Soila from The Divorce Magazine had the opportunity to interview Karen Agnew-Griffith of Woolley & Co. Solicitors about Divorce, Pensions and Financial Settlement or the Financial Order.
How important has the pension become in today’s divorce cases in view of the Wyatt vs Vince divorce court case?
Karen gave us a quick summary of the proceedings in the Wyatt vs Vince case. She explained that they were married but it wasn’t a long marriage and they had one child. They divorced in the early 90s and at the time of divorce they had no assests at all.
They separated, he went and she stayed at home living in quite poor circumstances, raising the child without any financial support from him.
20 + years later, he has made a fortune in wind farms and is now a mulitmillionaire. She on the other hand, is still living in very poor circumstances and as she has raised the child of the marriage without financial support and is saying she now needs help.
At the time of their divorce those many years ago there was no financial settlement of any description.
The courts have now agreed in fact that she is owed but nothing like the amount that she’s expecting.
So what does it means now for couples getting divorced today or those who got divorced a few years ago and had no financial settlement?
Karen explains that the situation hasn’t changed drastically in as much as family lawyers, divorce courts and judges have always said to clients that they should try to resolve financial order settlements and claims at the time of their divorce process.
Karen has had situations where financial order claims have been made so many years after a divorce involving multiples of millions. So there’s always been that situation there.
What’s remarkable about this case is that it wasn’t a long marriage at the time of the divorce there were no assests and this is many, many years later. But Karen thinks this case is going to be treated in the same way as any other.
The facts of the case are always unique and the uniqueness of this particular situation is his remarkable wealth, her remarkable poverty and the fact that she did make a contribution something the has been taken into account. She made a contribution in raising that child without financial support from the father.
What does “make a contribution” actually entail? What does it mean?
It can be anything, Karen explains that she had a case whereby a mother lived in a property that was in joint names. Husband left that property, never paid for its upkeep, never paid anything towards the mortgage and 20 years later has come back saying, “Well I know you paid the mortgage off now I’d like to sell.”
The husband’s view then was, it’s the wife’s payment of the mortgage during that 20 years, it was the wife’s contribution in maintaining the property that has meant the property is now availalbe to be sold.
So in that particular case what the judge did was that he asked us to secure a valuation to what the property would have been worth at the date of separation and gave the wife all of the growth on the property up to that point and half of the value of the property at the point of separation.
So contribution can be something like looking after a property or where a parent who is looking after the children post-separation while the other parent who is not looking after the children day-to-day is able to work perhaps full-time and pursue a career.
In the meantime, the other parent with the care of the children, looking after the child in school holidays, looking after the children when they’re sick, perhaps cannot pursue a career and is left with a more lowly paid less of a career opportunity type situation.
So, the parent who is looking after the children is making a contrtibution in that way and quite often in a divorce you will quantify what total assets are and you will give the parent with the children whether it’s husband or wife you will give them an extra few percentage of the total assets.
When it comes to divorce and pensions, divorce hasn’t changed and pensions haven’t changed either. They’ve always been very valuable before the 2000s and since it’s just that peope are now aware.
People are living longer, they are suddenly aware that they are going to have a poor retirement if they havent’ got a decent pension fund. The value of the state pension has fallen. We’ve had a lot of years of opting out so that there’s less additoinal state pension and people generally have been untrusting of pensions and have invested less in pension pots you know in the last 15 years.
We have the situation whereby government workers, civil servants, nurses, doctors, teachers, members of the armed forces, police officers, firefighters, they’ve all had defined benefits final salary schemes and those are worth vast sums often vastly more than the value of any home that the parties own. So and wives are beginning to understand that they are certainly going to live as long as their husbands possibly longer and they need that retirement. They need those funds.
So when it comes to divorce and pensions and property, I asked Karen, pension or property?
She explained that one the court would say, the property, the money in the property is what we call a liquid asset you could sell it go out and buy lots of sweets.
With the pension, up until the recent changes, it was very difficult to cash it in and it was regarded as an illiquid asset.
The recent changes means that there is more liquidity in a pension. Realistically you’re only going to take £30,000 because after that the tax you would pay is punitive. So there’s a little bit more liquidity in a pension, but no frankly you need both. Buy a smaller house and have a pension.
What role does the financial order have to play in a divorce process and divorce settlement?
What is more important, having the matrimonial home or a share in the pension (pension sharing in divorce).
When coping with divorce and looking at divorce settlements, what do both partners need to be aware off with regards to pensions especially if you’re a teacher, firefighter, police officer etc. How would the pension sharing be an important factor in your divorce?
How important is it to reach a financial order?
As you go through your divorce process, don’t forget about completing all your divorce papers including those that deal with your financial settlement or financial order.
Ask divorce lawyers about the financial order and how to go about it all.
How will your divorce affect your pension? Is pension sharing a must do?
If you would like to contact Karen – 01842779905 – www.family-lawfirm.co.uk