Three important ways you can future proof your family life – and the risk if you don’t!
We never want to think of things ending – relationships, marriages, our own life. But sometimes the unexpected can happen. And when it does, it pays to be prepared.
Having conversations about money with our loved ones isn’t always easy. It’s never a comfortable topic to raise, especially if you’re discussing what you want to happen if you die or become incapacitated.
And raising the issue of what happens to your money if you divorce when you haven’t even said your vows yet can at best be considered unromantic or pessimistic, and at worst be a subject you avoid altogether.
But avoiding a tricky chat in the short term can just lead to more heartache in the long term when you do die, or if you do split with your partner.
It’s far better to understand your options now, and protect yourself and your loved ones by having the right conversations now and putting whatever measures you need in place, should the worst happen.
But what are the conversations you should have – and what kind of risks do you take by not taking the right actions and getting the right legal advice? Here are three important ways you can future future proof your family life.
1) How to protect yourself when you fall in love
It’s not always easy to be practical when you meet someone and fall in love and decide to marry. But it is important to protect your hard-earned cash or business interests. Especially if you decide that not only will you live together and have children together, but you also want to (for the strong hearted only) work together.
If you combine your assets and share an income stream, what happens in the future if sadly you separate? How can you protect yourself at the start, without saying no to marriage?
You might decide to rely on the hope of a happy ever after, and that is understandable. But it doesn’t give you the security of entering into a pre-nuptial or pre-registration agreement.
These documents can be negotiated and drafted with independent legal advice for both you and your partner, so you are both clear on your financial positions in advance of your marriage or civil partnership, and possibly how this may change later.
These agreements give you both clarity, so you have a platform and security to build upon with the comfort that you have protected your respective positions if, sadly, your coupledom does permanently breakdown. The document acts as a contract between you and confirms what you both intend to happen should a divorce or disillusionment ensue.
2) How to protect yourself when you divorce
In the event that there is no pre-agreement and your marriage or civil partnership permanently breaks down, you can handle your own divorce online via the government website without the need for a solicitor.
However it can be risky not taking some level of advice before you begin divorce proceedings, as you may not have the whole picture, and full disclosure might not be given by your soon-to-be-ex. You may also need help deciding on arrangements for children, trust funds and properties.
Financial separation can be tricky. The finances between a couple and the arrangements for any children are not dealt with by the divorce itself. Say, for example, you have a house and pensions, and you do the divorce online and sell the house. You may think is the end of it, but sadly, that is not the case.
There can be a point in the future where your ex-reappears and can try to claim on pensions that were not dealt with, and even any inheritance or lottery win that you received after the marriage, and the divorce, have ended.
Maybe you didn’t sell the house and you have renovated, but your ex is still on the mortgage, so they are entitled to the enhanced share. Or perhaps you later discover they were moving money offshore, or paying a potential new spouse money or owned a business you didn’t know about before you divorced.
The best way to future proof this risk is to take advice early on, and understand what you need to do to finalise your financial position at the time you divorce.
A court order by consent or by application is the only way to prevent your ex from claiming against you at a future point. This is a clearly detailed agreement of how everything will be divided now and in the future – maybe when children are of a certain age, or a property is sold. This requires financial disclosure for transparency; an agreement or court reached position, which then becomes legally binding.
But what if you sign this and you do not have all the facts? Or you later find out things have changed? Or you used a lawyer and signed an agreement, but didn’t really understand the terms as you were too upset at the time?
What we can all learn from the case of Wyatt v Vincent
A perfect example of what can happen if you don’t handle your divorce properly is the case Wyatt v Vincent  EWHC 1368 (Fam). The relationship lasted two years and the parties had a child together. Their standard of living could be said to be ‘low’, so low income and limited assets.
However, after separation the husband pursued a new-age travelling lifestyle. 13 years after separation the he established the successful energy company Ecotricity, and his wealth grew to an estimated £57m.
As he was long divorced by this point, it’s easy to assume his ex-wife had no right to this money, but that’s not the case. She made an application and sought £500k for a house and £1.35m to support her for the rest of her life.
The husband applied to strike out his ex-wife’s claim, but this was not allowed by the court and the wife’s claim continued. Lord Wilson stated that “the current law always requires rich men to meet the reasonable needs of their ex-wives”.
In the end, the husband paid for the wife’s legal fees of £350k, and it is reported she received a lump sum of £300k. Needless to say, this case acts as a reminder to all parties to consider early settlement options. It also is a warning in settling finances at the time of the divorce in fear of allowing a claim in later years, as both parties’ finances could change significantly.
Why you need to get legal advice BEFORE signing a consent order!
We had a client recently who discovered her husband had a business she was unaware of. She had signed a settlement agreement without solicitors, and this had been filed at court.
The only way to unravel this is to apply to the court stating ‘fraud’; ‘lack of disclosure ‘ or ‘misleading the parties’. But to establish this she will need to prove she was not informed about the company and, without solicitors and letters, this is proving very difficult and could become costly and stressful.
Unravelling consent orders after execution is not as easy as people think, so it’s important to be wary of entering into these without advice.
3) How to protect your loved ones when you die
Whether you are single, coupled or with children, the only certainty in life, apart from taxes, is death. And while your death is not a subject to consider for too long, future proofing for your loved ones is the best way to look after them when you are gone.
A will can give effect to your wishes and provide your loved ones with certainty and everything you wish for them to have from your assets and items. It avoids the risk of your wishes not being followed and provides for the ultimate future planning for the people you care about.
A consideration that many have when looking at wills is also preparing for situations in which they cannot be understood or give clear indicators about what is wanted, because of capacity issues such as dementia.
Lasting Powers of Attorney can be created to appoint someone to speak on your behalf when you need them to do so, in respect of your health and welfare, and your property and bank accounts. It enables you to decide now who will make those decisions for you when you cannot.
Practical, forward-planning makes things easier if or when they end
We all think we will live forever; we all want to stay together and live happily ever after, and those wishes are not dispelled by practical, forward planning. Instead they are assisted.
As a firm we also look to the future and when assisting with these areas of future planning, giving certainty, we provide further certainty by providing clear, fixed cost estimates in all the above areas of assistance.
We know that short term and long-term peace of mind is best helped with clarity of costs too. Please do get in touch and find out more.
A City Law Firm offers a range of commercial and life services that benefit both sexes.
Photo by Nathan Dumlao