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We’re “consciously uncoupling”, what happens next?

The idea of “conscious uncoupling” has attracted a great deal of attention in the last week following the announcement of Gwyneth Paltrow’s divorce from Chris Martin. In short, they have decided to separate amicably.

The couple have two young children together and have spent married life living in the UK and the USA. Their joint net worth is reportedly $148,000,000 and they have a portfolio of properties in the UK and USA. So what happens next?

Where can they divorce?

Couples who live or had lived in a number of countries may have the option of deciding where they start court proceedings; this does not necessarily have to be the country in which they live or where they married. In Chris Martin and Gwyneth Paltrow’s case, it may be possible for them to divorce in England as they previously lived in London.

The country where couples start court proceedings could have a significant impact on the outcome when it comes to children and assets. For example, the courts in some countries will award bigger divorce settlements to wives than others and will consider a homemaker as equal to a breadwinner; others will not. The enormous differences between countries can sometimes result in divorcing couples ‘forum shopping’; shopping around to see which courts will give them a better deal. There can sometimes be a race between couples to get divorce proceedings started in the country that will get them a better divorce settlement.

What happens if there are properties or assets abroad?

Where there are assets abroad, it is always important to make sure that advice is sought from a qualified advisor from the country in which the assets are located. There may be problems with enforcing divorce settlements obtained in one country, in another.

What about the children?

It would seem that Chris Martin and Gwyneth Paltrow are intending to “co-parent”, which suggests that they will both play a meaningful role in their children’s lives and are intending to be amicable. But what happens if they can’t agree on where the children will live and who they will live with?

In England, if one parent wishes to move abroad with a child, they need the permission of the other parent, failing which, they must apply for court permission. Parents, who have a court order in respect of either residence or contact for their children, may need to get it registered with the court in the country that the child lives so that it can be enforced. In very extreme cases, one parent may remove a child from the country in which they live without the permission of the other parent; this is otherwise known as parental child abduction. It is unlikely to occur in the present case, but is sadly on the rise given the increase in families living international lifestyles.

As it can be beneficial to use the English legal system to process your divorce you should always take advice on whether you are eligible to divorce under English law. Please contact us on 01225 750000.

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Expat Divorce

Because the Mogers family team have collectively lived in countries such as Hong Kong, The Philippines and Nigeria we know it is hard enough to know where to turn to for a decent plumber, let alone specialist advice on matrimonial and family problems.

For those separating on British shores help is at hand in the form of Resolution – an organisation specifically set up by English family lawyers to help point separating couples in the right direction. However, in the event of a marriage or relationship breakdown between expatriates abroad, it is more difficult to know where to turn to. They will find themselves going through great anxiety facing questions such as “will I be able to stay here”, “who will sponsor the children and provide visas” and “what am I entitled to”. This is in addition to the normal emotions during a separation i.e. guilt, anger, sorrow and vulnerability. The sooner these issues are resolved, the better.

We often deal with enquiries that follow the pattern mentioned above. On a first meeting with a client we give an early consideration to the issue of jurisdiction. What is the appropriate forum for proceedings to be commenced? Jurisdictions to consider would be that of the client’s home country, the partner’s home country, or the jurisdiction of the host country if this is different.

Jurisdiction will largely depend on nationality, domicile and habitual residence of both parties. British expatriates are often unaware that divorce and financial matters can be dealt with swiftly through the English courts, without them even leaving the host country. A divorce is routinely carried out on paper, without attendance. It is not, as often thought, necessary to divorce in the place in which you were married.

Jurisdiction is a complex issue, and requires detailed consideration. Lengthy delays to any proceedings, amicable or otherwise, can take place if matters are commenced in the wrong jurisdiction. It is also important to be aware from the outset of the enforceability of any orders that are obtained. Some orders made by the English Courts may not be enforceable in the host country if they conflict with local laws. If separating couples seek comprehensive advice on all these aspects at an early stage, they can increase the likelihood of an amicable and swift resolution of the issues between them.

As in life, the key to a good marriage is compromise. The same can be applied to separation and divorce. Both parties must compromise with each other and to avoid the entire family becoming embroiled in a lengthy, costly and upsetting period; each party must try and continue to consider the feelings, needs and the rights of the other party.

Clean break via a pre-nuptial agreement

The Financial Times recently reported that professionals in the City and those working abroad are increasingly turning to pre-nuptial agreements in order to protect the savings and investments generated from their labour. These “new money nuptials” are a contradistinction to the “old money nuptials” which typically look to ring-fence assets inherited on the death of parents, grandparents etc.

So are pre-nuptial agreements binding and are they worth the “hassle”? To help breakdown the issues, let’s work with the following common example.

Jeremy is a British citizen who is getting married to Jenny, an Australian national who was schooled in England. They both currently live and work in Qatar taking advantage of the more favourable tax system. Jeremy is a civil engineer and Jenny an English language teacher. They plan to continue living in Qatar after marriage but do intend to return to England to set up a family. There is a significant imbalance in assets. Jeremy has roughly £1,500,000 in assets, including equity in a house in Cheltenham and investments. Jenny has a few thousand pounds in savings. Neither party is likely to inherit any significant sums.

The current position on pre-nuptials in English law is that weight would be given to them in the event of a disagreement provided certain factors are met. Importantly, the agreement must be fair in the prevailing circumstances and accompanied by some important formalities i.e. independent legal advice, absence any duress (pressure) and typically they are signed at least 21 days before the wedding.

Many pre-nuptials seek to ring-fence assets accrued before the marriage, so in Jeremy’s case the properties and investments, with the agreement essentially providing that the couple will, the event of a divorce, share the wealth they have built together – what might be called the “fruits of the marriage”. However, it is highly recommended that the pre-nuptial is periodically reviewed – it is important that neither party will be left without financial provision, and any children will need to be properly provided for. Staying with the above example, if Jeremy and Jenny have daughter, Jessica, the pre-nuptial would need to altered on Jess’ birth to take her into account and make sure she is provided for. So while there may be a clean break between Jeremy and Jenny on divorce, it is not possible for a parent to get a clean break from a child and issues such as child maintenance will need to be considered.

In terms of their benefits, pre-nuptials offer the likes of Jeremy and Jenny the certainty of knowing what will happen in the event of a divorce. The fact they currently live in Qatar is not necessarily a “deal-breaker” – a clause can be entered into the agreement which provides that both parties agree at the outset that any later dispute will be dealt with by English courts applying English law. More than this though, given the cost of a prenuptial is significantly less than court proceedings post divorce it really does pay to discuss and draft a prenuptial.

Traditionally many people like to sit down with their solicitors and discuss matters, nowadays with Skype it is often possible to discuss matters via the web. Papers can be faxed and sent via email.

Please contact Rebecca Silcock if you have any questions relating to pre-nuptials.

Young globe-trotters set to be winners with inheritance tax changes

Globalisation is leading more young professionals into international work and they look set to be the winners in changes in inheritance tax rules in the UK, designed to reflect the lifestyle changes of the rising tide of overseas workers who are increasingly likely to marry someone from a different country.

The 2013 Budget introduced two important changes to the inheritance tax (IHT) rules that will benefit couples where one partner is domiciled abroad.

From 6th April the IHT exemption on gifts to a non-domiciled spouse has been raised from £55,000 to £325,000 and non-domiciled spouses have been given the option to elect to be UK domiciled for IHT tax purposes.
Domicile is a concept that has no precise legal or statutory definition. It has nothing to do with residence, so a person stationed abroad for work will still be domiciled in the UK.

And it has little to do with nationality, as an Englishman who has settled in the States might have acquired US domicile for example. It is more to do with a sense of homeland or mother-country. At birth everyone has a domicile of origin, for example the domicile of one’s father in the case of a child living with the father, and one can acquire a new domicile – called a domicile of choice – by moving to another country with the intention of settling there permanently.

However, there is also what is known as deemed domicile for IHT purposes. If you have been resident in the UK for 17 of the last 20 years before a gift or death that gives rise to an IHT event, you will be deemed to be UK domiciled for IHT.
But non-domiciled individuals have generally been treated differently for IHT; they only have to pay IHT on assets that are situated in the UK, whereas UK domiciled taxpayers must pay IHT on all that they own, even foreign assets.

Obviously it would be easy for a UK taxpayer to avoid IHT by transferring assets to a non-domiciled spouse who would then move them abroad. And that is why the exemption for gifts between spouses has always been limited where the gift is to a non-domiciled spouse. From the mid 1980s the limit stood at £55,000 (the nil rate band at the time), so the increase to the current nil rate band of £325,000 is being hailed as long overdue.

The other reform is that a non-domiciled spouse can now elect to be treated as having UK domicile for IHT purposes and, by doing so, qualify for an unlimited spouse exemption. Once made, the election cannot be revoked while the individual is living in the UK. But if the individual leaves the UK and lives abroad for more than four years, the election will no longer be effective.

Nicola Owen private client expert of Bath-based solicitors Mogers said: “This is an issue that is becoming more and more common with globalisation. It will be important to weigh up the advantages of an unlimited spouse exemption against the disadvantage of having all one’s worldwide assets made subject to IHT.

“It is likely to be advantageous to young international professionals who are quickly accumulating wealth in the UK but who do not as yet have wealth abroad. Although it’s likely to be a different calculation for taxpayers in middle age or later who have either had time to accumulate wealth abroad or who have inherited from their parents.”

Can mediation always rise to the occassion?

Mediation is a popular method of resolving family law disputes in the UK. Rightly so, it gives power to the parties themselves to decide their fate. The idea is that a neutral third-party can facilitate discussion between couples and eventually help them compromise. This way of resolving disputes forms a central plank of changes to the family law system. The government ultimately hopes that it can fill the gap left by cuts to legal aid. Furthermore, plans are in place to make it a legal obligation to consider mediation before court-action.

But when is mediation relevant to a case? This recent article touched on the issue. Older people it suggests are “less likely to be fiery and more able to see the bigger picture”. As a result, mediation is suited to so-called “silver separators”. Mediation certainly has its place but its efficacy depends on the temperament of the parties and their general willingness to engage in the process. Moreover, in certain emergency situations such as the removal of a child from the jurisdiction mediation is unsuitable and court action necessary.

An application to the court may be or become the appropriate or only way of resolving disputes. However the court process can be stressful, costly, time consuming and lengthy. It may not result in the outcome the individual wanted and along the way problems can become more entrenched and family relations worsen.

The most important thing is finding the best approach for you – whether that’s mediation or collaborative work, joint meetings, negotiation and communication with another solicitor or direct with the other spouse or former partner. Court may be the answer but other than in particular emergency situations or where there is a risk of harm to an individual or child, it is certainly not the only answer and rarely should it be the first port of call.

If an application to the court is needed we can deal with all aspects of making that application and representing you in court but the important point being missed is that, without access to experience and expertise, the plethora of other options including mediation can often be overlooked.

MW

International child abduction

Recently I posted a blog on child abduction prevention looking at precautions parents can take in the event of suspected child abduction. The well publicised case of Aleksandra Abou-El-Ella shows just how complex such cases can be.

Polish-born Aleksandra (Alex) and Egyptian-born Mustafa were married in 2009. Shortly after, their daughter Mona was born. Without warning, Mustafa relocated with Mona to Egypt. Mona was just one at the time. As both parents in this case have something called ‘parental responsibility’, any decision on where Mona should live should have been made jointly.

Alex subsequently engaged in a two year legal struggle to try to recover Mona which culminated in a dramatic SAS-style mission. Alex travelled to Egypt, and disguised in local clothing, she was able to snatch Mona on the streets of Egypt and bring her back to the UK.

Whether this is the most child-centric way to go about matters is questionable, but the fact Alex felt this was her only option is certainly disappointing for the international legal profession. Unfortunately Britain has no extradition treaty with Egypt and the country has also yet to sign the Hague Convention on the Civil Aspects of International Child Abduction, a major treaty which allows children abducted from one country into another by a parent to be quickly returned.

The one document that is in place, the Cairo Declaration, is a simply a ‘memorandum’ a statement of well-intentioned principles which is yet to generate a single return from the country. To compound matters, the abduction of a child from the UK or another country to Egypt is not a crime in Egypt unless there is an Egyptian court order regarding custody of the child or travel restrictions. And ultimately in Egyptian law Mustafa would be entitled to custody in the circumstances.

Happy holidays

Schools out! It’s one of the best times of the year for children but one of the most challenging for parents. What do you do with them? How to keep them busy? Which camp should they go to?  Can Finding Nemo still be funny the 3488th time? Added to this can be the emotional hangover of a strained relationship or a recent separation.

Here are our top tips for making the holiday period go as smoothly as possible if your  relationship is on rocky ground, if you are in the midst of divorce proceedings or if you have already separated or divorced.

  1. Think before you drink. We all like Sangria on a hot evening but excessive alcohol consumption lowers inhibitions and can make you say or do things you will later regret. Save difficult, emotional topics for discussion when the children are not present or perhaps consult a specialist counsellor.
  2. Put the children’s needs first. Quarrelling in front of them, or tense angry silences during handovers will cause them anxiety and distress. Talk with friends about how you’re feeling (without the children present) or consider visiting websites such as http://theparentconnection.org.uk/ which can offer advice and support.
  3. If both of you are in new homes, try to ensure that your children spend enough time over the holiday period with each of you to relax and feel settled. Try to come up with contact plans well in advance so both parties know where they stand.
  4. Do not be afraid to seek counselling or other alternatives to save your relationship before you decide to commence divorce proceedings. The charity “Relate” offers relationship counselling in person, by telephone, or by email: http://www.relate.org.uk/home/index.html – Tel: 0300 100 1234
  5. If ultimately you feel that the relationship is over, and you have the children, you may wish to wait until the new school term has begun so that the children are settled in before you contact a solicitor.
  6. Finally, enjoy! When September comes, many parents breathe a sigh of relief. Thinking ahead, wouldn’t it be great to say you’d had a fantastic summer? In your family, what needs to happen for you to be able to say that? Parents are amazing people doing the most important job they’ll ever do – let’s make our summers enjoyable and refreshing for us as well as our children.

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