Helen: For some people talking to an IFA right at the beginning can be useful.  There will be a lot of financial information that will need to be gathered and submitted and having an idea about what will be required and how to find this information can be useful to know from the start.  Others might involve an IFA if there is a question about income needs.For others, it may be towards the end when a pension share is being agreed or needs to be implemented or a financial plan for the future needs to be worked out.

Richard: It’s as soon as possible really. People seldom come to me seeking a divorce per se.Normally it’s a case of the relationship having broken down, they are uncertain as to the future, and are seeking some certainty, security and assurance. The divorce becomes a means to that end.  We’ve got to try and sort things out and reach an agreement over financial matters, and if we can reach an agreement, we can enshrine it in a Court Order as part of the divorce to ensure that it is binding, without anyone having to attend Court. Similarly, if a couple cannot agree a financial settlement, the divorce becomes the means to resolve things, by asking the Court to intervene and decide matters. But coming back to your question, it’s as soon as possible, because people need to start gathering information sooner rather than later, to assist them getting a handle on what the future holds and what the solution may looks like. 

Q: And so, what do people need to disclose in terms of their finances?

Helen: So, both parties will need to be prepared to disclose everything.  This includes property, bank accounts, investments, pensions and business assets.  Your solicitor will talk to you about what needs to be disclosed.  An IFA or your solicitor can give guidance about how to find the information that is needed.

Richard: Basically, it’s about equipping people with the information they need so that they can make informed decisions about what is a fair settlement. So, we need to have evidence of all of the figures that go into the matrimonial balance sheet really. Everything from bank statements confirming paper trails on current bank balances to investments, pensions and property valuations. Once we collate all of that information, and sometimes that can raise as many questions as it does provide answers, then we can start to make an informed call as to what the solution is. 

Q: And as part of the divorce or dissolution part of the process people will need to work out what their current and future expenditure is.  Do you have tips on how to do this? 

Helen: This can actually be quite a difficult part of the process even though it sounds easy as people often haven’t had to analyse their income and expenses in any depth before. There is a useful budgeting tool on the government MoneyHelper website that is free to use and can help you to remember everything that you spend your money on, day-to-day expenditure as well as one-off annual expenditure.  This can be a good place to start.  However, for some people taking a book out with them and writing down everything they spend money on can be just as helpful. If you have access to bank statements then these are always a good starting point, but do not forget expenses and bills that you don’t currently pay for, but you will need to once you are on your own.  There may also be new costs such as life insurance or a mortgage that may be needed for the first time. An IFA can help you think through everything you may need to include in your expenditure.

Richard: It is so often about what people need as the starting point really. So, as Helen says, you need to give it some careful consideration and use the tools that are out there to get a handle on what you need. What you need might not be what someone else needs, each family/couple/individual are different, and their needs are different . It’s important to ensure that any list of your needs is comprehensive but without it turning into a wish list, which can be counterproductive.  Ultimately, we have to recognize that we will have two households now, funded by a pot, that used to fund one. So, to a certain extent, everyone is going to have to cut their cloth, but it is about making sure that as a starting point, we have a comprehensive and reasonable idea of what we need. 

Q: So how does someone doing through a divorce or dissolution work out if they can get a mortgage based on their income?

Helen: Speaking to a mortgage adviser can help give you the facts and figures that you need, and a good mortgage adviser can also talk you through the different mortgage options that are available to you.  At Orchard House (IFAs) Ltd we have a mortgage expert who can help you understand your mortgage capacity once you are on your own and can produce a report that can be used as evidence

Q: I understand there can be a tendency for people to forget pension during the divorce or dissolution process despite them being a sizeable amount of the asset point?

Helen: it is really important that you include pensions as part of the finances when considering ending a marriage or civil partnership.  They can seem daunting, so talking to an IFA can be helpful so that you can understand the different types of pensions that are being included.Your solicitor may also suggest that you request a joint pensions report where a Pensions On Divorce Expert gives their view to help you understand how pensions can be shared.  Pensions can sometimes be one of the biggest financial assets to be considered so need to be included.

Richard: As Helen said, pensions are an asset that needs to be shared like any other. We talk about income needs and cash flow analysis, and housing needs and therefore what someone’s mortgage capacities are, but people also need to look at their retirement planning. Therefore, it’s important to make sure there is a fair pension pot available to both of them post-divorce, so they need to look at the pension assets and understand what a fair sharing is, not just in terms of the capital value but more importantly what those pensions are going to generate for the both of them. 

Q: What are the options for pensions when a marriage or civil partnership ends?

Helen: There are three main options that are available.  There is more information on the government Money Helper website. The three options are:

• Offsetting
• Attachment Orders
• Pension Sharing Orders

Richard, you’ve got some thoughts on those options…

Richard: Absolutely. Typically, I find myself dealing with pension sharing orders, particularly where we are sharing assets that are not going to materialise until many years into the future. The beauty of pension sharing orders is that pension assets are divided now, so you have something now that you take away and it matures and accrues in its own right independently of your spouse and their pension.

Whereas with pension attachment order or earmarking, as the name suggests, you are attaching and earmarking part of your spouse’s pension when it accrues in the future. But that can create problems depending on what happens to you in the future, what happens to your ex-spouse, and indeed their pension between now and then. And the other option is offsetting. I think ideally there should be a fair sharing of all types of assets, be that pension or non-pensions assets, but obviously it’s about what’s right for a particular couple. 

In some instances, they may wish to trade some pension in exchange for more cash and in which case that becomes a matter of financial advice as to what is a fair trade-off recognizing that £100k of pension fund may not be the same as £100k in cash. That will change from pension to pension, and the particular circumstances of the parties. So again, that’s where independent financial advisers and solicitors can really work together to get the best and right deal for someone. 

Q: So how long does the process take to get a financial order?

Richard: To a large extent it depends on how quickly two people can agree something. If we think about the divorce process itself as the starting point, if you commence divorce proceedings, you would be able to apply for what’s known as a Conditional Order for divorce 20 weeks after the divorce proceedings were started. 

Once you have got your Conditional Order, which is typically 4 weeks thereafter, at that point you can say to the Court “This is what we have agreed in relation to finances. Please judge can you make an order on those terms?”. The judge will be presented with a brief resume of the financial circumstances so that they can exercise their discretion as to whether or not to approve the settlement.  It may not be what the judge would have done if they had been left to their own devices, but if the deal seems fair, they will approve the financial settlement and make an order on those agreed terms. So, by definition you would be in a position, potentially, to ask the court to do that six months down the line, and the hope of course is that during that time negotiations and discussions have played out well between the parties and we’re ready at that six month point to upload our financial agreement to the court portal (I used to say it's a paper exercise but now it’s an online portal exercise). 

But of course, it may be that the parties involved sort things out in a matter of weeks and then they are waiting for the divorce to catch up, similarly, negotiations can be protracted and if there is an impasse for whatever reason and you have found yourself having to make an application to the court for them to determine things, and then those proceeding ultimately end up in a trial with a judge making a decision, then you could easily be 18 month/ two years down the line or even longer. So given the length of time proceedings can take and given how much it can cost as a result, it is far better for people to take good advice early on so parties can have informed discussions sooner rather than later, and hopefully with things cost effectively, reasonable swiftly and by agreement.

Q: What happens once the divorce is finalised or my civil partnership has ended?

Helen: It can be useful to sit down with your IFA to review your settlement and start making plans for the future.  There may be a need for advice on how to provide income, taking out a mortgage, making investments or reviewing your protection.  Your IFA will work with you at your pace to help you develop a robust plan for the future that suits your needs, taking into account your new circumstances.

Thank you Richard and Helen for joining me today to talk about some of the financial considerations people need to think about if they are going through a divorce or the dissolution of a civil partnership. You can find out more about Richard Rodway and his Family & Divorce team at www.thpsolicitors.co.uk and Helen Fraser is at Orchard House which is at www.orchardhouse.co.uk

So Ruby, let's start with talking about Nikah. Is Nikah recognised under English law?

Thanks, Melissa, a really interesting conversation. Before I answer your question, I think it’s quite important to share with you the fact that over 3.9 million Muslims are living in the UK.

Now firstly, let's go back, to what is a Nikah? A Nikah is a religious ceremony undertaken by a man and wife to bring them together in matrimonial harmony. There are some conditions to a Nikah:

• there must be wilful consent from both parties

• two adult witnesses to the ceremony

• a legal representative or Wali, who is normally the father of the bride

• and bridal gift to the bride from the groom, known as Mehr, which I will go into more detail about later

So, is a Nikah recognised under English law? It depends on where the marriage took place. When you enter a Nikah ceremony in the UK, and providing you have met the full condition I have just outlined, your Nikah will be valid under Islamic law but unfortunately unless you have a civil legal ceremony you will not be legally married under English law and you would only be treated a ‘cohabitees’.  

By only undergoing a Nikah ceremony in the UK, couples are in effect denying themselves security and the other advantages that come from a civil marriage. So, my advice will always be, that when getting married, you should always have the civil ceremony first and then have the Islamic ceremony. I appreciate that most people would not wish to live together until the Islamic ceremony but by doing it this way you provide protection. Time and time again, I see clients who have had an Islamic ceremony and were promised a civil ceremony and it never happened.

Now, this is where it becomes a bit complex. A Nikah will be recognised in the UK if you got married aboard in a country where Nikah is legal. I’ll give you an example. I was actually married in Pakistan, and I’ve only ever had a Nikah, but because I got married according to the law of the country where the ceremony took place, and it was registered. When my husband came to the UK, our marriage was recognised under UK law and we didn’t have to have a separate civil ceremony.  

Now in the event of a divorce where you have got married abroad, because your Nikah has been recognised under UK law not only would you have to have a divorce under Islamic law, you would also need to have a divorce under civil law as well which is obviously important.

It sounds quite complex. Where you had your Nikah is really important and defines if you may need to have a civil marriage as well if you are living in the UK, as that determines if your marriage is legally recognised here.    

The key thing is, just to remember, if you got married abroad according to the law of the country, when you come to the UK your marriage will be recognised under civil law. If you got married in the UK under Islamic law, you need to have a civil ceremony to get the marriage rights that you would be entitled to.

Moving onto methods of separation in Islam, there are a number of different ways that couples can get divorced depending on who instigates it.

The two main methods are granting of the divorce by the husband, which is Talak. Talak is where the man unliterally gives a divorce to the woman with or without cause. However, he then has to pay the bridal gift, Mehr, as a financial settlement in full.

I briefly touched on Mehr earlier. In Islam, when marriage vows are recited the husband gives his wife a gift which is known as Mehr as part of the marriage contract. Mehr is documented and in the event of divorce, Mehr is what would be paid as a ‘settlement’. Mehr is normally paid at the time of the marriage ceremony, sometimes it can be deferred. It can be nominal amounts or huge. Often people put in a small amount such as £10 or £100 as they are confident in a happy union and just want something nominal, and others have a large Mehr for protection in case things go wrong. There are normally lots of discussions about it before the ceremony.  

Now if the wife wants to get divorced in Islam it is called a Khula. Khula is where the wife can, without giving a reason, ask the husband for a divorce, however, the condition is that the wife is usually asked to repay the Mehr to the husband. There is no allegation of fault. In some instances, if they both agree, it can also be agreed that the wife does not need to repay her Mehr to the husband depending on the circumstances of the divorce.

There are also two lesser-known ways of getting divorced. There is the Faskh-e-Nikah or Tafweedh-e-Talaq. Excuse my pronunciation!

The Faskh-e-Nikah is the dissolution of an Islamic marriage pronounced by a third party upon application by the wife, normally a Qadhi (a judge who sits in a Shariah court). The reason why a woman may seek dissolution of marriage by way of Faskh-e-Nikah is when the husband refuses to give Talaq. It could be because the wife is not happy that the man is not looking after her properly, or the marriage has broken down and the husband is refusing to give the wife a divorce, so you would ask for the Qahi to grant you a divorce.  Abroad you would apply to the Shariah Council, and you could also apply to the UK Shariah Council here in England.  

Talaq-e-tafweez is a form of agreement, a bit like a prenuptial agreement. It’s made either before or after marriage providing stating grounds when the wife may seek divorce from her husband.  One of the most common grounds is if a husband took on another wife, as in Islam, subject to certain conditions, a man may take up to four wives, but a bride may specify in a marriage contract that if the man took on another wife, she could get divorced.  

I actually went to see a local Imam at my mosque to ask about Talaq-e-tafweez and see how popular a form of divorce it was. He said he does get instances of Talaq-e-tafweez being used as a form of divorce, and sometimes the wife specifies a crazy long list of ‘circumstances’ and that they have to be watered down to the significant ones. There have to be really good reasons, it can’t just be that, for example, the husband does not cook the wife dinner! It needs to be more serious ground than that.

These last two methods of divorce under Islam, are for women normally to instigate the divorce process.  

As we covered at the beginning, is it important to remember that if your Nikah was recognised as a legal marriage in the UK you need to get a civil divorce under the laws of England & Wales.  

Yes, so if you have had a marriage that is recognised in the UK, just because you have entered the marriage under Islamic law you are not legally divorced and you would also need to end the marriage under civil law.  

That’s so important. I have had people come to me where they have started a civil divorce and then for some reason the other party won’t grant the divorce. So, the two should really be side by side when you start divorce proceedings. It is possible to apply for an Islamic divorce at any time whereas under civil law your marriage needs to have been valid for at least a year. Your Islamic divorce can start before or after the civil proceedings, although my own advice would be that it’s best if they run parallel to each other.

Have you got any final words of wisdom?

I think let's go back to the beginning. Any Muslim who is thinking of getting married, go and visit your local mosque. Imams are now more approachable, whereas in the past you may have shied away from approaching an Imam, more and more mosques are now offering matrimonial services.  

If you are thinking of getting divorced, go and see someone who specialises in divorce, like me. Whilst I cannot help you get a divorce under Islam, I can guide you as to what steps need to be taken with regard to Islamic divorce and the civil process. I have links with local Imams at mosques that I can refer you to – there is help out there.

I am hoping that at some time in the future, Islamic marriage will become valid under UK law and you won’t need to have a further civil ceremony. There has been consultation on this but at the moment we are still behind, and I do think there needs to be something done. The government does need to make sure that rights are given to Muslim women in particular, as those who have just had a Nikah in the UK are left in a vulnerable position.

Well, thank you, Ruby. We appreciate your time. You can find out more about Ruby Tufail on our website, or general information on our legal services and divorce, on www.thpsolicitors.co.uk

Once a buyer has found a property to purchase, or in the case of the seller has accepted an offer on a property, they contact a solicitor to instruct them to move the process to the next stage.

Once the buyers and sellers have instructed solicitors, the estate agent will issue a sales memorandum to all parties involved, so that the conveyancing process can begin.

One of the big concerns at the moment is money laundering, so solicitors have a responsibility to protect against fraud when they start the process with your clients, don’t they?

Yes, to protect against fraud, one of the first things we need to do is obtain ID for each person that’s involved in the matter that we’re instructed on, so we can  verify their identity. For a buyer we must also obtain information with regards to their savings, their mortgage etc .and how the money is being obtained for their purchase.

And that’s simply to check if, for example, if they are buying the property in cash or don’t have a mortgage, the money used to fund the purchase has not been obtained through criminal activities?

Absolutely, and to check that the money is indeed their funds and that there is no third party involved, to ensure we are complying with the Anti Money Laundry Regulations.

Right, so once that is done, I’m guessing you move on to the meatier paperwork?

If we are acting for the seller, they need to complete what we call the protocol forms, such as a Property Information and Form and Fittings & Contents form. They then need to return them to us together with any relevant paperwork that relates to the property, so for example, Fensa certificates for windows, planning and building regulation documents etc. We normally ask for as much information as the client has, so we can it put together with the property information form.

And that will save time, the more information you get upfront?

Yes, the more information we get at the start, normally the fewer enquiries will be raised during the process later on, so we tend to ask our seller clients to provide us with everything they have, so that way we know from looking at the paperwork what is needed, and which documents are required.

If a seller has a pack of information from when they purchased a property that’s always useful as it will have information from their previous sellers, and maybe more details of any works undertaken prior to their ownership.

The seller has to be very careful when completing those forms, don’t they? There was recently a well-publicised case when a seller ticked ‘No’ to a question about whether Japanese Knotweed was present on their property, but it turns out there was, and it ended up costing the seller £200,000 to compensate the person who had purchased their property. So, when you fill in these forms it’s important to do it honestly and accurately.

It is difficult, because some sellers don’t always know the answers to some of the questions but it’s very important that they are completed to the best of their knowledge/ ability because once it gets close to the exchange of contracts, the details and information provided in these forms are relied on by the buyers and their solicitors to be accurate and to be correct.

So once that paperwork is complete and people have provided all of the supporting documentation required such as guarantees, building permissions, and have said if they are leaving anything behind that will be included in the sale, the next stage is presumably to move on to drafting of contracts?

Yes, most properties today are registered at the Land Registry, so the Title documents are downloadable from their portal. Once we have these title documents, we can then prepare the contract, and send that together with the deeds and seller’s protocol forms and relevant information to the buyer’s solicitors.

And then if you are acting for a buyer, you need to scrutinise this information?

Yes, once we have received the draft contract papers from the seller’s solicitors, the first thing we tend to do is check the title plan and order the necessary searches that relate to it. So, it is always important to check the title plan to ensure that there is no missing land, because some properties may have two titles relating to that property, to make sure that when we apply for the searches, we are covering the full extent of the land.

We try to do the searches quite quickly because some Local Authority searches can take a couple of weeks to come back. Whilst we wait for those, we will review the draft contract pack, look at the title, protocol forms and documents provided by the seller’s solicitors.

When the searches come back, we will also review those and raise any necessary enquiries for information that we may need clarity on or if there are missing documents so that we can give a full picture to the buyer when we present our report to them.

About searches – what exactly are they?

There are three main searches that are carried out for most properties by the buyer’s solicitor: –

• an Environmental Search (gives details of the past uses of the land/land in the vicinity of the property and any potential contamination),
• a Drainage and Water Search (which confirms that the property is connected to mains water and drainage)
• a Local Authority search (will confirm any planning permissions, building regulations, that the road is adopted and maintained by the Council etc).

All the searches are specific to the property.

So once the buyers and sellers have exchanged information and the solicitors are happy with the responses they have had, what happens next?

Well once we know everyone is ‘ready’ we then start to talk about completion dates that are agreeable with everyone, and the buyer of the property will need to place a 10% deposit in order to proceed with an exchange. By this time, we will have reported to the buyer and sent the documents for signing, so it’s imperative we get those original documents back in order to be in a position to exchange contracts.

When it comes to exchanging and completion, is this normally done on the same day or is there a gap in between?

It depends on the chain but generally, there is a week between exchange and completion, the reason being that if the buyer is obtaining a mortgage, we need to request the funds from the mortgage lender and they normally require a minimum of 5 working days.

Sometimes, we do undertake a simultaneous exchange and completion on the same day, which can be quite stressful because you don’t know until the day if you are moving or not. And sometimes we have delayed completion dates e.g., in two months’ time, and this can be driven by various reasons e.g., people wish to move in the school holidays or have to accommodate work commitments.

As long as all parties agree to the dates, it can however be as short or long as it needs to be.

So, exchange means the ‘deal is done’ and you are committed to it and the completion is the day that everyone moves and swaps keys?

The point of exchange means that the sale or purchase is legally binding. So, for a buyer, at the point of exchange the buyer effectively owns the property and the seller holds the property on trust until the completion can take place. And then on the day of completion, the monies for the sale/ purchase are transferred through the banking system and once that transaction is complete then that is officially when completion takes place.

And once the property transaction is complete, you then go on to register the property for the buyer at the Land Registry?

Yes, for a buyer we submit an application within a month of completion to apply for their ownership with the Land Registry.

There are a lot of moving parts essentially, during that process, and presumably the longer the chain is the more complex it gets?

Yes, it really does depend on how quickly enquiries are responded to and dealt with and how quickly clients can get signed documents back to us.  If there is a long chain that can delay things a bit, as you have more people to try and coordinate with, and progress on the same sort of time frame. For example, agreeing on completion dates when there is quite a long chain can be quite stressful if people want different dates.

If you were to give a person a tip, on one thing they could do to speed up the conveyancing process, what would it be?

If we are acting on the sale, and we have enquiries raised that the seller needs to respond to, turning around the replies quickly can make a difference. It’s good just to keep the lines of communication open between clients and solicitors on all sides so that everybody knows what is happening. One of the main stress points of buying and selling is that it can consume people’s personal life and increase stress levels, so ensuring everyone knows what the current position is can help to alleviate some of that stress.

Thank you, Denise. If you are looking to buy or sell a property and would like some advice or a quote for conveyancing please contact our Residential Property team.

What are Settlement Agreements?

A Settlement Agreement, (previously known as a Compromise Agreement), is a voluntary legally binding written contract, where the employment relationship between an employer and employee is terminated on agreed terms.  

They are usually offered when the employer is seeking to make the employee’s role redundant, or if there is a risk of legal action and the employer wishes to avoid going to an Employment Tribunal, or where there is a mutual agreement between the employer and the employee for termination.  

And so, if you are an employee and your employer asks you to sign a Settlement Agreement to terminate your employment, what should you do?

For a Settlement Agreement to be enforceable it is a legal requirement that an employee receive specialist legal advice before signing. This advice should be from an independent solicitor, chosen by the employee, which is normally paid for by the employer in terms of a financial contribution (which is usually outlined in the Settlement Agreement itself).

The employee therefore should receive advice on the terms of the Settlement Agreement and the effect of signing. Where appropriate the solicitor may be also able to negotiate terms so that the parties can reach an agreement that they are happy to sign.  

How do Settlement Agreements work?

Should an employer need to terminate an employee’s employment, using a Settlement Agreement it enables them to offer an employee a sum of money to facilitate an agreed termination of their employment. This in turn helps protect their business against future claims as the employee will contract to refrain from issuing claims listed in the Settlement Agreement, such as unfair dismissal.

In essence, Settlement Agreements financially compensate the employee whilst limiting the employer’s liability so that a line is drawn under the end of the employment relationship. Effectively, a “clean break” is being achieved.  

It is important that both sides understand what their signing, isn’t it?

Yes, both the employer and employee need to clearly understand the terms of the Settlement Agreement and what they are agreeing to.  

The employee obviously also needs to understand the ramifications of signing a Settlement Agreement and a solicitor will be able to offer advice on whether the settlement proposed is reasonable in light of the background to the termination of employment and can negotiate the terms and financial settlement on behalf of the employee. Your solicitor should refer to your contract of employment to calculate the correct notice and see if the compensatory sum covers an appropriate amount and if any bonuses are due.  

How is a settlement amount calculated?

So, it varies. The amount offered in a Settlement Agreement will vary depending on each situation. The most significant part of the payment is the termination payment which is the compensation element for the employee’s loss of employment.

When signing a Settlement Agreement, employees will forgo the right to bring a claim against their employer, so this sum will depend on the nature of the situation and the level of incentive that the employer is prepared to offer as an incentive for their employee to sign the Settlement Agreement.

Some Settlement Agreements contain restrictive covenants that can restrict an employee for work with a certain employer for an agreement period, so any compensation figure should reflect that if it could affect their income.

Yes, absolutely, and if these restrictive covenants mean that they are unable to work in their industry for a time, then the compensation figure should reflect the loss of income they would experience. And also it is possible that a solicitor may be able to negotiate down restrictive covenants, say for example, if a restrictive covenant prevented an employee from working for a competitor for 6 months, the solicitor may be able to get this reduced to 3 months, or in the best possible scenario, removed in its entirety.  

If an employee is being asked to sign a Settlement Agreement, how long do they have to decide if they wish to agree to it?  

According to Acas guidance, employers should give employees a minimum of 10 calendar days to decide whether they want to accept a Settlement Agreement, but quite often an employer can put pressure on the employee to sign before then, in which case a solicitor can see if they can obtain an extension to allow reasonable time to consider the contents of the agreement.  

What happens if an employee refuses to sign a Settlement Agreement?

Settlement Agreements are not compulsory so if an employee is not satisfied with the terms, compensation, or indeed anything else about the agreement they do not have to sign. However, refusing to sign could lead to an employee’s role being made redundant if it were in a redundancy situation, whereby the employee may only receive a statutory redundancy amount compared to an enhanced figure which may have been offered in the Settlement Agreement.  

Obviously having advice from a solicitor is crucial because they can help negotiate better terms for you, check that the terms that you are signing are fair, and potentially give you an uplift in compensation.  

If you are an employee who has been asked to sign a Settlement Agreement, or an employer who is looking to draft one, please visit www.thpsolicitors.co.uk for contact details on our employment team who can advise you