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   Ancillary relief
  Ancillary Relief   "Ancillary relief is concerned
with the finances on divorce
"

The courts consider the divorce as of primary importance as this concerns the arrangements for any children. Ancillary to this are the financial matters and matrimonial assets that include the pension arrangements. Ultimately the court will seek a clean break between the parties including using pension sharing.
  Introduction   Powers of the court   Matrimonial home
  Clean break   Court decisions   

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Introduction
In England and Wales the courts regard the divorce as of primary importance and the question of financial matters and matrimonial assets as being ancillary. However, usually the husband and wife will agree that the marriage is over and that getting a divorce is the correct procedure, so this part of the process is quite simple.

The arrangements for the children will often be resolved by agreement, however there can often be disputes over the financial matters also including a members pension rights. In the case of pension arrangements, this could take the form of an earmarking order or pension sharing order against retirement benefits.

It is not unusual for ancillary relief proceedings to take longer than the divorce to resolve but even so the whole process is typically measured in months rather than years as can be seen in detail from the step-by-step guide. On divorce, even if the parties agree to a financial order, it cannot be made final until the decree nisi is granted. For couples either on divorce, judicial separation or nullity of marriage the court has the power to make a financial order against the assets owned by the husband or wife in their own names or assets owned jointly.

In addition the court has the power to make a financial order that will apply to the sale or transfer of property, a payment of a lump sum from the assets or a members pension rights or where there are children and an income for a non-working spouse is required, maintenance payments. It is important to realise that the court does not have the same jurisdiction where the couple is not married but living together.


Clean break
Under the Matrimonial Causes Act 1973 (MCA 73) the courts are given direction for the resolution of the financial matters for a couple on divorce and this includes having regard to a clean break. This means that the matrimonial assets will be divided between the couple resulting in a complete separation when the marriage ends, usually sometime after the court grants the decree absolute. However, where there is an obligation to maintain children of the marriage it may not be possible to achieve a clean break.

This could occur if there were limited assets of the marriage and one of the parties was a high earner (usually the husband) whereas the other party looked after the children (usually the wife). On divorce she would be unable to support herself and there may be a requirement for a maintenance order. Even so, the courts will usually expect an order for maintenance for the spouse to be restricted by time so as to achieve a clean break in the future. One assumption is that the wife will have existing skills from a previous employment, can be re-trained and will eventually have a sufficient income to support herself.

Where there is a pension arrangement involved and an earmarking order against the members pension rights at retirement age, a clean break will not be possible. This arrangement will mean the former spouse will have to wait until the member chooses to retire before payment of a pension income or any tax free lump sum. As most couples usually want a clean break of the financial matters on divorce, it is understandable why earmarking is only occasionally used to settle the retirement benefits.

A clean break would result in an internal or external transfer of pension benefits and in many cases the spouse is nearing retirement and requires a pension income. Where this is a money purchase scheme, the spouse can use the pension fund to buy an annuity and has the option to use an open market option to search for the highest pension annuity. Once you have purchased an annuity it cannot be changed, so learn more about annuities, compare annuity rates and before making a decision at retirement, secure a personalised pension annuities quote offering guaranteed rates.


Court decisions
During divorce procedures the court will divide the matrimonial assets based on the rules as set out in section 25 of the Matrimonial Causes Act 1973 (MCA 73). These rules consider for each party the matters of income, property, financial needs, obligations, standards of living, age of the parties and may other factors.

However, there has been an increasing tendency for the courts to concentrate on and aim to satisfy the needs of the parties when deciding on financial matters. This means that where the couple have young children the court assume they will stay with the wife and that they will need a roof over their head. Usually the wife will remain in the former matrimonial home and the property will be transferred to her name with the husband receiving other assets, for example retaining the full value of his pension arrangements and this process is known as offsetting.

Satisfying the parties, in particular the wife, on a needs basis has occurred in most cases even if the parties are wealthy. The wife has received only enough for a house and an income to satisfy her needs and this is often been only a fraction of the value of the total assets. With the case of White v White (2000) the needs basis approach has been changed as the ruling by the House of Lords emphasised the starting point should be on an equal split of assets, based on the equal contribution by the parties whether one is an income-earner or a home-carer.

In the United Kingdom it is important to remember that the existence of a pre-nuptial agreement specifying the ownership of assets as a result of a marriage breakdown is not binding in law. The court has the jurisdiction over the division of assets and can look beyond any agreement when making a final order. If the couple are not married and remain so, then the existence of such an agreement will be effective in UK law.


Powers of the Court
Throughout the legal procedure to settle ancillary relief at first appointment, financial dispute resolution (FDR) appointment and final hearing the judge will work with the parties to achieve an outcome where there is mutual agreement as shown the step-by-step guide. Only as a last resort where agreement cannot be reached will the court use its power and impose a judgment. When the court makes a final order it can decide to split the matrimonial assets in any way it feels is satisfactory.

This can mean the transfer of legal ownership between assets or from a joint to a single ownership. In the case of a members pension rights, since 1 December 2000 the Welfare Reform and Pensions Act 1999 (WRPA 99) has made it possible to grant a pension sharing order that would result in dividing the retirement benefits. This creates a pension arrangement in the name of a former spouse. The court also has the power to grant a financial order after divorce. As there is no time limit this could be served years after the divorce.

At the time, the couple may have thought they could reach an agreement but then find this is no possible. The court will consider several factors for such a case but in particular, an increasing time delay will be detrimental to the application. If the parties have lived apart for a long time and are not dependent there is less of a case for ancillary relief and this is especially true if the party has since re-married. The court would consider it unreasonable after time and without expectation to make a claim for ancillary relief against a former spouse.


Matrimonial home
Where the married couple are joint legal owners of the matrimonial home, both have the right to remain in the property unless the court makes an exclusion order. Various orders can be made to achieve this:

Transfer to one party's sole ownership;
   
Deferred Interest Order granted by the court. There is the right for one of the parties to occupy the matrimonial home up to an agreed point in time, such as the children are independent. It will be agreed who will pay what bills;
   
Mesher Order granted by the court. In this case usually the wife is allowed to remain in the property rent free, and the sale of the matrimonial home is postponed until the children are 17 years of age;
   
Martin Order granted by the court. The wife or husband remains in the property for the remainder of their life or until a "trigger" event occurs such as remarriage or a voluntary decision to leave the property.
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