Can an ex-spouse still go after your assets years after divorce? STEPHEN GOLD explains

Stephen Gold is a retired choose and writer who has written in style collection for That is Cash on learn how to be a profitable executor, writing a will, chapter, shopper rights and authorized disputes.

Partially one among his newest information, he defined the bottom guidelines courts observe to resolve how funds are cut up in a divorce, and upkeep funds to exes and youngsters.

At this time, he seems at pension sharing, belated purposes to divide funds, remarriage and tax.

The court docket should have a look at any pension rights held by the events, even when they aren’t going to show into money within the foreseeable future.

It can additionally take note of any loss beneath the pension scheme which a celebration could undergo due to the authorized finish of the connection.

An instance is rights the pension holder’s widow would have loved had she nonetheless been married to them on their loss of life as a substitute of divorced and so not the widow.

However it might be that neither celebration makes a court docket software for monetary reduction.

Maybe the celebration with none or an identical pension is unaware of what the court docket might give them. Or the existence of the pension is perhaps hidden from the opposite celebration and so no court docket software is made for that cause.

One of many orders the court docket could make with regard to a pension is a sharing order.

It’s common for a proportion of what’s referred to as the money equal worth of the pension rights to be debited from the holder’s pension and credited to a pension within the different celebration’s identify.

Alternatively, the court docket may contemplate permitting one celebration to maintain their pension and the opposite celebration to have the household dwelling.

It’s potential to use for a pension sharing order with out searching for every other monetary reduction similar to upkeep or a lump sum.

For an in depth dialogue of the way it all works – although you will have a humid towel or flannel to be utilized to the pinnacle each quarter of an hour or be an insomniac- I like to recommend the free Information to the Therapy of Pensions on Divorce, printed by the Pension Advisory Group and lately amended. Solely 192 pages.

And for bang updated details about the suitable strategy to sharing, take a look at paragraphs 34 to 41 of the March 2024 judgment in a case named SP v AL [2024] EWFC 72[B}.

There the judge, who eats and breathes pensions, tackled the legal conundrum as to the extent to which a party’s pension earned outside the relationship should be excluded from a sharing order.

They and their employers might have been paying into the pension scheme for 20 years before the marriage and then continued to do so for ten years between marriage and divorce. Ignore 20 years of pension value when calculating what share the other party should take?

It will depend, said the judge, on whether it is a ‘needs’ case (see part one of this guide under the ground rules section LINK) or the available capital to be shared out exceeds the needs of the party after a pension share.

The judge adopted the proposition that in a needs case, it would often be fair – but not always and other circumstances might make a difference – for the whole 30 years’ worth of pension to be shared out.

But in a non-needs case such as the one he was deciding, it was likely that the focus would be on sharing according to the length of the relationship.

Done it again?

It may be that a party after some financial remedy has remarried or entered into a new civil partnership. That in itself does not bar pursuit of an application to the court made beforehand, except for maintenance.

They are still entitled to a fair share of the assets. They have earned it. Similarly, entry into permanent cohabitation does not debar an application, even for a maintenance order.

But going after maintenance while cohabiting is likely to be over ambitious unless, say, the applicant has children of the previous relationship living with them, full-time or part-time, who are still being educated and that inevitably increases the household expenditure.

Much will depend on the cohabitee’s finances and the extent to which those finances benefit the applicant.

Better late than never

If you have failed to make an application for financial remedies within a reasonable period but now feel you should have done, don’t kick yourself. It may not actually be too late.

Should you have married or entered into a civil partnership without notifying an application to the court, either in a prescribed form or in the document that started off the divorce or other matrimonial case, you will have had it.

Too late to apply now except – and this is a big one – for a pension share.

However, provided you have not married or entered into a civil partnership, there is no time limit for making a financial remedies application against your former spouse of partner.

The court might be unsympathetic if you left it for ages and then suddenly pounced when the other party thought they were out of the woods.

The delay would usually mean a discount on what would have been awarded with a prompt application.

A Supreme Court case where the wife had delayed making an application for 19 years after her divorce hit the headlines in 2015.

When they had separated the parties had been leading a nomadic lifestyle and there had been nothing about the husband’s financial circumstances to excite the wife into making a court application. But how things changed with time.

When the wife finally made her application, the husband was alleged to be worth £107million! The appeal judges gave the wife the green light to pursue the application, holding that the wife was entitled to have her case heard even though it was exceptional.

A substantially belated application would be afforded decent hearing unless there were really compelling reasons against.

So, what happened in the end? Answers on a postcard? No, I could not keep you in suspense. The case settled with the wife accepting…£300,000.

The morals of the story are that, while delay may not be fatal, it will not help. 

And, if you dislike acute shocks, seek an order from the court, even where it is agreed that no financial remedies for either party are appropriate, which dismisses all claims by both sides.

This would rule out a future application.

Retired judge and writer Stephen Gold 

Ex-judge Stephen Gold’s The Return of Breaking Law, published by Bath Publishing, is an irreverent guide to legal rights and winning in court or losing well. 

It gives more information on the topics covered in this series of articles and is full of tips and templates. 

Among the numerous other areas featured are rights for cohabitees, succeeding on small claims, making a will, battling with sellers, creditors, domestic abusers, lenders and landlords – and how Stephen coped as lawyer to the Kray Twins. 

Taxing matters

The recipient of maintenance does not pay tax on the money: conversely, the payer cannot claim relief on the maintenance they pay.

The position is more complicated in relation to any possible liability for capital gains tax when the family home (or other asset) comes to be sold after separation.

The rules were changed from 6 April 2013 by the Finance Act 2023. Provided certain conditions are satisfied, when the asset is transferred by one of the parties to the other, it is treated as not involving any gain.

But when the asset is subsequently disposed of, the recipient could be liable to capital gains tax on any gain made between the date of transfer and the date of disposal, on the basis that the recipient acquired at the original cost to the transferor.

If the asset is the family home, then the gain may be cancelled out by principal private residence relief which applies if the property has been the only or main residence of the recipient during ownership, apart from the last nine months. There may otherwise be partial relief.

That, as I say, is subject to certain conditions. These are that the transfer was made within three tax years following the tax year in which the parties separated: alternatively, it was part of a formal agreement or court order made in connection with the divorce or civil partnership dissolution.

The message, then, is that if the transfer is to be made outside the three years, enter into a formal agreement for it or obtain a court order requiring the transfer to be made.

Other changes from 6 April 2023 relate to a court order for the home to be transferred from one party to the other but for the receiving party to grant the other party a charge (a sort of mortgage without repayments and usually without interest) on the property.

They will usually mean that there will be no tax liability for the transferring party when making the transfer or when the charge is realised. Tax advice is recommended.

IN PART THREE… Stephen Gold explains how to reach an agreement, and what happens when one ex tries to cheat the other out of their fair share of assets.