Confronting one’s financial future can be worrying (sometimes terrifying) at any time but when uncertainty and complexity collide with the trauma of separation or divorce the effect can be devastating.

In addition to the anxiety about how children or other family members might be affected, the future can seem very forbidding if one or both partner’s share of the joint property, pensions and savings are in dispute – at one of the most harrowing times of anyone’s life.

Noel Ferry, a partner at legal firm Turcan Connell and a specialist in family law, believes that with sound legal advice that allows a couple to go into marriage or cohabitation with their eyes wide open and aware of the potential pitfalls, the trauma of such events can be substantially ameliorated.

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One of the first facts to establish when a client enquires about separation or divorce, he says, is whether they are married, in a civil partnership or cohabiting. “There is still a difference in law as to how their situation is taken into account when deciding how to divide the couple’s assets and the results can be quite different even if they have been living together for some time,” he explains.

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Important differences

“While it’s common for people to assume that the same rules apply, they don’t; the law has obviously improved the situation for cohabiting couples and given them more rights but they do not mimic those for married couples.”

These new rights were established by the Family Law (Scotland) Act 2006 and whereas a spouse can claim a capital sum, maintenance payments, a transfer of property or a share of their husband or wife’s pension, cohabitees are restricted to claiming a capital sum to redress any economic advantage/disadvantage.

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First Steps

“In either case, the first thing I do is have a discussion with the client to explore the possibility of resolving their situation without separation: do they really need to separate – or would they like assistance before they take that serious step,” says Ferry.

“If so, we can put them in touch with a family therapist or relationship counsellor if they haven’t yet reached the stage of beginning proceedings.”

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Consider the alternative approach

The second, important piece of advice is that that there are alternative resolution methods available. The procedure for dividing matrimonial property, which is any money and other assets owned jointly or individually is that it is to be divided fairly, which may not simply mean equally. If the situation has to be resolved in court that can result in a decision that is far from satisfactory to one – or both – of the partners.

“It’s important that we  advise clients about the fact that Alternative Dispute Resolution is available. These situations emphatically don’t involve an inevitable progress to court – which should be regarded as very much the last resort,” he says.

In fact, some 90% or more of cases are now dealt with through negotiation rather than a court order that determines the division of assets. People who proceed to court, says Ferry  almost inevitably have an urgent issue such as suffering from a serious shortage of money or protection issues resulting from circumstances of domestic abuse.

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The alternative routes principally involve collaboration or mediation. Mediation, involves an independent mediator guiding the parties toward a solution. The mediator does not usually give them legal advice as to their entitlements though in assisted mediation both parties have their solicitors in the background .

“That is an option that sometimes works out well –  but many people are looking for verifiable answers, and this can be achieved through the collaborative approach which I find is generally a better way to resolve disagreements.”

Ferry, a trained collaborative lawyer, believes this route is best to minimise conflict and secure financial choices – while also, importantly, ensuring the best future for the children. He explains that collaborative law involves the parties and their advisers in four-way meetings with discussions around the table, in private and without the delay of correspondence and court proceedings. And this, he says helps to avoid subsequent, and potentially costly, misunderstandings.

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The problem with pensions

Pensions, for example, can become very contentious. “In our experience pensions are frequently overlooked by clients when considering divorce settlements. However, the value of the pensions built up during the marriage or civil partnership is taken into account and can be substantial. Our clients’ settlements often involve pension sharing agreements.

“However, pensions can be extremely complicated – not only in terms of valuing them and dividing them but it’s also important to get the best advice on which pensions should be shared and which should not. Some have more benefits attached to them than others. For example, there may be spouse’s benefits attached to them which may be very valuable.”

In addition, he adds, there are various types of pensions such as Self Invested Personal Pensions (SIPPS) which can be convoluted when dealing with them in divorce cases as sometimes these can involve multiple underlying property and other assets contained in the pension which may need to be valued too.

“You need to take advice not only about its value at the date of separation but also its type of pension and current value. A failure to identify pension interests or to correctly apportion the value of a pension may have dramatic long-term implications for either spouse and there is a strict timescale involved after divorce for implementing the pension share.”

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Business assets

Ferry says that clients also need advice about business assets and shareholdings, as to what constitutes  matrimonial property as these can, inadvertently, be converted into matrimonial property in the course of, for example, restructuring a company that was founded or bought before marriage.

“Shareholdings that may be worth several millions can be transferred into the joint matrimonial pot and that possibility is not often considered by the accountant or tax advisor involved,” he says.

These are just a few of the issues to be considered but despite the obvious vexations that separation and divorce involve, Ferry believes in confronting them in a positive, proactive way. The Family Law (Scotland) Act of 1985 was well thought out and is quite flexible, providing for the needs of individual cases, he says. 

Divorce, he adds, need not end up in long, drawn out court proceedings. “Whether via a pre-nuptial agreement or a collaborative resolution, with good legal advice parties can deal with separation and divorce in way that achieves the solution that works best for them both.”

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Noel specialises in all areas of family law but is particularly noted for acting in high value cases for high net worth individuals, for example, celebrities, sports personalities, entrepreneurs, business owners, directors, professionals and executives. Noel has successively been ranked by the Legal 500 for his experience in high net worth divorces, prenuptial agreements and child relocation cases and has been described as providing "outstanding service", being "absolutely committed to the case" and having "exemplary" knowledge.

Noel has extensive experience as a litigator having regularly appeared in both civil and criminal court cases before specialising in family law cases since 1999. Noel has considerable expertise in negotiating financial settlements and regularly drafts complex separation agreements as well as pre-nuptial and cohabitation agreements. Noel has acted for many high profile clients and has been involved in many prominent divorce cases in the Court of Session and Sheriff courts. Noel has also acted in several international child relocation cases. Noel has also acted for clients with complex family trusts as well as difficult cohabitation claims on separation and death under the Family Law (Scotland) Act 2006. Noel has assisted in many professional negligence cases involving family lawyers and has been asked for his expert opinion on several cases of potential negligence.

Noel Ferry, Partner at Turcan Connell

Tel: 0141 441 2111  / 0131 228 8111

Web: www.turcanconnell.com

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