Considering a Declaration of Trust

It is not uncommon  that when a couple purchase a home together  they make unequal contributions towards the purchase price; maybe a parent has gifted one of them a significant sum of money or one of them has contributed  the sale proceeds from a previously owned property.  

When this happens the couple may wish to own their new home in different shares to reflect their  different contributions.  There may be other  reasons apart from differing contributions why the shares should not be equal. For example, there may be tax planning considerations or  asset limitation as in the case of a business owner wishing to protect the property from future creditors. 

Different shares in property are created  by using a method of ownership known as Tenants in Common; creating separate and distinct legal shares that can then be owned individually.  However  the law presumes that  joint owners of property  own it in equal shares, which means that the onus is on the owners to show that their shares in the property are different.

The easiest way to do this is for the owners to enter into a Declaration of Trust which is a document setting out the shares in which the property is owned, the proportions in which the owners are to contribute to any mortgage repayments and other property outgoings and how and when the property is eventually to be sold.  Each Declaration of Trust can be tailored to meet a specific need or circumstance and can deal with issues such as whether on the death of one owner the survivor has any right to stay in the property and if so on what terms.

A Declaration of Trust is about creating certainty. It is not a public document and is not registerable at the Land Registry but it informs the owners, the owners’ personal representatives and the owners’  lawyers, exactly how the property is owned and the agreed process for resolving  any disputes in the future, potentially preventing any messy and expensive  litigation.

If you would like to find out more about Declarations of Trust or to speak to us about creating one please contact us via the website at info@horseylightly.com or telephone  01635 580858 and ask to speak to a member of our private client team.

Funding your Divorce

Some options for funding a divorce

Coming to the conclusion that your marriage or relationship is at an end is hard enough let alone working out how you are going to fund the legal costs involved with sorting it out. 

Understandably most clients don’t budget for this sort of expense in a marriage and, whilst the average divorce is a lot cheaper than the average wedding, most clients don’t enthuse over spending money on this life changing event. Some clients convince themselves that they “can’t afford” to instruct a solicitor but the reality is that they generally can, and should. It may mean that they have to start using up savings they have had earmarked for a “rainy day”,  or use their credit card or loan from a bank or friend or family member or just forego a planned holiday or new car just until “things are sorted”. Not really what most clients want to hear, I accept, but without legal advice the divorce and finances may not ever get sorted out, may take longer to sort out and may leave the party without legal advice financially worse off compared to their ex-partner or spouse.

So in summary here are some options for  funding a divorce:


Savings and/or budgeting for the costs

A private loan (e.g. from family or friends)

A bank loan

Credit cards

A specialist legal loan provider such as Novitas 

An agreed monthly payment to your solicitors – this will depend on the amount you can afford and the amount of your legal fees.

An application to Court for an Order that the other party helps contribute to your legal costs by paying a lump sum – although this is only possible in certain situations.  


Is my Divorce going to be straightforward?

Hmmnn… “probably” is what most Divorce lawyers will say even after the recent case of Tini Owens, widely reported in the press http://www.bbc.co.uk/news/uk-england-hereford-worcester-39380779 following the Court of Appeal's decision not to overturn a lower court’s ruling that she could not divorce her husband after a 39 year marriage. 

The reality is that most “divorces” are straight forward. In fact it’s often the sorting out of the related finances and children’s arrangements which are the challenge for most separating couples and their lawyers. The Owens case was unusual, primarily because Mr Owens decide to defend the divorce. Most spouses, even if they don’t particularly want a divorce, don’t actively defend divorce proceedings because of the cost and effort it involves.

This case does, however, underline the procedural requirements needed for Divorce though which most people may not be aware of. You can’t just get divorced because you are unhappy or haven fallen out of love with your spouse.

The particular issue before the court in the Owens case was whether the marriage had come to an end on the basis of Mr Owens unreasonable behaviour. The law states that you must prove your marriage has “irretrievably broken down”' and use one of the five following reasons to explain why:

Adultery

Unreasonable behaviour

Desertion

You have lived apart for more than two years and both agree to the divorce

You have lived apart released five years even if your husband or wife disagrees

So for unreasonable behaviour you need to prove that your spouse’s behaviour was/is unreasonable. Sometimes clients struggle to come up with reasons to blame their spouse for the marriage breakdown or feel uncomfortable doing so. In the Owens case the Judge decided that Wife had not proved her case.

There have been calls for divorce law to be changed to make it “no fault” but in the meantime, with divorce law as it is, if you need help with any of the issues raised please contact Alison Whistler on 01635 517128 or awhistler@horseylightly.co.uk


Enforcing Maintenance

On my divorce, I came to a financial settlement with my former spouse and an order was made by the Court. I should receive maintenance payments every month. Payments have stopped and there are now significant arrears. What can I do?

Firstly, you need to consider why your former spouse is not paying the maintenance and maintenance arrears.  

As simple as it sounds, you need to consider when and whether the payments are due to end.  Are there any terminating events that have taken place, ending your former spouse’s obligation to make maintenance payments?

If the maintenance is payable, the next step is to consider why your former spouse has stopped paying maintenance.   Have they misunderstood the terms of the order?

An order whether made by consent or not that requires maintenance to be paid is a judgement by the Court; the terms of which must be complied with.

If your former spouse argues that his personal circumstances changed, it does not change his obligations under an order.  

If your former spouse lacks the means to pay the maintenance, they should contact you setting this out and try to agree a way forward.  If it cannot be agreed, it is for your former spouse to ask the Court to change the order.

However, if your former spouse is not willing to agree to pay the arrears and reinstate maintenance, it may be necessary for you to file an application to Court to enforce the order.

There are a number of ways you can seek to enforce an order; you can seek for your former spouse to be sent to prison, to receive some of your former spouse’s remuneration from employment or you can charge assets.  You may also be able to seek a “pay-up summons”, an order that is becoming more and more common.  

A pay-up summons is an application for an order that your former spouse meet the outstanding arrears.  However, under such an application, you can indicate by which method you wish to enforce the order or, you can ask the Court to consider which method of enforcement is most appropriate.  When making the application, you will need to set out what sums are owed and to demonstrate how you have calculated this figure.

The Court will then require your former spouse to attend a hearing and provide details of their financial position.  The Court can impose severe penalties should your former spouse not attend.

A point to note is that you will need permission from the Court should you wish to seek payment of arrears for a period greater than 12 months.  So, do not delay making an application if arrears are mounting up.  You will need to consider alternative enforcement methods if your former spouse if living overseas. 

The Home Rights Notice

Matrimonial Home Rights give protection to a husband, wife or civil partner under the Family Law Act 1996 where the matrimonial home is owned by one spouse but the other spouse has a right of occupation.

So, in a nutshell, Home Rights protect a person’s interest in the family home, even where they don't legally own it, as long as their spouse does.

We strongly advise that if you are seeking to rely on Home Rights, they should be registered by a notice at the Land Registry.  If they are not registered, your Home Rights will not take effect.  On making an application, any mortgage lender will be notified. There is no fee for making an application.

Once Home Rights have been registered against a property, they are recorded as a charge.  Whilst the spouses remain married, written consent is required to remove Home Rights once registered. 

Home rights give an individual the right to:

not be evicted by the other spouse (providing that a court order does not prevent them from being there);

seek an order from the court to allow you to return to the home if you moved out;

pay the mortgage (in case the owning spouse will not);

be informed by any mortgage company that they intend to issue proceedings against the property; and

prevent the owning spouse from selling the property.

The registration of Home Rights does not prevent a mortgagee from beginning proceedings for the possession of a property.

However, once registered, Home Rights notices will fall away once a marriage or civil partnership has ended (usually by pronouncement of Decree Absolute).  

It is therefore important that a non-owning spouse takes steps to prevent or delay Decree Absolute if they have not made arrangements for future housing nor have reached a financial settlement.

If you would like to discuss any of the points considered above, please do not hesitate to contact a member of the family team on 01635 580858.

Trustee Act - Protection for executors

Are you as an executor protected against claims from a creditor?

If you take on the role as executor then you may be personally liable if you pay out money from the estate to the beneficiaries before paying off all of the deceased’s debts.

One way to protect yourself is by placing notices asking for creditors to contact you if they believe the estate owes them money. These notices should be placed for a minimum of two months after which you, as executor, would be protected from any future claims regarding the debts. If you have been made aware of a debt during or before the notice period then you would remain liable personally if you did not repay that debt from the estate.

It is important to note that the creditor is still able to claim their debt through the beneficiaries of the estate to obtain what they are due. You, as executor, however would be protected and the cost of these notices can be paid from the estate.

If you would like to discuss how we may be of assistance to you in the administration of an estate please do not hesitate to contact us.

Guardians for your children

Who would look after your young children if you die?

It is important for any parent to consider who should look after their child or children who are under the age of eighteen if they die. At the first stage, in simple terms, the surviving parent would become responsible for looking after their child or children.

However if both parents die, for example in a car accident, then it is possible to name in your Will who you would like to act as guardian for your children. It is highly recommended that you discuss this with your chosen guardian before naming them in your Will to make sure that they are happy to take on the role should the worst happen.

Another important consideration is whether or not you would like to leave a gift of money to your chosen guardian. It is possible to make such a gift on the condition that the named guardian takes on the role. If so, should they choose not to look after your children they will not receive the money gifted in your Will.

If you would like to discuss how to appoint a guardian in your Will please do not hesitate to contact us.

Pursuing a guarantor bound by an Authorised Guarantee Agreement (AGA)

When a lease is assigned to a new tenant it is usual for a Landlord to require the existing tenant to enter into an AGA. Under the terms of this agreement the current tenant guarantees that the new tenant will comply with the terms of the lease and pay the rent. Should the new tenant fail to pay the rent the landlord can pursue the former tenant in order to recoup the lost rent. 

Because the AGA is an agreement which is subject to statutory regulation under the Landlord & Tenant Act 1995, a specific procedure must be followed in order for a Landlord to successfully recover sums from the former tenant. A failure to follow the legal procedure in pursuing a former tenant could have a number of serious legal implications. 

As a rule of thumb, there are many intricate details to handling the recovery of unpaid arrears from a former tenant bound by an AGA and it is important that the process is followed correctly in order to avoid any risk of a tenant taking advantage of a mistake and to prevent a delay in attempted recovery.

Inheritance (Provision for Family and Dependants) Act 1975

Are your beneficiaries going to inherit the money you have left to them?

One of the most common reasons a person makes a Will is to ensure that the people who inherit their estate are those that they want to inherit their estate. However if, for example, you are married and do not make provision for your spouse a court may decide that your spouse is entitled to money from your estate.

Another situation where a court may decide to make provision for someone from your estate, if you have not done so, is with your children. There are many factors that the court will take into account but a child is able to make a claim against your estate if they feel it is appropriate.

 There may be very good reasons why you have not made provision for someone in your Will and, if so, it is important to keep a note of these reasons with your original Will so that they can be taken into account after you die. You must remember that you will not be around to explain your decision!

If you would like to discuss the possibility of a claim against your estate then please do not hesitate to contact us.

Specific gifts in Wills

Making sure your assets go to the right people.

One of the most common reasons a person makes a Will is to ensure that the people who inherit their estate are those that they want to inherit their estate. If a person dies without leaving a Will their estate is distributed strictly according to statute, irrespective of the wishes of the person who has died.

There are several types of gifts that you can make in your Will including gifts of money, gifts of specific items and gifts of the remainder of your estate after any debts have been paid.

There are particular issues that must be considered when making a gift of a specific item. The choice of words used in your Will is very important. For example, if you make a gift of ‘my Ford Focus’ then, if you do not own a Ford Focus when you die, the gift will fail. However, if the gift had been worded ‘a Ford Focus’ then your personal representatives would be obliged to purchase the car using money from your estate.

With a gift of land, an important consideration is whether your beneficiary should receive the land free of any mortgage that may be held on the land or whether the mortgage should be paid from the remainder of your estate. If the gift is made free of the mortgage then the people you name as the beneficiaries of the remainder of your estate will receive less as they will have to pay the mortgage.

If you would like to discuss making gifts to people in your Will then please do not hesitate to contact us.