Pensions and Divorce –




Pensions and Divorce


When dealing with a case involving pensions on a divorce or dissolution of a civil partnership there are three potential options;

• Pension Sharing

• Pension Attachment (Earmarking)

• Pension Offsetting

Without a doubt pensions can be difficult to understand. That’s why specialist advice is needed and that will often involve a separate pension expert and involvement by an actuary.

There are a variety of different pensions which may need to be considered, to include personal pensions, final salary schemes and often executive pensions, such as SSASs (Small Self Administered Schemes). An actuary can asses the options and present a report setting out the calculations and the relevant options to assist with negotiations.

Once matters are agreed, separate advice is often needed on how to actually implement the pension share or pension attachment. It is obviously important that the relevant pension order is implemented properly and in a timely fashion. Equally, separate advice can be taken about how best to rebuild a pension following the pension share.

Pension Sharing

A pension share essentially means that a pension on divorce is shared between the parties. The pension member who loses a percentage of the pension (pension debit) and the other party receives the percentage of the pension which is subsequently transferred (pension credit). The person receiving the pension share then has his/her own entitlement to that share of the pension.

There are two options in relation the pension credit;

• An internal transfer – this means that the pension remains within the existing pension scheme; or

• An external transfer – where the pension credit has to be transferred out of the existing pension scheme and invested in a new pension of his/her choice.

A pension sharing order can only be made following a divorce and by a Court order. A pension scheme has four months to implement the pension sharing order/ annex from the date it is served with the relevant papers. In considering pension sharing, it is also important on a case by case basis to consider the other relevant options of pension attachment and offsetting.

It is also important that the pension valuation is fair and accurate and special care must be taken where the pensions are perhaps unusual in nature particularly where the benefits are undervalued or are connected to a privately run business – this is where independent actuarial input can be crucial.

Pension Attachment

This effectively means that part of the pension is paid to the other party when the pension is drawn or in payment.

A pension attachment order can be made by a Court and following a divorce. Commonly, a pension sharing order will not take effect for some time as the member of the pension scheme will not have retired. Common problems with pension attachment orders are that they end at the death of a pension member or on the remarriage of the spouse. A pension earmarking order, might be an attractive option where the death in service benefits are high and a member of the scheme is near retirement.

Pension Offsetting

This basically means that the value of the pension benefits are offset against the value of other assets commonly the family home or investments. This could be appropriate where the pensions are modest, where it is the case of a short marriage and/or parties are of a young age and/or pension sharing is not a viable option, for example, because the case involves and overseas pension where sharing is not allowed.

Process

Where there is an application for ancillary relief the applicant must indicate on Form A if this will include any pension arrangements.

A copy of this form must be sent by the person with the pension rights to the persons responsible for each pension arrangement (scheme provider or administrator) requesting the following information;

Valuation of pension rights or benefits

A cash equivalent transfer value (CETV)

Details of the benefits included in the valuation.

Whether the administrator will offer membership to the person receiving a pension credit as an internal transfer, or whether an external transfer would be necessary.

Schedule of charges which would be levied.

This information then forms part of the overall negotiations and a report may be produced by a pensions expert to aid negotiations in this regard.

Once a Pension Sharing Order is made an annex is attached for each pension arrangement which outlines the specific percentage value of the pension arrangement to be transferred as well as the date at which the benefits are to be valued and how the charges are to be apportioned between the parties.

The annex will usually require the recipient to include details of where their pension credit will be received – therefore pensions advice will be required to select the most appropriate vehicle.

The scheme provider/ administrator must discharge their liability within the period of 4 months beginning the date on which the order or provision takes effect or the first day they are in receipt of the order, including the annex.

How Brown Shipley can help;

We have pension experts who can provide advice and guidance for individuals with regards to pension matters and we also have our own pension wrapper which can accept most pension credits.

We are more than happy to discuss a situation in outline without obligation, working with the individual’s advisors and our Private Bankers to ensure an effective solution.

Brown Shipley & Co Limited is a UK authorised bank, authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. In relation to Pensions and Financial Planning Brown Shipley provides advice on a restricted basis.

Brown Shipley is also a member of the network of private banks known as KBL European Private Bankers, which, together, manage over €40 billion of client assets.


Who Owns You When You Are Dead? The Responsibility, Possession and Disposal of Your Remains –




Who Owns You When You Are Dead? The Responsibility, Possession and Disposal of Your Remains


 

Between busy work schedules, family, friends, social lives and personal problems our lives are rarely ever straightforward; but what happens when the chaos of our lives carries over into our death?

It is a sad fact that family relationships can often be strained or even non existent and this frequently causes disputes in the event of a family member dying. The most common question asked is who gets what? This is decided either by the deceased’s Will or by the Intestacy Rules. An equally important (but less frequently asked) question can arise when planning the funeral; who gets to decide what happens to the body?

In the majority of circumstances family and friends agree on funeral plans; usually by sticking to any wishes the deceased may have expressed. Unfortunately there are occasions where loved ones simply cannot agree and if this applies to you or someone you know then here are some facts you may need to know:

 

Ownership of the Body

The case of Williams v Williams (1880) sets a long established legal principle that there is no property in a corpse. Although a person can’t own the deceased’s body, certain people can have the right to possess it. This right in possession is only for the purposes of disposing the body.

 

Who has Responsibility for Disposing of the Body?

If the deceased left a valid Will the Executors of this Will are responsible for disposing of the body.

If the deceased died intestate (without a Will) the persons who apply for and are granted the Letters of Administration (the Administrators) are responsible for disposing of the body.

The Executors or Administrators should, as a general rule, try to abide by the wishes of the deceased whilst taking into consideration the wishes of any family members and friends of the deceased, however, they are not obligated by law to adhere these wishes.

Generally, the Executors or Administrators have the ultimate say as to whether the deceased’s body is buried or cremated (and whether your ashes are scattered, buried or kept) but also where and when this occurs.

As affirmed in the case of Dobson v North Tyneside Health Authority next of kin do not have a right or responsibility to dispose of the deceased’s body.

 

What Does This Mean For Me?

If you have not done so already, you should consider writing your Wills to minimise the likelihood of disputes of this kind arising. We have an expert team who ask all the right questions to ensure your Wills accurately reflect your wishes. If you would like to discuss your Wills further please do not hesitate to contact a member of the team who would be happy to help.


Reasons to Use Us –




Reasons to Use Us


Youstepping stones will have specialists working on your behalf

Receive a fast and efficient service

Have individual attention from one of our experienced staff

Direct access to our personable staff

Be able to ask as many questions as you want to reassure yourself about progress on your work

Your individual needs will be assessed and your questions answered

You will be kept informed at every stage of the process

You will get value for money

Quite simply, you will get an excellent service


Why a financial planner is an essential part of your divorce team –




Why a financial planner is an essential part of your divorce team


By Guest Blogger Hannah Foxley of The Women’s Wealth Expert http://www.thewomenswealthexpert.co.uk/#!


 

A mistake that is often made in the divorce process is involving the financial planner at the end once the settlement has been agreed, but they can add much value in helping to reach a settlement.

A good financial planner will bring to your attention and help you avoid making mistakes, I have included some here as examples but the list is not exhaustive;

Dealing with financial assets on a single basis rather than taking account of the bigger picture

  • Keeping a house that you can’t afford
  • Failing to break all financial ties
  • Not having a true understanding of the financial assets and debts of a marriage
  • Failing to understand what your true outgoings are and preparing an incorrect budget
  • Assuming that an equal division is a fair division on divorce
  • Failing to understand the risk and reward trade off when offsetting assets
  • Having an unrealistic expectation of your lifestyle after divorce
  • Failing to understand the true value of your husband’s defined benefit pension scheme
  • Failing to take your fair share of your husband’s pensions
  • Taking the house in lieu of the pension
  • Not taking into consideration the impact of tax on assets
  • Failing to change joint life policies
  • Failing to insure the maintenance payments and maintain control of policies
  • Not understanding the liquidity of assets
  • Failing to consider your long-term security
  • Forgetting about the long-term impact of inflation and tax and having unrealistic expectations of investment returns
  • Failing to develop a post-divorce financial plan

So, as you can see, having a financial planner is key.

Here are some of the ways that they can help you.

 

Help with preparing the Form E

The Form E is the financial statement document in a divorce and is the lynchpin of the financial decision-making. It is absolutely vital to get the information on it correct. The most crucial part for you to get right is part 3, which relates to the financial requirements that you have both in terms of capital and income. This is where any mistakes in the budget could have a negative impact on the settlement that you agree. It is imperative to include absolutely everything on that statement and take into account the impact of inflation and tax.

In addition to that, a financial planner can help with the rest of the form by assisting you to obtain all of the relevant information about your savings, investments and pensions from the providers. Because they see this paperwork all of the time, they know exactly what they are looking for and can take the stress away from you and save your solicitor time also.

 

Understanding the assets

If your husband has many different assets and investments, you will need to understand exactly what they are, how risky they are, what the tax implications are and whether you can actually sell them.  You will also need to understand the future value of those investments and how they will help your future financial security rather than focussing on the current value of it. Your husband is likely to have a different risk profile to you and so you will need someone who really understands the assets to explain them to you. A financial planner can do this for you.

 

Getting to grips with the pensions

Getting your share of your husband’s pension is absolutely crucial and it’s not just about agreeing an equal split based on the current value of the funds, doing this could be seriously detrimental to you. There are many factors to consider when looking at splitting the pension and they are a significant asset in most marriages, so getting it right is crucial. Only a financial adviser can advise on pensions. They work with your lawyer and, if necessary, an actuary, if a final salary pension scheme is involved to bring the figures to life and explain the impact of the factors used in the calculations.

 

Calculating your future income needs

When calculating your future income needs factors such as inflation, tax and investment returns need to be taken into consideration so that you do not run out of money. Failure to take these factors into consideration can and will have a devastating effect on your future financial security.

A good financial planner uses specialist software, which can analyse future cash flow requirements taking into account inflation, tax and different investment returns to calculate the sum that would be required as a settlement.

 

This software gives you a visual representation of how different factors can affect your future financial security. It will show when you will run out of money, which allows the financial planner and lawyer to calculate how much of a lump sum you need as a settlement or how much maintenance needs to be paid. It can also be used to show how much of your husband’s pension you will need to take to ensure that you have a fair income in retirement. It clearly shows the effects of inflation and investment returns on your money and is brilliant for helping you to plan and budget. The results of this analysis and the assumptions used can be used to produce a report to provide to the court. The planner will then use this software for the post-divorce financial planning to help you set a realistic budget to live on so that you don’t run out of money. This is the true value of a great financial planner.

 

Protection of the settlement

You may agree as part of the settlement that your husband will pay you maintenance either until the children reach a certain age, or it may be for the rest of your life. It is essential that this is protected in case your husband becomes sick or dies. It is also vital to ensure that the protection is set up in such a way that you know that he is paying the premiums, and you don’t find out when it is too late that he cancelled the policy without you knowing.

 

Post-divorce financial planning

Once the divorce has been finalised and you have your settlement, you will be on your own financially. Proper financial planning is really important as you don’t want to get ten years down the line and run out of money, or get to retirement and realise that you don’t have enough.

As described above, financial planners can help you to budget correctly, so that you have money for now and money for the future. You will also need help with school and university fees for the children.

You may have got some of your husband’s pension as part of the settlement and this will need to be invested for you, as well as a discussion around adding to it yourself. You may have cash and assets that you have no idea what to do with. This is a very scary and fearful position to be in when you are not used to it and this is where the planner can help. The relationship with your financial planner is a long one and will guide you through life’s changes as well as any curve balls that it throws at you.

Your relationship with your lawyer ends as soon as the divorce is finalised but a financial planner will be there for as long as you continue to have a relationship with them. This will give you a feeling of security and continuity. By having them involved at the very beginning you can ensure that you avoid making expensive financial mistakes, they can support your lawyer, working with them to ensure the best outcome for you.

If you would like further financial advice then you can contact Hannah on 020 7125 0409 or email her at Hannah@thewomenswealthexpert.co.uk


Seasons Greetings –




Seasons Greetings


Please note Lawindexpro’s offices will be closed from 5.30pm on 24th December 2013 and will re-open at 9.00am on 2nd January 2014

 


Women on the Rise –




Women on the Rise


A recent article by the Law Gazette said that women account for almost a third of new partners in the magic circle’s latest appointment round. Whilst this is higher than last year, of 91 promotions across the big five law firms only 32% were women.

Traditionally, the ‘Old Boys Network’ meant white middle class men dominated the legal profession, but will it always continue? According to The Law Society, in July 2013 48.6% of the 158,644 Solicitors on the Roll were women. This number could rise further still if we look at educational statistics in the industry as The Law Society also found that in 2012, 62.4% of students accepted onto University law degree courses were female.

Lawindexpro is ahead of the curve in the surge of female legal professionals with women making up three quarters of our employees. In fact: 9 out of our 14 solicitors are female (including a trainee); 3 out of 5 Directors are also women at the top of their fields; and Nicola Chard is our founder and Managing Director.

We pride ourselves on our progressive and modern approach to the law where the only thing which matters to us is how hard you’re willing to work to reach your goals. We hope to see an increasing number of female legal professionals in senior positions throughout the country which should appropriately reflect the evident rise of young women studying the law.


2015 Budget Changes to Inheritance Tax: What does it all mean? – Copyright lawindexpro Limited 2015




2017 Budget Changes to Inheritance Tax: What does it all mean?


Following the release of the current Budget there has been a lot of talk about the proposed changes to Inheritance Tax (“IHT”). We have heard much about a rise in the “Nil Rate Band” (the amount of your Estate which can pass IHT free) to £1 million with the caveat that it applies to a “family home”.

At Lawindexpro we aim to make legal jargon as simple and understandable as possible so we have prepared the following brief points to note on the upcoming changes:

 

The Transferable Nil Rate Band

The Nil Rate Band for an individual is currently set at £325,000 per person and this will not change.

For those who are married or in a civil partnership, if you gift your estate to your spouse upon your death then your estate passes spouse exempt and no IHT is payable. Rather than your Nil Rate Band going unused, it can be transferred to your spouse so they can use your Nil Rate Band together with theirs so the have a new Transferable Nil Rate Band of £650,000 to apply to their estate upon their death. This too will remain unchanged.

 

What has changed?

The government have announced a new tax free “Main Residence” Band which can be used in addition to your existing Nil Rate Band when applied to your family home/main residence.

The new Main Residence Band can also be transferred from one spouse to another. The amount you can claim from 2017 as the new Main Residence Band is as follows:

For individual’s:                     For Married Couples or Civil Partnerships:

2017      £100,000             2017   £200,000

2018      £125,000             2018   £250,000

2019      £150,000             2019   £300,000

2020      175,0000             2020   £350,000

 

Where does the “£1 million exemption” come from?

When looking at married couples or couples in a Civil Partnership, it is possible to claim up to £1 million exemption from IHT when you add together the Transferable Nil Rate Band (£650,000) and the Transferrable Main Residence Band (£350,000) which will be available in 2020.

 

What if I downsize?

As from now, if you choose to downsize your property you can still claim the Main Residence Band as if you still owned the larger property.

 

So what is the catch?

If you are single you will not be able to claim the higher Transferrable Main Residence Band of £350,000 but instead will only be able to claim your individual Main Residence Band of £175,000.

If your property is worth considerably more than £1 million then you might not be able to claim the full Main Residence Band. For every £2 of value over £2 million, £1 is to be deducted from the new Band until the Band is depleted.

Further, you will only be entitled to the new Main Residence Band in the event you pass away in 2017 or later.

 

Summary

There are lots of benefits to the new Main Residence Band which aims to see 94% of Estates passing without paying IHT, however, as with any new scheme there are plenty of conditions to meet and hoops to jump through.

Lawindexpro will keep an eye on the finer details of this new scheme so we can keep all of you up to date with the latest news.

 

Please do not hesitate to contact one of our Private Client Team members on 0845 1124452


How to Change the Registered Owner of a Car when the Owner Dies –




How to Change the Registered Owner of a Car when the Owner Dies


We have had a number of Clients lately whose partners have sadly passed away which has left them with many questions, including: what do I do about the car? At Lawindexpro we try our best to give straight forward, practical advice, so we have created a short guide on how to change the ownership of a car when the registered owner has died.

1. Check the Will to see who should inherit the car. If you require assistance interpreting the Will please do not hesitate to contact us to help as we offer free initial consultations;

2. Find the V5C (the registered keepers booklet) document and fill in the details of the person inheriting the car in the “new keeper details” section;

3. The new keeper must sign and date the V5C as normal;

4. Where the deceased would normally sign the V5C to transfer the car you should write “deceased”;

5. The V5C should then be sent to “DVLA, Swansea, SA99 1ZZ” together with a cover letter. You may also be required to send a copy of the death certificate;

6. The cover letter should mention that any car tax paid by deceased should be returned to the Executors account or the Estate together with the appropriate bank details;

7. This will take roughly 2-4 weeks for the DVLA to action;

8. The new owner may re-tax the vehicle in his or her name using s. 10 of the V5C either at a post office, via telephone or online; and

8. Don’t forget to notify the insurers for both the deceased party and the new keeper.

We hope this is useful to you at this difficult time but if you have any questions in relation to the above please do not hesitate to contact us as we will be happy to assist you.

To suggest other “How To” guides you would find useful and would like to see please send your suggestion to us at enquiries@Lawindexpro.co.uk


How to minimise the negative impact of Divorce on Children –




How to minimise the negative impact of Divorce on Children


If you have decided to get divorced there are few important points to consider when children are involved. This has been a decision that has been agreed between the parents and to make sure that your children’s lives can remain as stable as possible the parents need to reassure them by being consistent.

It is good to talk to your child in a way that they understand,they don’t want to hear the problems between you,they just want to understand how their life is changing and the effects it has on them.

Reading story books with children is an excellent way of preparing the child for what changes will take place in a suitable language that they will be able to understand. The local library or your child’s school may have some books on the topic, we also recommend, “At Daddy’s on Saturday” by Linda Walvoord Girard. “It’s not your fault” by Koko Bear and “Two Homes” by Claire Masurel.

Being caught in between parents arguments or talking in a derogatory manner about each other is very hurtful to a child,even if you think you have just cause to do so,this can create difficult,negative behaviour in your child.The heated discussions are better kept for a time that the children are not present.when children feel under pressure or stress they say things that you want to hear rather than how they feel.they may say they want to see the other parent then change their mind and say they don’t want to depending on how they read you either being upset or happy.

Children are not possessions and cannot be used to get back at each other,for example,stopping contact.It is so much better for youngsters to see their parents co operating,even if they don’t live together.Learning to cope with inconsistencies and instability is tough for your off spring so being considerate to their feelings will allow them to get use to the idea of single parents and build a closer relationship between you.

Written by Jules Kerswill of Hands On Parenting.

Find us on www.handsonparenting.co.uk

Hands on Parenting are running a special offer at the moment £99 for a one hour consultation (saving £51)

Please contact them to find out how they can help you and your children.


Conveyancing Fees Outpaced by Estate Agents Charges – Copyright lawindexpro Limited 2015




Conveyancing Fees Outpaced by Estate Agents Charges


The Law Society Gazette has recently reported that the cost of Conveyancing for a house purchase has risen less than fees charged by estate agents and surveyors in the past decade.  Not a title that would come as a surprise to most in the legal profession, although it is interesting to examine the facts contained in the surveys’ findings, which support the suspicions of most in the legal profession.

The average cost of a purchase conveyance was said to be £1419 in 2014, and this amounted to 12% of the total outlay in house buying charges.  These figures were compiled in a study by Post Office Money and the Centre for Economics and Business Research.  They represented an increase of 37% compared to 2004, when the average Conveyancing purchase fees were £1039.  Looking at these figures in isolation may paint a positive picture, and perhaps help to alleviate some of the self pity one may have felt following a glance at the article heading.  However, putting things in context, it is evident that this rate of increase was significantly less than the other home moving costs.

At a glance:-

  • The average stamp duty rose 87% to £3,620 in 2014
  • Estate agents fees rose 61% to £5,214 surveyors fees rose 51% to £607
  • Only removal costs, which rose 21% from £855 to £1034 during the same period, increased at a slower rate.

That the survey concludes that estate agents fees now equate to 44% of the total Conveyancing costs will no doubt be the main gripe, which is perhaps intimated by the title of the article.  Whilst I am a firm believer that a good estate agent is an essential tool in helping a transaction go through smoothly, there are of course those agents that can have the opposite effect.  The fact that there may be no difference in what these two types of agents will be paid highlights further the frustration for Conveyancers.  With the increase in panel and other referral arrangements – which we are continually assured has been concluded to have no effect on consumers (?!) – the gap between Conveyancing and estate agents fees is only likely to widen.   This merely highlights the challenge facing all Conveyancers in trying to operate a profitable Conveyancing department, in an industry which is becoming more commoditised but retains the demand for top class levels of customer service.

We here at B Legal are fully aware of this challenge and tackle it head on, using a structure which streamlines all processes involved in a conveyancing transaction, with clear and open lines of communication throughout.  We aim to deliver an exceptional service at a fair price, and if clients feel that they are being looked after throughout the transaction then levels of satisfaction can be upheld irrespective of the percentage of the costs when compared to other house moving charges. It is only hoped that providing a service that clients value will enable us to move closer to a level of fees commensurate with other parties involved in the process!”