Equality and needs in determining a financial settlement

Going through a divorce or dissolution of a civil partnership will be a challenging time for most people, not only dealing with the emotional distress that comes with a break up, but also the financial realities of separating one household into two.

It is important to recognise at the outset that financial settlements do not necessarily mean that each person will walk away with 50 per cent of the assets,’ says Kirsty Tighe, Head of the family team. ‘The family courts will seek to find a fair division of assets, but there are a number of factors they will take into account before moving the calculation of a financial settlement away from equality.

Disputes can arise where one person perceives that they have been treated unfairly. But how is fairness determined?

While most disputes are capable of resolution without the intervention of the courts, it is necessary to understand the principles the court consider to ensure you have a fair and just financial settlement.  There are two overarching principles the courts look at when it comes to considering financial division, namely the equality principle and the needs principle.

What is the equality principle?

Historically, the financial division of assets was often tipped in favour of the working spouse, to the detriment of any stay-at-home spouse which was usually the woman.  This position changed over 20 years ago when the court decided that there should be no bias in favour of the money-earner against the homemaker or caregiver.

Nowadays, the starting point for the court is to consider an equal division of the family assets, and only seek a move away from this if it is just and fair to do so.

When can there be a move away from equality?

Equality is not always what will produce a fair solution, which is ultimately what a court is striving for in determining how finances will be divided.  This difference could be for several reasons, for example:

  • One partner may have received a large inheritance. This could make it unfair for the other partner to obtain half of the inherited assets.
  • One partner may have made a ‘stellar’ contribution to the family assets. This could be where one partner has gone above and beyond to enhance the family wealth.  Cases of this nature tend to be less common, but each set of circumstances needs to be judged on its own merit.
  • One partner has significantly greater financial needs than the other, which could be for a number of reasons. For example, if they have primary care of the children of the relationship their financial needs will be greater to house the children; or they could suffer from a disability which impacts their housing requirements or earning potential.

Any of the above factors could mean that the court awards a larger share of assets to one partner in order to recognise their extra contributions to the family wealth or to meet their greater needs.

The needs-based approach

When there is insufficient money to allow for an equal division of assets and still meet the requirements of both parties, the court will carry out an assessment of what is fair in order to meet the needs of each person.

The legislation stipulates a number of categories for the court to consider when assessing the needs of each partner, including:

  • their income, earning capacity, property, and other financial resources;
  • their financial needs, obligations, and responsibilities;
  • how long the marriage or partnership lasted, and the age of the partners;
  • their standard of living prior to separation; and
  • any disability of either partner or any children.

The housing needs of any children of the family is a commonly used factor in providing one partner with a larger proportion of the assets.  Shorter marriages can also result in a significant move away from equality.

Considering the needs of each person allows for fairness to be put at the forefront and attempts to ensure financial stability and independence for both partners.  A clean break is the ideal solution, when the partners can move on without being financially tied to each other – save for any child maintenance obligations.  It is often the case that sacrifices and a change in lifestyle will be needed for each person following separation.

How we can help

Ultimately obtaining a fair and just financial settlement involves a balance between equality and meeting the needs of the individuals involved.  The judges have significant scope for discretion.  Obtaining specialist advice from a lawyer practising in family law, who can be realistic as to the likely judicial approach, will be invaluable.

If you are recently separated, considering financial separation, or want to know more about your options, then please contact one of our expert family lawyers who can advise you on the best route to suit your circumstances.

For further information, please contact Kirsty in the family law team on 0191 297 0011 or email wb@kiddspoorlaw.co.uk

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.

Selling a leasehold property where there is a problem or dispute

If you are selling a leasehold property, as part of the standard conveyancing process, your buyers will expect you to provide certain information about your property. There are set forms for this, including one which relates specifically to leases that asks if you are aware of any problems regarding the service charge or any complaints about your landlord, the management company, or any neighbour.

Unfortunately, occasionally disputes occur and usually these can be resolved over time. But what if you are keen to move, can you still put your home on the market and hope to find a buyer at the right price?

It is important to be realistic in your expectations if there is a problem with a leasehold property,’ cautions Philip Walker, Head of the conveyancing team.  ‘Buyers will naturally be wary of buying into an ongoing dispute, so they will need reassurance and any sale will require careful handling.’

Here he answers some of your questions.

How much must I tell a buyer?

You might have heard the expression ‘caveat emptor’, meaning the buyer needs to beware, but if you withhold information that could influence your buyer’s decision, you could be liable for misrepresentation.

Your buyer could reject the sale contract and require you to compensate them for any loss. So, if you are in any type of dispute with your freeholder, or management company, tell your solicitor who can advise you about what you must disclose and how best to deal with it.

When asked if you know of any problems, in theory you could refuse to answer these questions. However, a buyer is likely to find this suspicious and it could jeopardise your transaction. Sometimes sellers are tempted to tell a half-truth. This too can easily backfire, undermining the buyer’s confidence when they discover the full story.

If there is a problem, it is often better to be open and to tell the other party what you are doing to fix it.

Do I need to resolve any outstanding issues before selling?

Most buyers will view a historic dispute more favourably than an ongoing one. So, ideally, you should resolve any dispute before putting your property on the market. Your solicitor can advise whether this is possible in your desired timescale and, if so, how best to achieve it. If necessary, we can introduce you to a colleague who specialises in dispute resolution.

Sometimes, it may not be possible to resolve an issue before you need to sell. For example, you may be trying to exercise your statutory right to extend your lease, but your landlord is slow in responding. Showing you have complied with all the legal requirements and that your buyer will be able to continue your application to extend the lease should help alleviate their concerns. Alternatively, you could agree that the buyer retains part of the purchase price pending the successful outcome of the application to extend the lease.

There are no one-size-fits-all solutions. So, it is important to have a solicitor on board who is experienced in complex property transactions and who can give you their close personal attention.

Should I withhold payments to my landlord?

The level of service charge, and non-provision of services, are some of the most common complaints by leaseholders. If you are not happy with these, it is easy to feel tempted to withhold some of your service charge payments. There are some limited exceptions, but generally you should ensure your service charge and ground rent payments are up to date. Failure to do so is likely to put you in breach of your lease terms.

Any buyer will want to know that there are no bills outstanding. Not only could this affect their security, but they will also want to be confident the landlord will not look to them to make up any shortfall.

Paying your bills up to date does not prevent you from challenging the reasonableness of the service charge separately, provided you follow the correct procedure.

There may be some circumstances in which you could lawfully withhold payment. For example, if your landlord has failed to carry out repairs they are obliged to do under your lease, and you have spent money in effecting those repairs yourself. Before doing so, however, ask your solicitor who will check that your lease does not exclude this right and discuss with you how this could impact any sale.

Do I need my landlord’s agreement before I market the property?

The law provides leaseholders with some protection against unreasonable landlords in certain situations. For example, where your lease contains a restriction against alterations or transferring your property without your landlord’s consent, that consent cannot be unreasonably withheld or delayed. If your landlord unreasonably withholds or delays consent, then it is possible to apply to court for a declaration to this effect. Your landlord may then be deemed to have consented. Sometimes, a solicitor’s letter reminding them of this possibility is enough to have the desired effect.

Unfortunately, though, the law in this area is complicated, with different pieces of legislation applying in different cases. Talking things through with your solicitor will help you understand your options and the potential impact on any sale.

Do I need to get retrospective consent to alterations?

If your lease contains a restriction on alterations, and you have carried out work on the property, your buyer will want to see evidence of compliance. If the work was in breach of a restriction, the landlord could require the new owner to remove the work or to pay damages. In an extreme case, they could even exercise their right to enter your property and bring your lease to an end.

If you did not obtain your landlord’s consent when you should have done, you may need to apply for it retrospectively or take out insurance against the risk of enforcement action.

If, however, there is an absolute bar on alterations, the position is more complex. As a result of a recent case, Duval v 11-13 Randolph Crescent Ltd, some landlords may be reluctant to agree to vary a lease, for example, to permit alterations that would otherwise be a breach of the lease terms. There are some possible solutions to this impasse, for example, applying to the tribunal to vary the lease terms.

Depending on the facts, the pragmatic approach may be to remove the works yourself or to make it clear to any buyer that the price reflects this risk.

How we can help

Ideally, you should contact your solicitor as soon as you think of selling if you are aware of an issue that might be problematic.

We can advise you about the implications of the issue on the proposed sale, support you through the negotiations or by obtaining relevant insurance.

For further information, please contact Philip Walker in the conveyancing team on 0191 297 0011 or email wb@kiddspoorlaw.co.uk

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.

Postnuptial agreements and family business succession plan

The 2020s have been called ‘The Great Wealth Transfer,’ as £1 trillion of wealth built up by the ‘baby boomers’ is expected to pass to the next generation. Much of this wealth will pass via a family business, and parents who wish to retire are having to make strategic decisions about succession planning.

A particular concern for many is the potential impact on a family business of a divorce or the dissolution of a civil partnership, and the consequent negotiations of a financial settlement.

Business difficulties can arise for any number of reasons, and directors usually have business strategies, budgets and contingency plans,’ says Kirsty Tighe Head of the family team.  ‘However, few businesses have a plan for what would happen if an owner got divorced.  This could have devastating consequences for a family business, yet it is rarely talked about until it is too late.’

According to the Office of National statistics, 41 per cent of marriages will have ended in divorce prior to their twenty-fifth anniversary.  With such a high level of risk, it is not surprising that business owners are asking what can be done to protect their business in such an event – especially if they perceive a child to be in an unhappy marriage.

If the founder’s offspring is already married or in a civil partnership, then one thing to consider would be to propose a postnuptial agreement before they transfer business assets.

What is a postnuptial agreement?

A postnuptial agreement is a legal contract between spouses, outlining how assets will be divided in the event of divorce, which is signed after the marriage or civil partnership has taken place.

Like a prenuptial agreement, a postnuptial agreement is not legally binding but it will tend to be upheld by the court provided it has been entered into fairly.

How will a postnuptial agreement benefit the family business?

When negotiating the financial settlement in a divorce, business assets will normally be valued as part of the matrimonial assets for sharing.  A postnuptial agreement is unlikely to be able to ring fence the business entirely, but it can be realistic about how much of the asset a spouse or civil partner could expect and over what time period payments would be made.  For example, it could stipulate that a spouse would receive a certain percentage of turnover or profit, and allow for this to be paid over a number of years to minimise disruption to trade.

If the couple worked in the business together, then a divorce could also mean negotiating the end of one spouse’s or civil partner’s employment as well.  A postnuptial agreement can include the basis for how any severance would be calculated, and stipulate any restrictive covenants such as not setting up business or working for a competitor within a certain trading distance of the existing business.  You may have further stipulations you wish to include that are specific to your business, such as protecting your trade secrets and customer and supplier lists or ensuring your employees are not poached.

A postnuptial agreement can ensure that the business stays in the family, and protects the future of the business by outlining how both current and future assets of the business will be treated.

Reassurance can be provided between family members if all owners are prepared to enter a postnuptial agreement.  This means each of your livelihoods can be protected.  It can encourage both investment into the business and growth as it helps to provide stability and certainty.

What can a postnuptial agreement cover?

While the postnuptial agreement may have been prompted by the proposed transfer of business assets, the agreement can cover how all your assets would be divided, not just the business assets.

For example, you can agree what happens to land, properties owned, stocks and shares, saving and investments, as well as pensions.

One of the advantages of a postnuptial agreement is that while it offers you more certainty, it can also save you significant costs if a divorce does occur.

The importance of independent legal advice

It is critically important for each person to have independent legal advice.  For any agreement to be enforceable, the court needs to be satisfied that it was entered fairly, with each person having a full appreciation of the assets involved and what their entitlements could be in a divorce.  If upon receiving advice your spouse or civil partner does not wish to enter the agreement, then they have the right to refuse.  If the court feels that someone has been unduly influenced to sign, then it is unlikely to uphold the agreement.

If your spouse or civil partner does not have the resources to pay for legal advice, then you can offer to pay or the business can pay, but the legal advisor acting must be clear that their client is your spouse or civil partner, and not you.  Their duty lies with their client.

How we can help

If you are the parent who wishes to propose a postnuptial agreement to protect the future of your business, we can help you by providing you with the basis and information needed for your child to consider, including the protection it provides when growing your business.

If your parents or your in-laws have proposed a postnuptial agreement as part of their business transfer, then we can help you to understand the proposal and what would be fair to you in the circumstances.  We will advise you on what your likely entitlements would be in a divorce scenario.

Contact Kirsty in the family law team on 0191 297 0011 or email wb@kiddspoorlaw.co.uk.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.

Providing for a pet in your will

Your pets are an important part of your family, but providing for them in your will is not as straightforward as providing for other family members,’ says Nigel Miller, Head of the wills and probate team. ‘Whilst a cat or dog might be relatively easy to care for, pets such as tortoises, llamas, or horses will likely require specialist care by someone who has sufficient time, knowledge and property to give your pet the care they need.’

Pets do not have a distinct legal personality and are technically belongings, but they sit in their own category between possessions and dependants and need to be considered carefully.

This means that you need to leave instructions about them in your will, and any financial provision you want to make for them cannot be a gift to the pet.

Livestock or pet?

There is a distinction between pets and livestock for the purpose of a will. You might, for example, have two pigs or llamas that you keep as pets, which would be treated as any other pet would in your will. However, if you have, for example, a rolling stock of 20 pigs that are used for breeding, or sold for their meat, this would likely be considered livestock and a business asset. Leaving livestock as a business asset under your will should be dealt with very differently and you should seek specific advice on this point to consider any pre-existing business agreements, as well as the most tax effective options for disposal on your death.

Leaving instructions about a pet in your will

First, you will need to consider what you wish to happen to your pet.

The most straightforward way is to leave your pet directly in the care of another person. This could be an existing owner of the pet, such as your partner or children, or it could be another family member or friend who does not currently share ownership of your pet. As with any gift in your will, you can leave your pets to whomever you wish and they do not need to know, or pre-approve, your intentions. However, a beneficiary of your will is not obliged to accept their gift and it can, therefore, be worth checking in advance that they are happy to take on responsibility for your pet.

Alternatively, you may prefer to leave your pet to a person or organisation for them to find the pet a suitable new home. This could be an animal charity, a family member, a trusted friend, or an executor, for example. You can state your wishes in regard to rehoming, but you should bear in mind that these would not be legally binding and the person or organisation would be ultimately responsible for deciding where your pet should end up going.

At the time of your death, it is possible that an individual may not be best placed to take on the responsibility of rehoming your pet, (for example, if ill or in unsuitable housing), and you should also consider the possibility that they may decide to pass the responsibility on by involving an animal charity.

In the case of a larger animal, for example, a horse, it may be that they can be sold by the estate and the sale proceeds paid to your beneficiaries. Your executors will have the authority to sell the pet, and it can be useful to leave a separate letter of wishes to guide your executors as to how, where, when, and to whom you would like the pet to be sold.

A professional can help you to decide the best approach for your circumstances.

Practical factors to consider

If your pet requires unusual care, or extensive facilities or land, this may need extra consideration when it comes to deciding who the best person is to care for your pet.

If you are leaving your pet to a charity to be rehomed, you should consider any specific wishes you might have about the type of home you would like them to go to and any particular way in which you would like them to be cared for. If you have more than one pet, you might also wish to request that they are not separated. As well as a will, a solicitor can draft a detailed letter of wishes for you so that your executor, and the person or charity to whom the pet is left, is aware of your wishes.

Financial considerations

If you opt to leave your pet to an existing owner, it is less likely that they would require a pot of money for your pet’s upkeep. However, another individual might need some financial assistance in this regard.

Whilst an animal charity is unlikely to need funds specifically for your individual pet, as they will already have their own general funding, a monetary gift to them in recognition of the fact that you are leaving your pet in their care might be appropriate.

Whilst you cannot leave money to a pet, you can leave money to the person who will become responsible for looking after your pet. Any such gift should be by way of a bare trust, to allow the person or charity to use the funds for your pet’s benefit, including food, vet bills, and other such essential costs.

You should think about an appropriate level of funds, as well as how flexible you want to be with the terms under which it can be spent, including any additional wishes you would like known.

Any money left in a bare trust for your pet’s upkeep will need to include a provision about what would happen to any remaining funds if your pet is no longer in need of the trust money. You might want this to revert to your family or friends, or you might want it to be passed to a charity of your choosing.

How we can help

Pets must be considered carefully within a will, and a well-drafted will, prepared by an expert, will ensure that all eventualities are covered.

For further information, please contact Nigel in the wills and probate team on 0191 297 0011 or email wb@kiddspoorlaw.co.uk.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.

Cohabitation Agreements

What is a Cohabitation Agreement and what are the benefits of having one?

More and more families in England and Wales are comprised of cohabiting couples, with a proportion of those families believing they have the same rights similar to a married couple, especially if they have cohabited for a long time. However, the “common law marriage” is a myth and cohabiting couples have little protection under the law in England and Wales.

How can cohabiting couples protect themselves?

As cohabitees, there is no legal right to share your former partner’s income or assets if the relationship breaks down. Furthermore, there is no entitlement to your former partner’s pension. If there is a conflict as to what should happen to your home, the law is very complex and proceedings are often expensive.

A cohabitation agreement, is a written document which is tailored to the financial position of both you and your partner. The agreement allows you to detail the property and assets each of you own. It can also be clearly set out how those assets are to be divided in the event the relationship breaks down. For example the agreement can detail how the home should be divided in the event where one party has contributed more to the deposit.

However a cohabitation agreement can not make provision for pension sharing on separation, as this only applies to divorce only.

A cohabitation agreement can also detail who is responsible the day to day finances during the relationship.

How to make a Cohabitation Agreement

A cohabitation agreement can be entered into at any time, whether that be at the start of you cohabiting, or whether you have lived together for many years.

We have extensive experience in drafting cohabitation agreements and we can advise accordingly based on your circumstances and needs. We offer an efficient service and can help on how to protect yourself further for example making a Will.

Our specialist team are available on 0191 297 0011. Alternatively feel free to email us on wb@kiddspoorlaw.co.uk or raise an enquiry through our website www.kiddspoorlaw.co.uk

Budget 2024 and the abolition of multiple dwelling relief

The Government’s 2024 Spring Budget saw significant changes to the way property is taxed, including the imminent abolition of multiple dwelling relief. This will primarily affect investors looking to buy multiple properties at the same time, however, it could also affect you if you are buying a property that comprises more than one unit, such as a house with a distinct annex.

If you are purchasing a property with a separate granny annex and multiple dwelling relief applies to your purchase, it can save you thousands of pounds in stamp duty,’ explains Philip Walker Head of the conveyancing team.  ‘However, this relief will very shortly be abolished, so if you think an intended purchase may qualify, then speak to your solicitor as soon as possible.’

In this article, Philip answers some of your questions about multiple dwelling relief and the recent changes.

What is multiple dwelling relief?

The amount of stamp duty you pay will usually depend on the purchase price of the property. If you are buying more than one property in a single transaction, or what HMRC considers to be linked transactions, then stamp duty will usually be calculated on their combined value. So, for example, if you are buying two flats in a block costing £350,000 and £300,000 respectively, and assuming you already own property, you will have to pay £39,500 in stamp duty. This is based on the total combined purchase price of £650,000. The first £250,000 is taxed at three per cent (£7,500), the remaining £400,000 at eight per cent (£32,000).

In contrast, where multiple dwelling relief is available, you will only pay £27,000 in stamp duty, a saving of £12,500. This is because this relief allows you to average the cost of the properties. In this way, each ‘nominal’ property valued at £325,000 (£650,000 divided by two, the number of properties) can benefit from the lower rate bands of stamp duty. So, in this example, you will pay stamp duty at three per cent on the first £250,000 of the averaged property price multiplied by the number of properties (£7,500 x 2 = £15,000), and at eight per cent on the remaining £75,000 (£6,000 x 2 = £12,000).

Who benefits from multiple dwelling relief?

Multiple dwelling relief can apply wherever you buy two or more dwellings in the same transaction. For example, an investor buying several new-build apartments to add to their portfolio can claim the relief, as they can if buying ‘off plan’ (although special rules then apply).

The key requirement is that all the properties should be suitable for use as separate dwellings. This means a house with a separate annex could qualify if both are sufficiently independent of each other and individually suitable for a person to occupy as their home. However, this can be a very grey area with HMRC sometimes challenging claims for multiple dwelling relief in the courts. So, it is imperative to get expert advice before making a claim.

How has the 2024 budget changed things?

In his recent budget, the Chancellor of the Exchequer abolished multiple dwelling relief.

Transitional provisions mean you may still be able to claim the relief in two situations:

  • The first is where you exchanged contracts on or before 6 March 2024 (provided the terms of that contract have not been varied and it meets other conditions). In this case, you can claim multiple dwelling relief regardless of the date of completion.
  • The second is where you have exchanged, and ‘substantially performed’ a contract before 1 June 2024. Although ‘substantially performed’ has a special meaning for tax purposes, this will usually mean completion of your purchase.

Can I still claim multiple dwelling relief?

If you exchanged contracts on or before 6 March 2024, you could still claim multiple dwelling relief. In some cases, you may even claim reimbursement from HMRC if you were entitled to the relief but did not claim it when you completed. There is a twelve-month deadline for such applications. So, if you think this could apply to you, speak to your solicitor without delay.

In all other cases, you will only be able to claim multiple dwelling relief if you complete your purchase before 1 June 2024. If you are in the process of buying multiple dwellings, or plan to do so imminently, then completing before that date could save you money. The timetable is tight, so this is something you should discuss with your solicitor at the earliest opportunity.

While it makes sense to benefit from multiple dwelling relief if possible, you should avoid rushing into a commitment just to beat the deadline. It is more important to ensure the transaction as a whole works for you, and that there are no other legal issues which could cause you problems in the future.

How we can help you

Our team of residential property lawyers have experience in all aspects of conveyancing, including property tax. Being proactive, where multiple dwelling relief applies, we will progress your purchase to give you the best chance of making a successful claim. However, we will never lose sight of the bigger picture.

We can also advise you if there are other ways of reducing the amount of stamp duty payable. For example, other reliefs may apply if you are buying six or more properties in a single transaction, or your purchase includes a mixture of residential and commercial use.

For further information, please contact Philip in the conveyancing team on 0191 297 0011 or email wb@kiddspoorlaw.co.uk.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.

Later life and the various bodies you might encounter

If you are helping a loved one who is ill or vulnerable in their later life, whether formally or informally, there are various bodies that you might encounter with whom you will need to liaise to assist you with your loved one’s affairs.

Nigel Miller, Head of Wills and Probate highlights the main organisations and outlines why you may need to deal with them.

Whilst some organisations might be happy to liaise with you on an informal basis, many will not. Even those bodies which are willing to discuss your loved one’s affairs will require proper authority before allowing you to make any decisions for them.

In addition to your loved one’s solicitor, the main organisations that you might need to contact during this stage include, the Office of the Public Guardian and the Official Solicitor. You may also have to deal with the NHS, and your local authority.

Making sure you have the right authority

If you know that your loved one has planned ahead by making a power of attorney, you will need to locate the original. This might be stored with their papers at home, but it is more likely that their solicitor will be holding it for safekeeping. If so, they will need identification from you to release the original. Some solicitors will also require either your loved one’s authority or, if they no longer have mental capacity, some form of medical proof of such lack of capacity.

Office of the Public Guardian

The Office of the Public Guardian is responsible for registering powers of attorney and maintaining records of all the registered powers of attorney in England and Wales.

If you are uncertain about whether your loved one has made a power of attorney, it is possible to request a search of the Office of the Public Guardian’s records. This requires a specific form, which our solicitors can assist you to complete.

If you already know that a power of attorney exists, then you might need to liaise with the Office of the Public Guardian to register it. Again, this is a process with which our solicitors can assist. The process is dependent on the type of power of attorney:

  • if your loved one made an enduring power of attorney, then it will be up to you to register this; or
  • if they made a lasting power of attorney then this may already be registered.

You should check the position with a solicitor to ensure you are fully aware of what is required of you.

The Official Solicitor

The Official Solicitor’s Office is a governmental body which acts on behalf of those who are vulnerable and unable to instruct a solicitor of their own volition.

If the Official Solicitor is appointed, they will be appointed on behalf of your loved one, rather than you, but you will need to liaise and negotiate with them, and our solicitors can assist you with this. The Official Solicitor’s Office is an independent government body.  If the appointment of the Official Solicitor is deemed necessary, the cost of this service will be met from your loved one’s funds.

Acting for your loved one once authority is established

If you are appointed as your loved one’s attorney or deputy, you would then need to deal with various organisations to ensure their affairs continue to run smoothly and that their needs are taken care of. This would include financial institutions, such as their existing banks and any investment companies, as well as potentially the Land Registry and conveyancing solicitor if they have a property that needs to be sold, and a financial advisor who specialises in later life clients to ensure that your loved one’s funds are securely and appropriately invested in a risk-averse way that will yield the best possible returns.

Whilst your loved one’s financial position is important to ensure that they have access to suitable care, if a loved one is ill or vulnerable you may also be concerned about the health organisations you need to contact.

Local authority – social services

Depending upon their financial circumstances, your loved one’s local authority may be involved in ensuring that they are placed in a suitable care home or that suitable at-home care is provided. The local authority will also be key in establishing whether funding for your loved one’s care is available.

Provided you have the relevant authority, you are entitled to attend any meetings with the local authority when financial support is discussed. Before attending any care funding meetings, you should seek advice from a solicitor so that you are fully aware of your loved one’s rights and options. If required, you are also entitled to request that your solicitor attends the meeting with you.

National Health Service (NHS)

Similarly, the NHS may be involved in discussions and decisions surrounding care funding. NHS care funding is available in limited circumstances, but you should obtain legal advice and explore whether this applies to your loved one. You may also be required to attend meetings with NHS doctors, or other medical staff, to discuss aspects of your loved one’s care and how this should be managed.

If you are making decisions on their behalf, it is important that you ensure you are involved in the process all the way along so that you can make decisions on a fully informed basis and one that is in the best interests of your loved one.

How we can help

Acting for a loved one when they are ill or vulnerable can be very rewarding, but it can also be an onerous responsibility. Our solicitors can help you to ensure that your duties as an attorney or deputy are adhered to properly and fully, and that your loved one is cared for in the best possible manner.

For further information, please contact Nigel in the wills and probate team on 0191 297 0011 or email wb@kiddspoorlaw.co.uk.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.

Getting married in 2024?

Is 2024 your year for getting married?

If the answer is yes, have you considered a pre-nuptial agreement?

A pre-nuptial agreement is a document created pre marriage or civil partnership in which a couple sets out how they wish their assets to be divided in the event of divorce. This may cover: savings, property, income, inheritance and debts; whether they are acquired individually or jointly, before or during the marriage

Although they are not legally binding in UK law they are certainly worthwhile in the event of a disagreement upon separation/divorce.

Judges have expressed fears that if they were binding, it would open the door to one party being disadvantaged when the time came, perhaps many years later, for financial settlement following divorce.

Although a Judge can not enforce an Agreement he can add weight to what has been agreed. The legal position is moving in the direction of acceptance.

Account will also be taken of the fairness in the circumstances that have arisen over the years, by the time of the financial settlement and also the capacity of the weaker party to have said no at the time.

Are they enforceable?

Of paramount importance are the provisions for the welfare of children in the family under the age of eighteen. Then, in order to determine how the assets of the marriage are split, the court will consider:

  • the financial resources available to each party
  • their financial needs, obligations and responsibilities
  • the standard of living of the family before the breakdown of the marriage
  • the age of each party and the duration of the marriage
  • physical or mental disabilities of either party
  • he contributions which each party have made to the family. including looking after the home or caring for the children
  • the value to either party of any benefit which they would lose the chance of acquiring (pensions)

Will they be upheld?

Before entering into an agreement ensure the following are adhered too:

  • it must be at least 28 days before marriage
  • there must be no pressure or duress to sign
  • full disclosure of both parties’ assets must be made
  • the agreement should be fair and realistic
  • provisions should be made for children, alive or yet to be born.

The agreement may be disregarded by court if there is deemed to have been a change of circumstance which renders it inappropriate.

It is also advisable to periodically review your Agreement.

For further advise and assistance please contact Kirsty Tighe, Head of Family Law on 0191 297 0011 or via email at wb@kiddspoorlaw.co.uk

How are gifts treated in divorce or dissolution of a civil partnership?

The Government’s 2022 English Housing Survey reported that 27 per cent of first-time buyers used gifts from family or friends to fund their house deposit.  With the average deposit now required exceeding £43,000, it is hardly surprising that so many seek the help from their family to get their foot onto the property ladder.  Well-intended parents will often gift large sums of money to their adult children without taking any legal advice or having any formal documentation drafted. But what happens if the couple decide to separate?

‘As a family lawyer, we regularly see sizeable gifts being made by family members to help a newly married couple starting out.  While this is often money to buy their first home, it can also be money gifted to help out with a business venture, or to extend or move house,’ says Kirsty Tighe, Head of Family Law.  ‘Difficulties can arise if that marriage or civil partnership later breaks down.  The spouse or civil partner whose family have been so generous may expect to see a larger share when it comes to dividing the matrimonial assets.  Unfortunately, that will not always be the case.’

What does the law say about gifts?

A gift can be any item, such as jewellery, vehicles or money provided to another person.

Personal gifts such as jewellery tend to stay within the ownership of the spouse or civil partner they were gifted to.  Joint wedding gifts, such as a valuable artwork or an antique, are treated as matrimonial assets regardless of whose family or friends gifted them.

Gifts can be redistributed by a court if that is deemed necessary for the fair division of assets.  For less valuable gifts, it is best to try and agree how these will be divided by proposing a list of the gifts you wish to retain.  For more valuable gifts, a formal valuation is likely to be required in order that the assets can be fairly accounted for in the division of assets.

Typically, it is monetary gifts that are most likely to cause conflict in attempting to agree the financial settlement after a divorce or dissolution of a civil partnership.

Issues with financial gifts

When money is paid by a parent or other family member without the expectation for repayment, and without an expectation of ownership or rights over how the money is used, it is deemed to be a gift.

In most divorces, gifts are treated along with the rest of the matrimonial assets which are subject to being divided.  That is because most divorces are dealt with on a ‘needs’ basis i.e. any financial settlement will cater for the financial needs of each partner or spouse.

Some divorces, typically those where assets exceed several million pounds, can be dealt with on a ‘sharing’ basis.  That is because there is significant excess wealth above that which is required to meet the financial needs of the separating couple.  In a sharing case, the court will consider significant gifts from one partner or a spouse’s family.  This may result in that spouse or partner obtaining a larger share of assets to reflect their family’s contribution.

Is it a gift, or a loan?

It is not uncommon to find, after a separation, that the family who generously provided money claim this was in fact a loan not a gift.  This is because loans and gifts are treated differently by the law.  If a loan is made, then the loan needs to be repaid or taken into account prior to the division of assets in a financial separation.

In determining if the money provided was a gift or a loan, the court will examine all the surrounding circumstances and the detail of the terms of the alleged loan.  This is when documentation can be helpful.

Is there any documentation available?

Being able to provide a written loan agreement, specifying the terms of the loan and repayment and which has been signed by both spouses or partners and witnessed would be ideal.  Unfortunately, in our experience this is not how most families work, and typically a much less formal arrangement will be in place.  Therefore, examining any other documentation that can support the claim that this was a loan would be helpful.  This could be text messages, emails, thank you notes, or proof of some repayments having already been made.  Ultimately, proving a loan without formal documentation can be very difficult.

How we can help

If you are concerned over what might happen to your family gift or loan when you separate, or if you want to ensure protection over a gift or loan before it is made, then please contact one of our expert family lawyers who can advise you on the best option to suit your circumstances.

For further information, please contact Kirsty in the family law team on 0191 297 0011 or email wb@kiddspoorlaw.co.uk.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.

Gazundering and gazumping, avoiding the perils

Research suggests that nearly a third of recent sellers have suffered gazundering, which property pundits attribute to a downturn in the market. But, in some areas, the lack of suitable properties means there is still fierce competition for homes, with buyers trying to outbid each other via gazumping.

‘It is certainly a challenging time to be moving home,’ agrees Neil Shearer, a Conveyancer in the residential property team with. ‘Unfortunately, some buyers and sellers are taking advantage of the current market to renegotiate the agreed price, threatening to pull out if their demands are not met. The good news is there are things you and your solicitor can do to reduce the risks.’

Gazundering, and why it is a problem

With gazundering, the parties agree on a price, and the sale is proceeding, but the buyer then lowers their offer, threatening to pull out if the seller refuses to accept their reduced offer. Gazundering tends to be more common in a falling market, where the gazundering buyer exploits the seller’s fear that they may struggle to achieve the same price again.

Gazundering can happen at any time between accepting an offer and exchanging contracts. However, it is most common just before exchange. This is the moment both parties commit legally. As a seller, you will already have made a significant emotional and financial investment in your move, and the buyer knows this; it is the point at which their ultimatum is likely to have the most impact. The stakes are high, particularly if you are buying another property with your sale proceeds. If you call your buyer’s bluff and they walk away, you risk losing your new home too, particularly if your seller is in a chain of linked transactions. However, giving in to their demands could cost you dearly too. It can feel like a lose-lose situation.

Gazumping, and why it is a problem

Gazumping is the flip side of gazundering. It is generally more common in a rising market, but can happen whenever there is strong competition over a property. A seller accepts an offer from a buyer, and it seems like the purchase is progressing normally. However, the seller then accepts a higher offer from another buyer.

If this happens to you, your seller may invite you to increase your offer. This may secure your purchase, but it could escalate into a bidding war or a contract race. Even if the seller accepts your increased offer, you may find it hard to trust them, fearing they may try the same thing again.

Just like gazundering, gazumping can be costly emotionally and financially. If you decide to pull out, you will lose the benefit of the money you have already spent, for example, on a survey or conveyancing searches. If you are selling your own home, and are in a chain, it could also endanger that transaction unless you find a replacement purchase quickly or decide to move out anyway.

Is gazundering or gazumping legal?

Most people consider both practices to be unethical, but neither is unlawful. Either party may change their mind right up until exchange of contracts. It is only then that the transaction becomes legally binding.

The Government considered changing the law to prevent gazumping when it reviewed the house-buying process in 2018. However, it found this would be hard to do without creating other problems. It also took the view that a greater commitment from buyers and sellers earlier in the process could reduce the risks.

How you can reduce the risk of gazundering or gazumping

Until there is a binding contract in place, both buyers and sellers are at risk of the other one changing their mind. So, minimising the time gap between offer and exchange will help reduce this risk. Specific action you can take will depend on whether you are buying or selling.

Sellers

If you are a seller, you should address any issue that could delay your sale in advance. For example, your home may have an extension that does not have the requisite planning permission, or that needs consent under a title restriction. Applying for retrospective consent or taking out a suitable insurance policy could prevent this from becoming an issue later. Discuss your plans with your solicitor at an early stage; they can carry out a title audit of your property and pre-empt any issues.

It is also a good idea to consider your buyer’s position before accepting their offer. Ask yourself how proceedable they are. Generally, the more complex a chain the more scope there is for problems to arise. However, there is no hard and fast rule; sometimes a first-time buyer who has a mortgage offer in place may be less inclined to risk their purchase than a cash-buyer looking for an easy bargain.

Buyers

If you are a buyer, make your offer conditional on the seller removing their property from the market. Their estate agent has to tell them about any offer they receive. However, if they are no longer actively marketing a property, the chances of receiving a better offer will be a lot lower.

Ensure you can proceed quickly and efficiently. Arrange your finances well in advance, and have your solicitor and surveyor lined up. Monitor the progress of your sale. Return any papers your solicitor sends you for completion and respond to their questions promptly. If you show you are a serious proceedable buyer, any seller should think twice about risking their sale. Where possible, develop a rapport with them; they will be less likely to renege on a promise if they like and trust you.

Some other things to consider

If you are a buyer, you may also want to consider a lockout agreement. This is a separate agreement that prevents a seller from selling to anybody else for a fixed period. In return, you undertake to progress your purchase diligently.

Lockout agreements do not suit everyone; they involve additional expense and negotiating one could prolong your purchase and unsettle your seller. However, they can be useful in some circumstances. If you are concerned about gazumping, discuss this possibility with your solicitor.

It is now also possible to take out a home protection insurance policy. This will not stop you from being gazumped, but it can help with the additional expense you may suffer as a result.

How can I keep my transaction on track?

It may not always be possible to eliminate the risk of gazundering or gazumping, but there is a lot you can do to protect yourself. Either can be down to one party’s greed, but frustration and poor communication can also encourage these practices.

Due diligence at the outset, and understanding your buyer or seller and their motivation, will help. So too will having the right professionals on board. Our solicitors are proactive and communicate well, giving both parties confidence the transaction will progress as it should. That, and the swift resolution of any legal issues, is often the best safeguard against the perils of gazumping and gazundering.

For further information, please contact Neil in the residential property  team on 0191 297 0011 or email wb@kiddspoorlaw.co.uk.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.