Family law group Resolution encourages, and indeed expects, both parties to voluntarily begin financial disclosure at an early stage to help move negotiations along and increase the chances of reaching an amicable solution, thereby avoiding the acrimony and costs of having to go to court.
Without an exchange of financial information, neither party can receive proper advice on any settlement. Put very simply, the size of the matrimonial pot needs to be known and agreed upon before it can be shared out.
Indeed, if either party makes an application to the court for a financial remedy (settlement) order, then the court will automatically order both parties to disclose their finances and assets fully. These details will need to be filed with the court and exchanged with each other by a given date.
It makes sense to prepare and exchange this information as soon as possible using Form E.
You get a percentage share of any one (or more) of your spouses’/ civil partner’s pensions. This is either transferred into a pension in your name or it may entitle you to join your ex-partner’s pension scheme. There may be better benefits available from the pension if you are able to remain a member of your spouse’s scheme. If the pension is transferred to you and you don’t already have your own pension, you’ll have to set one up. An independent financial adviser will be needed to assist with this. A pension sharing order can only be made if your divorce or dissolution is completed with the court pronouncing a Decree Absolute / Decree of Dissolution.
The value of any pensions is offset against other assets. For example, you might get a bigger share of the family home in return for your ex-spouse keeping their pension. It is vitally important however to appreciate that it is not an easy exercise to compare the value of a pension which is a future income stream and say money in the bank which is immediately available to you.
Even though the form can look quite intimidating at first glance, it is not that difficult to complete it, and with the benefit of proper legal advice, there is no reason for it not being completed properly.
A poorly-drafted and presented Form E will take far more time to deal with and mean that the parties often have to ask for additional details in a questionnaire or ‘schedule of deficiencies’, incurring additional, unnecessary costs.
They can also confirm one party’s suspicions that the other party is not being forthright and maybe trying to hide assets or muddy the waters.
Stowe Family Law clients benefit from the firm’s in-house forensic accountancy team. The team can be invaluable in preparing accurate Form Es, particularly where business assets are involved.
The forensic accountancy team can also help scrutinise the other party’s Form E and supporting documents and raise relevant questions if the information seems to be lacking or unclear.
Here is some divorce form E guidance, with answers to the most common questions our divorce solicitors encounter.
Including a current valuation of any properties owned is good practice but not obligatory unless one has been obtained within the last six months. Ideally, an up-to-date valuation is provided for all properties owned unless both parties fully agree on its current market value.
A further common omission is an up-to-date mortgage redemption statement, showing the amounts outstanding for any mortgages secured against the properties. These should always be obtained and should be current.
All bank accounts, building society accounts, and National Savings accounts held by either party over the previous 12 months, including joint accounts, must be fully detailed in Form E.
You will need to set out the name of the bank or building society, the type of account, the account number, the names of the account holders, the current balance, and that party’s share of that balance.
It is surprisingly common to find that bank accounts have not been disclosed, only revealed after questions have been raised later. Often bank statements are not provided for the necessary period – i.e. a full 12 months – or they are illegible, or certain periods are missing, or one statement merges into another statement, making it impossible to clarify what accounts are held and what the balances are.
To avoid this problem, draw up your bank details with professional help if possible. A family law firm can help you with this.
This includes PEPs, ISAs, TESSAs, National Savings, bonds, stocks, unit trusts, investment trusts, gilts, and other quoted securities.
These must be disclosed, giving the full name of the investment, the type of investment, the size of the holding, its current value, the names of all parties with an interest, and the current value of that party’s interest.
The key documentation required in support will be the last statement or dividend counterfoil for each investment.
All life assurance (endowment) policies must be disclosed even if they have no surrender value and pay out on death only. If they do have a surrender value, that should be included.
Insurance and similar financial instruments can be more difficult to understand than regular income. As such, we recommend talking with family law solicitors and similar third-party professionals when filling in these sections of Form E.
Details of all monies owed to a party must be included, as well as all cash sums held more than £500. Similarly, all personal belongings individually worth more than £500 must be included too. Often valuable items of jewellery or family heirlooms are excluded when they should be disclosed.
All liabilities should be disclosed, with details of who the debt is owed to and the amount.
Interestingly, Form E does not require supporting documents to be provided for this. Ideally, these should be included to save time, as the other side is likely to request up-to-date statements for verification.
If capital gains tax might be payable, then it is good practice and expected that a calculation should be included in Form E, as clearly this affects the net value of the assets.
As Stowe Family Law has a forensic accountancy team, these calculations can be undertaken in-house; contact our family solicitors for more information today.
There are detailed sections of Form E for any business assets or directorships. These need to be completed with supporting documentation, including business accounts for the last two financial years and any documentation that values a party’s interest: either a formal valuation or otherwise, with all directorships held or having been held in the last 12 months detailed.
As the parties’ pensions are often valuable items in the pool of matrimonial assets, the court can consider these, so full details of all pensions need to be provided in Form E, together with an up-to-date cash equivalent (CE).
The CE is an important document that the court requires for the initial valuation of all pensions held.
As they can take quite a long time to obtain from the pension provider, it is good to ask for these at a very early stage to avoid any delay in the proceedings.
Pension providers are obliged by law to provide this information and documentation to the pension scheme member, free of charge, annually.
In certain cases, the cash equivalent may not be an adequate valuation. In those cases, it may be necessary to obtain an actuarial report on the pensions held, but this would have to be ordered by the court at the first appointment hearing.
Parties to divorce must also fully declare their income from all sources, whether from employment, self-employment, a partnership, or investments – i.e. dividends, interest, rental income, state benefits, pensions, or any other source.
Supporting documentation must be provided for each type of income. So, for example, for PAYE employment, the P60 for the last financial year will be needed, along with the last three wage slips they received and the last form P11D if this is relevant.
Each party will also be required in their Form E to set out a schedule of their monthly or annual income needs, both for themselves and for any children, as well as their ‘capital needs’ – i.e. the funds they may require to purchase a property or replace a motor vehicle or undertake essential repairs on their home.
It is good practice to obtain details of several suitable properties similar to the former matrimonial home to assist the Court in establishing the costs related to that party’s housing needs. This is often not dealt with at an early stage, but it is preferable to do at the outset to establish housing needs.
Other sections towards the end of Form E require details of any significant changes in assets or income over the preceding 12 months or in the following 12 months.
Further sections allow comments upon relevant factors such as contributions or inheritance prospects or conduct.
It should be remembered that in the case of the latter, only the most serious misconduct should be detailed and only if it is relevant to the financial issues at hand.
At the end of Form E, each party must sign a ‘statement of truth’ that confirms that the information they have given is full, frank, clear, and accurate disclosure of their financial and other relevant circumstances. It includes a warning that anyone making a false statement on Form E may face contempt of court charges.
Even after Form E has been filed and exchanged, the parties must make full, frank, relevant, and continuing disclosure of their finances until an agreement has been reached or the court has made a final order. This means each party will be legally obligated to disclose any changes in their financial circumstances or any relevant changes in their circumstances to the other party.
Although to the uninitiated Form E’s may appear cumbersome, they are very useful as both parties exchange like-for-like documents. Furthermore, Form E acts as an excellent checklist of what information and supporting documentation must be disclosed during the divorce.
It is advisable to seek independent legal advice from a family law specialist if you must complete a Form E.
If the factors listed are all taken into account when completing a Form E, you are far more likely to avoid unnecessary delays, costs, and questions later on; a divorce lawyer can help you do precisely that.
So, are you searching for family solicitors near me? Contact Stowe today! Our local divorce lawyers have helped many people with Form E and divorce settlements.
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