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Entries in Family Mediation (9)

Wednesday
Apr192017

The hidden cost of Divorce

If you are separating, issues about tax may not be high on your list of concerns.  Your priority may be whether you can keep your home or, if your home is to be sold, whether you will have enough money to buy somewhere else. However, tax issues could have a significant effect upon your assets and should not be ignored.

Capital Gains Tax

This can be an issue, particularly if you have a number of properties.  We frequently see couples who wish to wait until they have been separated for two years before divorcing.  That can of course be an amicable way of dissolving the marriage, but you need to be aware of potential tax pitfalls.

Transfers between husbands and wives in the tax year of separation can happen on a “no gain no loss” basis, meaning there will be no Capital Gains Tax payable.  This may be difficult to achieve if your separation occurs close to the end of the tax year. 

If transfers of properties, other than the former matrimonial home, do not take place within the tax year of separation then Capital Gains Tax may be payable by the person disposing of their interest to their spouse.  This could lead to a considerable reduction in the assets available to be divided between you.

In relation to the matrimonial home, Main Residence Relief may be available if one party transfers their share to the other, but the disposal must take place within 18 months of the property ceasing to be the other party’s main residence. After that time there are further restrictions if the transfer is to avoid a charge to Capital Gains Tax.

Stamp Duty Land Tax

Once again, there can be issues that you may not have considered, particularly if you intend to wait for a period of time before divorcing.

For example, a couple may separate and the wife may remain living in the matrimonial home, perhaps with the children.  The husband may be in a position to buy his own property and want to do so, rather than paying rent until the time that financial matters are finally resolved.

The husband needs to be aware that he would be acquiring a second property and the purchase of that property is likely to be subject to an additional 3% Stamp Duty Land Tax charge.  On the purchase of a property for £500,000 this would result in Stamp Duty Land Tax of £30,000 rather than £15,000 that would have been payable if the additional charge had not arisen.

It may be possible to reclaim that additional tax payment if that property then becomes the buyer’s main residence within a 3 year period.  However, as can be seen, it will cause a significant increase to the up-front costs involved.

You also need to be aware that a Stamp Duty Land Tax charge applies to owning more than one property whether those properties are located in the UK or worldwide.  Any holiday home owned by you may also cause difficulties.

If you require any further advice regarding divorce or separation please contact Stuart Hughes (stuarthughes@greene-greene.com or call direct on 01284-717493)

The Family Law Department has considerable experience in dealing with cases involving tax issues and are assisted by specialist tax Solicitor Natalie Stoter (nataliestoter@greene-greene.com 01284- 717462)

For more information on the services offered by Greene & Greene Solicitors please visit www.greene-greene.com and follow on Twitter @GreeneGreeneLaw.

Friday
Nov042016

Divorce and the Farming Family

 

 The damaging effects of divorce are often felt more acutely in cases involving farming families: especially so where the farm has been held within one family for generations.

Often farming businesses will involve Partnership or Corporate Structures, land may be co-owned with extended family, land ownership may be within or outside of business structures and various land or property assets may also be held in Trust.  These can all complicate matters.

Typical questions that arise are:

  • How can the assets be divided fairly where a farm has been passed dynastically to one spouse through the generations?
  • What weight will the court apply to the financial and non-financial contributions of the non-owning spouse?
  • Will the court force a sale or transfer of land and property?  

The court’s approach can be unlike other cases and present unique challenges.

The court is tasked with arriving at a fair outcome and must meet the parties’ (and any dependent children’s) reasonable needs. In doing so the court will consider whether the farming family intended that the farm should be passed down through the generations. The court will have to consider whether the farming family can and should retain the farm (in so as far as that is possible) even if that means an overall unequal division of assets. Numerous other factors including the standard of living enjoyed by the parties during the marriage can also be taken into account. 

Funding a settlement may require finance to be raised against the retained farm. Land may need to be sold in order to retain the majority of the farm to pass on to future generations.  Many farming businesses experience cash flow and liquidity issues which can make it difficult (or impossible) for income generated from the farm to satisfactorily meet the needs of two separate households following separation.  

The Family team at Greene & Greene has a wealth of experience and a proven track record of success in farming cases. The team is also able to call upon specialists in the Agricultural Property and Estate Planning teams to deliver creative and bespoke solutions.

Divorces involving family farms are often complex and it is important that if you find yourself in this position you seek the assistance of a lawyer experienced in this area. 

If you require any further advice regarding a divorce involving farm assets then please contact Stuart Hughes (stuarthughes@greene-greene.com or 01284-717493) or Melanie Pilmer (melaniepilmer@greene-greene.com or 01284-717418) who will be pleased to assist you.  For more information on Greene & Greene please visit www.greene-greene.com or follow @greenegreenelaw on Twitter.

 

(Editorial first published in East Anglian Daily Times Rural Review, September 2016)

 

Thursday
Oct152015

Fraud and Non-Disclosure in Divorce: “Back to the Future?”

Marty McFly left 1985 and travelled to 2015 in the film Back to the Future 2.  What does this have to do with fraud and non-disclosure?  Well the Supreme Court also recently “travelled back to 1985”.

Judgment was handed down on 14 October 2015 in the conjoined appeals at the Supreme Court of the cases of Sharland v Sharland and Gohil v Gohil.  In both cases the Court of Appeal had declined to overturn previous decisions despite evidence of fraud and deliberate non-disclosure.

Mr and Mrs Sharland had reached an agreement during the final hearing in their case. Mrs Sharland then later discovered that Mr Sharland had been making arrangements to float his company on the New York Stock Exchange. This was despite Mr Sharland’s evidence to the Court that it was most unlikely a sale or floatation would happen in less than 3 years. Having discovered this information Mrs Sharland appealed. The Court of Appeal said that whilst Mr Sharland’s evidence was seriously misleading and dishonest the non-disclosure was not significant enough for the Court to have arrived at a different outcome.

The Supreme Court has allowed Mrs Sharland’s appeal and the case will return for a further hearing.  As a result of Mr Sharland’s non-disclosure the previous agreement does not stand and Mrs Sharland may yet receive further funds from her husband.

In arriving at its decision the Court repeated the position first established back in 1985 in a case Livesey (formerly Jenkins) v Jenkins that the duty remains with the disclosing party to provide full and frank disclosure to the Court.

Mr and Mrs Gohil settled their case and entered into a consent order. The order included a recital that Mrs Gohil believed her husband had not provided full and frank disclosure of his financial circumstances. Mr Gohil had disclosed he was in debt totaling £311,512, but he was later convicted for money laundering and fraud valued at over $57 million. The Supreme Court allowed Mrs Gohil’s appeal and returned her case for further hearing.

So the message is clear, if you lie about or misrepresent your assets and fail to make “full financial disclosure” then the Court may overturn an agreement reached. Non-disclosers beware!

The Family Team at Greene & Greene have a wealth of experience in advising in relation to the financial aspects of divorce and separation.  All members of the team are trained Collaborative Lawyers.  Greene & Greene also offer a Family Mediation Service and the team has significant experience in drafting Nuptial Agreements.  For further information contact Melanie Pilmer on 01284 717 418 or melaniepilmer@greene-greene.com.  To find out more about Greene & Greene go to www.greene-greene.com and follow @greenegreenelaw. 

Thursday
Jun182015

Farming Daughter Sues Parents for £1.3million

The High Court in Cardiff recently awarded £1.3 million to Eirian Davies to settle her "proprietary estoppel" claim on her parents' farm.  Proprietary estoppel is a legal claim used to assert rights, often to land but also to other assets, and usually in the absence of proper documentary evidence.

Miss Davies worked for the farming business for little or no payment for many years, on the understanding that the whole enterprise would eventually pass to her.  She has two sisters, but both had moved away to follow other careers.

By 2008, Miss Davies' parents, Tegwyn and Mary Davies, had agreed to hand over almost half of the business to her.  Documents were prepared to implement the agreement but were never signed.  Instead, the parents agreed to prepare Wills leaving Miss Davies the land and buildings, and a share in the company.

Unfortunately a family dispute arose.  In 2009 Mr and Mrs Davies decided to amend their Wills putting the farm into a trust with the rest of their estate split between the three daughters equally.  Family relations continued to deteriorate, leading to Miss Davies' departure from the business in 2012.  She then sued.

In 2013 the High Court upheld Miss Davies’ claim.  Her parents appealed, but the Court of Appeal rejected their appeal, except on one relatively minor point.  The court directed that Miss Davies' recompense could be settled either by granting her a share in the farm or by a cash payment.

The Court of Appeal then invited the parties to negotiate a settlement as to the amount of Miss Davies' interest without further litigation, but this proved impossible.  Miss Davies therefore returned to the Cardiff High Court, which, it is reported, granted her £1.3 million in compensation – around one-third of the business.  The amount was described as sufficient for her to start a new farming business of her own.

Proprietary estoppel is an unusual but potentially very useful basis for making a claim.  It is however a difficult and expensive action to mount. 

Farming families are particular vulnerable to such claims because of the huge increase in land values.  The Davies’ case has so far spent five years going through the court systems and involved thousands of pounds of legal fees.  Unfortunately family disputes do occur.  Properly drafted documents setting out the intentions and wishes of the parties at the outset could well have prevented this.

For further information or advice please contact Wayne Perrin at Greene & Greene on 01284 717454 or email wayneperrin@greene-greene.com.  For more details about Greene & Greene solicitors please visit www.greene-greene.com and follow us on Twitter @greenegreenelaw.

This article was originally published in the East Anglian Daily Times Rural Review Feature on 28 March 2015.

Thursday
Feb132014

A Fresh Approach to Divorce Funding

The law changed in 2013 to enable a spouse to obtain an Order compelling the other to make a payment to them in respect of their legal costs. This is called a “Legal Services Order”.

Ideally you will be able to resolve financial matters swiftly and cost effectively with the help of your Lawyer and possibly assistance from a Mediator.  If not the costs of proceedings can cause great anxiety.  The change in the law is particularly helpful for the weaker financial party who believes that they cannot afford to obtain good quality legal representation.

These changes became effective at the same time as Legal Aid was largely abolished (save in certain exceptional cases), however, please note that Legal Aid is still available for Mediation.

So, how can you obtain a Legal Services Order?  The Court cannot make a Legal Services Order unless it is satisfied that without the payment from one spouse, the other would not reasonably be able to obtain legal services. The spouse applying to the Court has to demonstrate that they cannot obtain a loan to pay for their legal fees, that their Solicitors will not enter into a deferred payment arrangement and meet certain other conditions which conclude also with the possible effect that making an Order would have on the paying party.

In addition to the change in law a number of commercial organisations have also begun to provide funding loans for legal costs.

If you believe that you are trapped because you have insufficient funds to pay legal fees then a Legal Services Order (or the availability of funding loans) may provide you with the help you need.

For further information contact Stuart directly on 01284 717493 ~ stuarthughes@greene-greene.com.

Stuart Hughes - 01284 717493  |  Kate Chandler - 01284 717513  |  Juliet Harvey - 01284 717448

Stuart has worked for Greene & Greene Solicitors since July 2012, joining the partnership in December 2013. He specialises in Family Law with considerable experience dealing with all aspects of relationship breakdown, divorce, separation, finances and disputes concerning children.

Also find Stuart on:      Google +        LinkedIn         Twitter

Thursday
Jan092014

THE DEATH OF THE CSA

As from 29th July 2013, the Child Support Agency stopped accepting new cases. The much maligned CSA is now in the process of winding down. Notices will be sent out from April 2014 to those with assessments under the old regime (CS1 and CS2) confirming that their cases will be closed. Those cases will be migrated over to the new “CS3” system, which will be administered by the Child Maintenance Service.

CS3 is different in a number of respects:

  1. The simple calculation of 15%, 20% or 25% of net income will be abolished. CS3 involves much more complicated calculations based on gross income (however, pension contributions can be deducted).
  2. The new “basic rate” calculation first looks at gross income up to £800.00 per week and then calculates it on varying rates dependent on how many children there are. If the paying party has gross income of between £800-£3,000.00 per week, a deduction is then made from that “additional” income at the basic rate. The resulting figure is then reduced for any other children living in the paying parent’s household (including children of the new partner/step children) and for shared care. No more simple calculations!
  3. When a paying parent earns in excess of £156,000.00 gross per annum, the parent with care can apply to the Court for a “top up” in addition to the Child Maintenance assessed by the Child Maintenance Service.
  4. The new system will use information lodged with HMRC.
  5. The most widely reported change has been that the Child Maintenance Service proposes to charge both parents for using its facilities. Although the final details of the charging structure have not yet been approved, it is believed that all applicants will pay a £20.00 fee. The service will then impose a 20% collection charge which will be levied against the paying parent in addition to the Child Maintenance payments. The service will also deduct 4% of the maintenance received by the “resident” parent. This will be payable on all ongoing payments.
  6. The Government has been promoting its Child Maintenance “options” programme which encourages parents to make their own agreements regarding Child Support. Given the imposition of collection charges upon both parents, there is a significant financial advantage, to agree Child Maintenance.

Juliet has been a part of the Greene & Greene firm since joining in 1988. Dealing primarily with family matters and child related disputes, Juliet’s recent work includes dealing with divorce, cohabitation disputes and child cases following separation of parents.

Also find Juliet on:      Google +        LinkedIn         Twitter

The Family Team at Greene & Greene can advise on the likely amount that the Child Maintenance Service would order under the new scheme and have significant experience in negotiating Maintenance Agreements. For further information, please contact Kate Chandler - 01284 717513 | Stuart Hughes - 01284 717493 |