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It is crucial to get a grasp on your finances before any divorce proceedings start. This applies equally if you have a financial team working on your behalf, or whether it’s just you and your accountant.

If you want to reach a fair and reasonable financial settlement as part of your divorce, you’ll need to disclose your own assets, and in turn receive in turn full disclosure from your soon-to-be-ex-spouse.

In the second of her articles, Director Anne Leiper explains how full and open financial disclosure is important for any divorcing couple, regardless of their net worth.

 

How to account for your finances in 30 minutes

If you don’t know where to start with disclosing your finances, the Money Advice Service (MAS) have produced a handy downloadable spreadsheet that guides you through the process of accounting for all your financial assets.

Whilst the 30-minutes completion timeframe is wildly optimistic, it does lay out a sound action plan that anyone divorcing, billionaire or otherwise, should follow:

  • Draw up a budget and control current spending (divorces do cost money even when amicable)
  • Plan for costs, legal fees and “the likely expense of running two households” or more
  • Calculate your worth in terms of Property, Assets and Debts
  • Work out support arrangement costs, including child maintenance, private school fees, etc.

Saving up for your divorce

Whatever your income, it's always advisable to out money aside for your divorce. Use the MAS Quick Cash Finder to find out how much you spend on regular items such as lunches, coffees, gym membership, clothes, etc. It is astounding how these seemingly small items do add up, and savings here can also be considerable. This is particularly useful at a time when maintaining a sufficient cash flow will become important.

We doubt Jeff Bezos would bother counting his coffees, but the principle is sound for most of the rest of us!

 

Plan for legal fees

Any divorce in England and Wales incurs reduced fees from the court, which are set by the government. In addition, you should budget for your legal team’s fees, which will vary according to the complexity of your finances, family situation, financial setup and level of current contact with your spouse. (See below on how our transparent billing could save you money.)

 

Calculating your net worth - property

The value of a property will depend on market forces, but in terms of your divorce, it’ll also depend on:

  • The amount of any remaining mortgage
  • What’s left to pay off, by when and by whom
  • Any early repayment costs or fees
  • Subsequent selling costs

Again, the MAS spreadsheet will guide you through the process of calculating this. Calculating your debt is also very important, not just for an accurate figure of worth but to ensure you can continue with repayments after you separate.

 

Child maintenance costs

If you have dependent children, you will need to calculate how much child maintenance might be due by the non-resident parent. Needless to say if you’ve never had to pay this before, you’ll need to know what is the ‘going rate’ before entering into negotiations. The Child Maintenance Options website has a handy calculator that will give you a ballpark figure that we can take forward into negotiations.

 

Paying for pets

Remember, any pets are classed as chattels, which is a term to describe any item of property apart from land. So you’ll need to factor in who gets the pets, including valuable animals such as stud horses, livestock, racehorses and polo ponies, and the ongoing cost of keeping them. For more details, see our article: “Who gets the dog?”

 

The true cost of good advice = priceless?

Please don’t be tempted by online, ‘quicky’ or ‘cheap’ divorces. As experienced divorce lawyers, we have seen people give away so much they were entitled to simply by filling in their forms incorrectly or not taking time for proper legal advice. It saddens us that even just 30 minutes invested in talking to us and gaining invaluable insights could have ensured a totally different outcome.

As a new client, you may be entitled to our free, no obligation 30-minute consultation to discuss your divorce. You can also extend the consultation by prior arrangement to an hour or more if you wish. Call us, email us or fill in our reservation form online.

 

Why pay for professional legal advice

In any divorce, taking advice from an experienced family law firm such as LGFL will, literally, pay dividends. We know exactly how to ensure you get a full and fair settlement, and how to ensure your ex has made a full and frank disclosure of their assets. We can also help you protect your assets and your future from inflated claims made by your ex-spouse. Let’s be honest, the more you are worth, the more you stand to lose…

 

Transparent fees for your divorce

At LGFL, we are committed to transparent pricing for all legal action, including divorce. You are always fully informed of costs, with no hidden fees, and no unexpected charges. Our costs are usually based on the amount of time we spend working on your behalf, based on our standard hourly rates.

We fully itemise all work we do on your behalf, including complete details of what has been done. You can ring and ask for your outstanding bill figure and costs of any work in progress, at any time.

 

Expert financial settlement advice from LGFL

For more details on our bespoke, pragmatic and transparent approach to divorce:

High net worth for divorce

At the beginning of this month, Jeff Bezos, founder of Amazon, finalised his divorce settlement to ex-wife MacKenzie. According to the law in Washington USA, assets acquired during marriage are to be divided equally. Bezos has a reported net worth of more than $157 billion, so his ex stands to gain a lot. An awful lot.

However, as a US lawyer pointed out:

“The major thing for billionaires is that most of the time, their assets are very complex and mostly illiquid — with Bezos, a lot of his assets are linked to Amazon stock.”

In the first of two articles for high worth couples on the brink of separating, Director Anne Leiper looks at the implications of financial disclosure for divorce. She also explains how her expert advice and determination for full disclosure can save you considerable time, money and stress.

Your business is his business?

The settlement agreed between Jeff and MacKenzie Bezos highlights one of the issues I deal with on a regular basis - joint financial involvement in a family business or group of companies. This ranges from a couple both being on the Board, to joint shares ownership, and companies/properties registered in a single spouse’s name.

That makes high worth divorce settlements much more complicated. Indeed, the same applies for divorce settlements for any marriage or civil partnership where your finances are intertwined with your business interests.

Both spouses must ensure they fully disclose all their assets at the start of any divorce process, in order to reach a robust, reliable and reasonable settlement. If new assets are disclosed (or uncovered) at later stages, things can get very awkward indeed.

 

Divorce and your company’s value

The divorce of high profile figures within a company can also have a detrimental effect of the company’s worth too. Bezos retained 75% of his shares in Amazon (59.1 million shares), still making him the wealthiest man in the world, whilst his wife retains 25%. Crucially, MacKenzie relinquished all her voting rights to her ex, so he still has control over the company. Perhaps it’s this openness that has seen Amazon’s shares rise 20% this year, rather than dip as some expected.

 

Defining your assets prior to divorce

So, what is the process of sorting and defining your financial assets? If you have a pre-nuptial agreement that lays out the basics, this is a very good place to start. It enables both parties to say “I came to this marriage with £xm”.

In a pre-nuptial agreement, there is usually agreement reached over how these and subsequent assets are to be allocated in the event of a couple separating. (If you’re not married, a cohabitation agreement can achieve the same.) Whilst a pre-nup is not currently legally binding in the UK courts, it is a significant factor the court will take into account.

 

What’s included in full financial disclosure

Financial settlements rely on complete and full disclosure by both parties of all monies and assets, including:

  • Cash in current accounts
  • Property, whether owned individually or jointly
  • Businesses owned
  • Savings
  • Investments
  • Pensions -workplace, state and private
  • Company shares
  • Personal assets such as jewellery, art, cars, etc

If you consider that your partner has not disclosed all their assets, whether intentionally or not, we will investigate further. If disclosure is not forthcoming, we can go to court to obtain orders to force disclosure. The court has the power to order your ex to fully disclose their assets. If you later discover assets that were not revealed at the time of the Consent Order, it can be expensive and difficult to go back to the court later and ask for more money.

Remember, disclosure works both ways. You may consider that you already know what your spouse owns (or not), or consider that parts of your financial affairs are simply none of their concern. As above, non or partial disclosure could result in legal action from your spouse.

 

Getting your financial agreement sorted

The good news is you can agree a financial divorce settlement without going to court. AT LGFL, this is the route we always advise. You can use mediation to come to an amicable and mutually agreeable solution that is tailor-made for you, your family and your situation.

With our help as experienced family lawyers, a legally binding agreement known as a Consent Order can be drawn up that works for both of you. This method keeps your divorce financial details out of the public domain (and hopefully, the press too). You can also include non-disclosure clauses.

If you can’t agree, then the process will have at least provided considerable information for any subsequent court hearing and ruling. It is a condition that you will have at least met together to consider mediation before you go to court (unless you are separating from an abusive partner).

At LGFL, we relish high worth divorce cases, applying our considerable expertise and experience to sort through any complex maze of financial arrangements and structures. Call us to discuss your situation in complete confidence either in person or via Skype if you are living or working abroad.