Following a divorce there are important practical matters to consider. Below are some of the most common areas.
MAKE A NEW WILL AND/OR REVIEW YOUR WILL ONCE MAINTENANCE PAYMENTS END
Divorce affects a Will in that its terms are carried out as if your former spouse or civil partner has already died. If your former spouse or civil partner was a beneficiary under your Will, after the divorce they will no longer benefit. If your former spouse or civil partner was appointed an executor or trustee under your Will, that appointment will not stand after the divorce. It is therefore important to review the terms of your Will to ensure that it takes into account your changed circumstances. You may need to appoint new executors or you may wish to alter the beneficiaries under your Will for example.
Where a party is paying maintenance, they will have been advised to reflect that obligation in their Will. When that obligation to pay maintenance ends it is advisable to review your Will to ensure that your Will is updated to reflect that change.
NOMINATIONS TO YOUR FORMER SPOUSE
For most pensions, death in service schemes and life insurance policies, you will have made a nomination as to the recipient of any benefits payable in the event of your death. Most people nominate their spouse to receive such benefits but after a divorce, that wish is likely to change. In some cases, amendments to those nominations might be covered in the financial remedy order. If not, you should make new nominations to ensure that the benefits payable reach your desired beneficiaries. Ideally these nominations should be considered in conjunction with the drafting of your new Will.
ENTITLEMENT TO BENEFITS
Check whether your entitlement to receive child benefit and/or tax credits has changed as a result of your divorce or physical separation from your spouse. Entitlement may change if your (former) spouse was a high earner and their income meant that you were ineligible to claim whilst together.
NUPTIAL AND COHABITATION AGREEMENTS
Relationships outside marriage do not attract the same legal status afforded to married couples. Resolving a dispute should that relationship break down can be complicated and costly. Prevention is better than cure in this instance. If you intend to live with someone, a cohabitation agreement should be prepared. This will protect your legal position by dealing with important matters such as how you would own any property bought for you to live in as a couple, and how assets would be divided in the event that you separate.
Should a new relationship lead to remarriage, the preparation of a nuptial agreement is advisable. These agreements help individuals protect the assets they bring to the marriage and ensure that potential issues have been addressed at an early stage. If a couple have children from previous relationships, the existence of a nuptial agreement could protect those children by limiting arguments about the new spouse’s entitlement to assets from their spouse’s estate.
Although not yet legally binding in England and Wales, since 2010 those properly entered into have increasingly been given greater weight by the court.
REGULARLY REFRESH YOUR MEMORY REGARDING THE TERMS OF YOUR FINANCIAL REMEDY ORDER
Many financial remedy orders contain ‘recitals’ which create ongoing obligations, for example for one or both spouses to provide evidence of their income annually or to confirm life insurance cover. Make sure you read the order in full each year so that you are not caught out by an omission to do/provide something. Many maintenance orders are increased annually in line with inflation. This is often forgotten about and can lead to enforcement proceedings and unwanted costs if not actioned.
CONSIDER REVIEWING THE MAINTENANCE PAYABLE UPON RETIREMENT
Retirement generally leads to a reduction in income. If maintenance is payable under the financial remedy order, retirement is a common trigger event for the payer to consider reviewing the amount of the payment. It is worth considering this possibility in advance of actual retirement as it can take time to agree a new level of maintenance and in some cases a further court application may be required.
CHILD MAINTENANCE ORDERS
If your financial remedy order provides for the payment of child maintenance it is worth remembering that this provision can be varied after the first anniversary of the order if either the payer or payee applies to the Child Maintenance Service for a child maintenance assessment. The newly assessed child maintenance figure will supersede the figure in the financial remedy order.
The information contained in this article is designed to provide, for guidance purposes only, a general introductory summary of the subject matters covered. It does not purport to be exhaustive nor to provide legal advice nor should be used as a substitute for such advice.
© Stevens & Bolton LLP 2016