Are you preparing to apply for a “No Fault Divorce” when it comes available in April? Here are some of the key points you should consider.
With the introduction of No Fault Divorce this April, many people will be considering waiting until then to file a divorce petition. In a previous article we looked at the significant tax risks in waiting until April. You can read that article here. If those risks do not apply, it is still important to consider all the steps that need to be taken in order to be in a position to proceed promptly in April.
Why it’s important to prepare for No Fault Divorce
If you have your marriage certificate, a divorce petition can be filed within days, but the position in relation to sorting out finances in divorce is more complicated and can take longer. The months between now and April provide valuable “preparation time” so that a divorce will proceed more smoothly should you choose to delay until April.
The key steps to take when preparing for No Fault Divorce
Get legal advice early
The first and over-riding step is to take early legal advice well before the April date. In doing so you can identify, and hopefully avoid, any of the tax risks. Your solicitor can also help you list and obtain the financial information you will be likely to need to negotiate a financial settlement.
For a financial agreement to be reached it is standard practice for both parties to exchange financial disclosure in Form E – this is a substantial form which requires evidence of your financial position to be attached.
For example, if you have a house, it is usual to attach an informal marketing appraisal, and in relation to a business, it is usually wise for the business owner to attach an informal valuation usually prepared by the business accountant. Information on shareholdings, ISAs and other investments and bank accounts will also need to be attached, including 12 months bank statements.
All of this takes time to collate.
Assess your pensions
Probably most significant in terms of time taken to obtain information is the requirement to produce a Cash Equivalent Value of your Pension.
This is the value your pension company attaches to the pension if you wished to transfer it to another fund. It is the way in which divorce lawyers and the courts assess pensions and with the help of financial professionals, calculate a fair division of the pension. The problem is that, particularly with public sector pensions such as the NHS and the armed services, the pension providers can take many months to provide the basic value. It is up to the pension holder to request this – you cannot obtain this information for your spouse. It is therefore very helpful if both parties agree to obtain their pension information in the run up to the divorce itself being filed.
It is possible to go one step further and agree mutually through your respective solicitors to obtain the pension information and seek a joint report on your pension options from a pensions expert. This step is usually taken after divorce proceedings but as many pensions experts take a minimum of four months to produce their report after production of all pension information, it is well worth getting ahead with this step.
Talk to your spouse about your assets
It is worth stressing that there is often little point in obtaining more expensive formal valuations of assets without the agreement of your spouse. What is needed at the planning stage is informal valuations to see if you can reach an agreement without the expense of formal ones that can follow later – your solicitor can advise you on all of these steps.
Preparing for a smooth No Fault Divorce
The key message is that with good legal advice, there is so much advance preparation that can be done to smooth the path of an amicable No Fault Divorce. Just waiting until the change in the law in April without planning ahead is likely to result in delays and frustration for all concerned.
If you would like advice on preparing for a No Fault Divorce, please get in touch and our Family team would be happy to assist you.