill in the form, or call us on 020 3904 0506.

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After the matrimonial home, pensions are usually the most valuable assets on divorce. How are they dealt with in the divorce settlement?

In general the court will deal with pensions in one of three ways:

• By an ‘offsetting’ arrangement, whereby the party with the pension will keep it and the other party will be compensated by receiving a greater share of other assets. Obviously, this is only possible where there are sufficient other assets available.

• By a pension attachment order, whereby one party will receive part of the other party’s pension when the other party receives it. Note that the receiving party has no control over when the other party takes their pension.

• By a pension sharing order. Under such an order, a proportion of the pension fund is immediately transferred into a pension fund in the name of the other spouse. Note that the other spouse cannot receive this payment as cash, but only as a transfer into a pension in their name. Note also that the basic State Pension cannot be shared, although the additional State Pension can.

The amount that the non pension holder should receive, whether by way of offsetting, attachment or sharing, depends upon the facts of the case, including when the pension was accumulated. For example, if it was accumulated entirely during the marriage then they might expect to receive half, whereas if the other party had the pension prior to the marriage then the non pension holder may only be entitled to a share of the proportion of the pension that was accumulated after the marriage took place.

To ascertain how much the pension is worth the court will require the pension holder to obtain a ‘cash equivalent transfer value’ of the pension from their pension provider. That is usually the figure that the court will use when deciding how much the non pension holder spouse should receive by way of offsetting or pension sharing.

If you would like any further advice about pensions on divorce, Family Law Café can help. To contact us click the Contact link above and fill in the form, or call us on 020 3904 0506.

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It has been well documented that the number of people divorcing in later life has been increasing in recent years, when divorce rates overall have generally been falling. What is behind the rise of the so-called ‘silver splitter’?

Before answering that question, let’s have a look at the statistics. Figures from the Office for National Statistics show that divorce amongst people aged 60 and over in England and Wales has been rising since the 1990s. For example, in 2011 nearly 9,500 men in this age group divorced, an increase of almost three-quarters compared with 20 years earlier. The trend for women is similar.

What is behind these statistics? Well, several reasons have been put forward.

The first reason is that life expectancy has increased – there are simply more people aged 60 and over living in England and Wales. In 1991, men aged 60 in England and Wales were expected to live a further 21 years. This increased to 26 years for men aged 60 in 2010. Similar rises have been observed for women. Accordingly, even with a small chance of divorce during each year of marriage, marriages are now more likely to end in divorce and less likely to end in the death of one spouse than they were in 1991.

Another possible reason is a loss of stigma in being divorced. In 1991, there were 404,000 divorced people aged 60 and over in England and Wales. That figure increased three-fold to 1.3 million by 2010. As it becomes more common to be divorced, there are fewer stigmas attached.

A third possible reason is increasing participation in the labour market by women. The employment rate of women aged 16 to 64 rose from 53% in 1971 to 66% in 2012. This means that women have become more financially independent and are more likely to have built up their own pensions. Therefore in general women are now more able to support themselves outside of marriage than in the past.

Whatever the reasons for the increase, there can be particular problems getting divorced in later life, for example regarding pension arrangements. If you are aged over 60 and are involved in, or are contemplating, divorce then you should seek specialist advice. Family Law Café can help you find this – to contact us click the Contact link above and fill in the form, or call us on 0208 768 2278.

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There are a number of possible financial orders that the court can make on divorce. The most common types of orders are the following:

⋅ Maintenance orders, also called ‘periodical payments’ orders, requiring one spouse to pay maintenance to the other spouse. The maintenance may be for a fixed time, or until the receiving spouse should remarry.

⋅ Lump sum orders, requiring one spouse to pay a lump sum of money to the other spouse. The order will state by when the money should be paid.

⋅ Property adjustment orders, adjusting the ownership of property, for example transferring the former matrimonial home from the joint names of both parties into the sole name of one of the parties.

⋅ Orders for sale of property, for example ordering that the former matrimonial home should be sold. The court will also order what should happen to the net proceeds of sale of the property.

⋅ Pension sharing orders, ordering that all or part of one party’s pension should be transferred into a pension in the other party’s name.

Note that the court can also make a child maintenance order, where the maintenance is agreed. If the maintenance is not agreed then the parent with care of the children will have to make a child support maintenance application to the Child Maintenance Service.

If you would like any further advice about financial orders on divorce, or about what orders may be appropriate in your case, Family Law Café can help. To contact us click the Contact link above and fill in the form, or call us on 020 3904 0506.

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