How to repay a help-to-buy equity loan

If you took advantage of the government’s help-to-buy scheme to put you on the property ladder, you may now be looking to pay off the equity loan that was used towards the cost of buying your property. This could be because you’re selling up, have cash savings or are looking to remortgage. Below we look at some of the factors involved in how to repay an equity loan, including how much this will cost, the process to be followed and if a solicitor will be needed.

How much will it cost to pay off an equity loan?

The total amount of help-to-buy equity loan that you will need to repay is not fixed to the amount originally borrowed, but instead calculated based on the market value of your property at the time that you choose to repay and the equity loan percentage amount.

This means that the repayment amount can be lower or higher than the amount originally borrowed. If you are selling, the repayment figure will be calculated based on either the approved current market value or the agreed sale price, whichever is the higher. The amount you will need to repay also includes interest, fees and any outstanding payments.

What is the process to repay an equity loan?

The process to repay an equity loan will depend, in part, on your method of repayment. As your equity loan will be secured as a second mortgage over the title deeds to your property, you may be looking to increase your borrowing on your first mortgage and use this to pay off some or all of your equity loan. If you want to repay just part of your equity loan through remortgaging, you’ll first need to get permission from the administrator for Homes England to change your mortgage provider and increase your borrowing on your existing mortgage.

Provided permission has been sought from Homes England, where applicable, or where you are using the proceeds of sale or cash funds to repay your equity loan, you will then need to instruct an RICS-approved surveyor to inspect your property and provide a valuation report to confirm its current value. You will be responsible for the surveyor’s costs in this regard.

Once you have the valuation report, this will need to be submitted to Target Services Ltd, together with their loan redemption form and administration fee, in order to obtain a redemption figure. Target is a private company appointed by Homes England to administer the repayment of equity loans under the help-to-buy scheme. The valuation report will be valid for a period of 3 months from the date of issue. If repayment does not take place within this timescale, you will need to arrange and fund the cost of an additional desktop valuation.

Is a solicitor needed to deal with the repayment process?

Given that your equity loan will be secured against your property, a specific legal process will need to be followed to ensure its removal once you have paid this off in full. This means that you will need to instruct a solicitor to carry out the legal conveyancing to repay the loan, including checking with Land Registry that the equity charge has been removed.

The legal fees for your solicitor dealing with the transaction will vary depending on the nature of your financing for the repayment of the help-to-buy equity loan.

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.

Does cryptocurrency go into the matrimonial pot on divorce?

When couples cannot agree on the division of marital assets on divorce, or even where agreement has been reached but the court is required to approve a draft consent order, consideration must be given as to the nature and value of any assets owned or available to either party. In this way, a court order can be made that’s fair in all the circumstances.

In most cases, this will include all physical assets, such as the marital home, as well as any savings or investments, such as stocks and shares, and occupational pensions. But what about digital assets, such as cryptocurrency? Should this also form part of the matrimonial pot?

What is cryptocurrency?

Cryptocurrency is a form of digital currency based on blockchain technology and secured by cryptography. Bitcoin is the best-known cryptocurrency, and the one for which blockchain technology was invented. It’s essentially a medium of exchange, such as the pound sterling, but is virtual and uses encryption techniques, both to control the creation of monetary units and to verify the transfer of funds. Cryptocurrencies don't have a central issuing or regulating authority, instead using a decentralised system to record transactions and issue new units.

Can cryptocurrency be taken into account?

When making a financial remedy order on divorce, the court is under a duty to have regard to all the circumstances of the case, taking into account a wide range of different factors. These factors include the income, earning capacity, property and any other financial resources which each party to the marriage has or is likely to have in the foreseeable future.

As with any other form of money or investment, this means that cryptocurrency is an asset, albeit a digital asset, that the court will almost certainly put into the matrimonial pot when assessing the parties’ financial worth and considering what’s fair in all the circumstances.

That said, whether or not cryptocurrency will form part of the overall settlement ordered or approved by the court will ultimately depend on the totality of resources available to either party — to be considered in the context of their respective financial needs, obligations and responsibilities. The welfare of any children under 18 will be an overriding factor here, where relevant, although other factors can include the age of the parties, the length of the marriage and the standard of living enjoyed by the family before the breakdown of the marriage.

Does cryptocurrency have to be disclosed?

Given the encrypted nature of cryptocurrency, it can be tempting for any party in possession of this type of digital asset to decide not to disclose to the court either its existence or its true value. There may even be cases where a spouse may attempt to dissipate more easily traceable physical assets through investment in cryptocurrency in order to defeat their spouse’s claim.

However, when asking the court to make a financial remedy order on divorce, or even when seeking the court’s approval of a draft settlement agreement, the parties are under an ongoing duty to provide full and frank disclosure, including disclosure of any digital assets.

In cases of non-disclosure, where this comes to light, the court has the power to set aside transactions and order that such assets be added back to the matrimonial pot for distribution upon settlement. If an order has already been made, the court can also overturn such order, with significant costs and other financial consequences for the non-disclosing party.

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.

Remember to register non-taxable trusts

As part of the UK’s implementation of the 5th Money Laundering Directive (5MLD), and so as to give greater transparency as to the beneficial ownership of trust assets, HMRC has extended the requirement for trust registration to most non-taxable UK trusts. However, with only a small fraction of the anticipated numbers added to the register since it opened to these additional types of trusts last year, trustees should be urgently turning their attention to the impending deadline date and the potential penalties for any failure to register.

What are the new rules for registering trusts?

Set up by HMRC in 2017, the Trust Registration Service (TRS) is a digital platform which trustees must use to fulfil their trust registration obligations. The main purpose of the TRS is to reduce the risk of trusts being used as a vehicle for money laundering, where the register includes details of all parties to the trust, including the settlor, trustees and beneficiaries.

Prior to 6 October 2020, there was no requirement to register trusts with no tax liability, where only taxable UK trusts paying certain UK taxes needed to be placed on the TRS register. However, under the new rules, most express trusts in existence since 6 October 2020 must be registered, even those with no tax liability, unless they are specifically excluded. The registration requirement also extends to some non-UK trusts, including those with land or property in the UK, or at least one UK-resident trustee and a UK business relationship.

What is the registration deadline date?

Even though the new rules in relation to the registration of trusts were introduced on 6 October 2020, it took some time for HMRC to upgrade the existing TRS to take account of the new changes. Accordingly, the TRS only opened on 1 September 2021 for registrations which were brought into scope of the trust register by the requirements of the 5MLD.

However, with a deadline date of 1 September 2022, this has still given trustees a total of 12 months to register a non-taxable express trust, although it has been reported that only a small fraction of the estimated one million trusts affected by the rule changes have been registered to date. This means that for the thousands of trusts yet to be registered, trustees will have to act quickly to meet the deadline date and avoid any financial penalties. This includes any registrable trusts in existence on or after 6 October 2020, even if they have since ceased.

Where a trust is set up or otherwise becomes registrable in the 90 days immediately before 1 September 2022, the trust must instead be registered within 90 days of its creation date. Equally, non-taxable trusts created after 1 September 2022 must register within 90 days.

If you have either created a trust or are the trustee of a trust which has not yet been registered with HMRC, you are strongly advised to consider the guidance on HMRC’s website and, where necessary, to seek expert advice to check if you are caught by the new registration rules.

For assistance in registration a trust please call 01524 386500. 

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, either express or implied, is given as to its’ accuracy, and no liability is accepted for any errors or omissions. Before acting on any of the information contained herein, expert advice should be sought.

How are trust assets treated on divorce?

Following a break-up, trusts are one way in which the economically stronger spouse may seek to ring-fence property to protect this from going into the matrimonial pot on divorce. Solely owned assets may have even been placed in trust prior to getting married, in addition to or in lieu of a pre-nuptial agreement. However, it’s a common misconception that trusts assets cannot be taken into account by the court when assessing the parties’ financial worth, and considering what’s fair in all the circumstances when it comes to the division of marital assets.

Below we look at how any trust interest will be treated on divorce, where separated spouses are unable to agree on a financial settlement and the court is asked to intervene. 

What are trusts and trust assets?

There are various different types of trusts that can contain a whole host of trust assets. In broad terms, a trust can contain both money and property given to it by a ‘settlor’.  These assets will then be legally owned by appointed ‘trustees’ who hold the assets for the benefit of those specified within the terms of the trust, known as the ‘beneficiaries’.

For instance, a residential property placed in a lifetime trust may allow the beneficiary of that trust to reside in the property for the duration of their lifetime, or a beneficiary may benefit from interest on savings placed in a discretionary trust, albeit at the trustees’ discretion.

Trusts can be set up for various legitimate and non-marital reasons, including tax avoidance, to give third parties beneficial interests in property, to provide a discretionary income for a class or classes of beneficiaries, and estate planning for future generations. In some cases, trusts may also be set up specifically to protect the wealth of the settlor-spouse on divorce.

Will trust assets be ring-fenced on divorce?

When it comes to financial remedy proceedings, the court may be called upon to look beyond the complexities of any trust mechanism to examine the reality of the financial situation.

The fact that trustees have legal ownership of any trust assets, or control over the way in which these are managed, doesn’t automatically mean that any benefit derived from the trust should be disregarded when it comes to the matrimonial pot. This is the case, even if the trust was put in place prior to getting married, or otherwise set up with a genuine purpose. There may also be allegations over whether or not a trust has been solely created as a means of defeating the financial claim of the economically weaker spouse in anticipation of divorce.

Either way, under section 25 of the Matrimonial Causes Act 1973, the court has a duty to consider all financial resources available to both parties, either now or in the foreseeable future, including any trust interest. The court also has wide and varied powers to make orders that achieve a fair outcome in each case, including awarding the non-beneficiary party a greater share of non-trust assets. This means that trust assets may be treated as either income or capital that can be brought into account, regardless of the reasons behind the trust.

Needless to say, the court is likely to take an even more robust approach when bringing trust assets into account if it considers the trust to be a sham. It’s therefore vital that expert legal advice is sought prior to entering into a trust arrangement, either prior to getting married or following the breakdown of a marriage, or when pursuing or defending trust asset claims in the context of divorce and financial remedy proceedings.

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.

Taking the stress out of financial disclosure

 When a couple separates, it’s important for each party to fully understand the financial worth of their ex before entering into any negotiations as to the division of marital or partnership assets. So as to provide transparency, and to enable the court to make or approve an order that’s fair in all the circumstances, the parties are required to provide ‘financial disclosure’. Below we look at how this process works and how to minimise the stress involved.

What is financial disclosure?

Financial disclosure is the process where both parties to a marriage or civil partnership are required to exchange financial information in relation to their respective incomes, property and any other financial resources which each has the benefit of. This includes any assets held on both a joint and individual basis, together with valuations, as well as assets acquired prior to, during and even after the marriage or civil partnership has irretrievably broken down.

In some cases, both spouses or civil partners may be fully aware of each other’s financial worth, including any solely-owned assets — whilst in others, one party may have no knowledge whatsoever that particular assets exist, let alone how much these are worth.

How is financial disclosure made?

The parties are legally required to provide full and frank disclosure of their financial and other relevant circumstances, in a clear and accurate way, otherwise risk having an order set aside and being ordered to pay any associated costs. Moreover, if a party is found to have been deliberately untruthful, criminal proceedings may be brought against them for fraud.

This means that, if an agreement is reached the parties have to complete and sign a Statement of information form. However, if a financial court application is made, the parties will be required to complete, and sign with a statement of truth, what’s known as Form E. This is a lengthy and detailed legal document that can potentially run into hundreds of pages long, once all documentary evidence in support has been attached. Needless to say, this process can be daunting, and extremely stressful, when an individual is already having to deal with the emotional fallout from the breakdown of their relationship.

How can the stress be taken out of financial disclosure?

Even though completing Form E is no easy task, the following three top tips should be followed to help ease the pressure when going through this process:

• Read Form E carefully: your solicitor can help guide you through this process, although Form E itself sets out exactly what’s required so that you know what to expect. By printing off a copy of Form E, you can make one of these your draft 'to do' list. Once you’ve got all the necessary information, you can print a fresh copy to complete and forward to your solicitor.

• Be organised: by starting your ‘to do’ list early, gathering the relevant documents to accompany Form E, you will minimise the stress of meeting any deadline. A great deal of the information required will need to be requested from third parties, such as home and pension valuations, where it can take weeks or even months  to receive this information. It’s important that you give yourself plenty of time to prepare what you’ll be required to disclose.

• Be thorough: the parties are required to be completely up front about all the assets they own, even if their ex has no knowledge of these. Equally, it’s important not to make any accidental omissions, where there may be significant costs and other consequences for failing to disclose an asset or source of income, even if this was a genuine mistake.

Legal disclaimer 

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.

Using a Will Trust to protect a vulnerable loved one

Planning for your family’s future once you’ve gone can feel daunting. For those of you with a disabled child or grandchild, or other vulnerable loved one, this feeling may be amplified, not least because leaving a substantial inheritance could create all sorts of practical problems.

In particular, a loved one may not have the mental capacity to manage their own finances or live independently. You may also have concerns, regardless of their age, of exposing a loved one to a risk of exploitation — after all, a sizeable legacy could put them in an even more vulnerable position when it comes to opportunists. Equally, being bequeathed money or assets could impact their eligibility for means-tested benefits, leaving a loved one no better off.

By including a Trust in your Will, you can make financial provision for a disabled relative when you’re no longer around, safe in the knowledge that the money will be managed by Trustees for the benefit of that individual during their lifetime. In this way, your loved one will not be forced to look after their own finances, or be exposed to any risk of exploitation from unscrupulous characters, and nor will any inheritance affect their benefits.

What is a Will Trust?

A Will Trust is a legal arrangement, contained within a Last Will and Testament, that places any legacy left to a loved one in the hands of appointed Trustees. Upon your death, the Trustees will be tasked with managing that inheritance on behalf of the beneficiary, for example, by ensuring that your loved ones’ care needs are adequately met.

You can choose who to appoint as Trustees, including family members or even professionals. You can also leave a Letter of Wishes, setting out your preferences on how the Trust assets should be used, helping to guide the Trustees' decisions once the Will Trust comes into effect.

What are the risks of not having a Will Trust?

For some of us, the idea of putting in place a formal trust arrangement to financially protect a vulnerable loved one may seem wholly unnecessary, especially where there are, for example, siblings of a disabled child or grandchild that can be entrusted with their legacy. However, this is a risky strategy, even if you implicitly trust a surviving relative to honour your dying wishes. This is because an outright gift to another family member means that this legally belongs to them, where unforeseen circumstances may arise, such as debts, divorce or death.

For instance, if you have two adult daughters — one with a mental disability and one without — you may choose to leave your entire estate to the mentally able daughter, provided they promise to use half of that inheritance to financially support their sister. However, if the daughter without the disability accumulates debts or gets divorced, this will expose everything she owns, including the money intended for your disabled daughter, to creditors and divorce proceedings. If that daughter then dies a few years later, her estate may be distributed equally between her children, leaving your disabled daughter with nothing.

Why is a Will Trust beneficial?

A Will Trust offers a number of benefits for the parents or grandparents of disabled children, or those otherwise looking to make provision for a vulnerable loved one, including:

•   the beneficiary will be able to benefit from the assets at the Trustees' discretion, without having to personally manage their own finances

•   the beneficiary won’t own the assets contained within the Trust, so they cannot be coerced into using the money for other purposes and it won’t affect their means-tested benefits

•   the Trust assets aren’t owned by anyone else in a personal capacity, so cannot form part of a person’s estate for the purposes of debt, divorce or death.

A Will Trust can be used to effectively ring-fence the inheritance earmarked for a vulnerable loved one. However, specialist advice advice should always be sought, ensuring that any trust mechanism contained within your Will is tailored to your family’s needs after you’re gone.

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.

Making a gift and minimising inheritance tax

Gifting money, property or possessions to a loved one during your lifetime can be such a great feeling, although the joy of giving can feel even greater when you also factor in the potential tax benefits on death. In fact, lifetime gifts can be one of the best ways to minimise the amount of inheritance tax that your estate will be liable to pay when you die. But what are the exemptions when it comes to lifetime gifts, and how can you make the most of any tax relief?

What are the inheritance tax rules relating to gifts?

Some lifetime gifts are automatically exempt from inheritance tax, whereas others are known as potentially exempt transfers (PETs) to which a 7-year rule applies.

Gifts that won't count towards the value of your estate include an annual exemption of up to £3,000 during every tax year, as well as the small gift exemption, where you can make an unlimited number of small gifts of up to £250 per person. Wedding or civil ceremony gifts, and payments toward the living costs of a child or elderly relative may also be exempt.

In contrast, PETs are gifts that are not automatically exempt under the rules, but will not be chargeable to inheritance tax if you survive for a period of more than 7 years from when the gift was made. This means that if a gift is made more than 7 years prior to the date of death, regardless of the nature or size of the gift, no inheritance tax will be payable. Accordingly, once you’ve given someone a gift, the inheritance tax clock will start to tick.

In most lifetime gift scenarios, this essentially means that you’ll have to survive for 7 years or more before your gift becomes 100% inheritance tax-free, although taper relief may still be available where the total value of any gifts made within the 7-year period prior to death exceeds the relevant tax-free threshold. Under the taper relief rules, inheritance tax is payable on a sliding scale, from the full rate of 40% for gifts made less than 3 years prior to the date of death, decreasing to as little as 8% for gifts made within 6-7 years.

How can the tax relief from lifetime gifts be maximised?

There are various ways in which the relief from inheritance tax can be maximised. In particular, giving someone a gift early in your lifetime increases the likelihood of you surviving for 7 years thereafter, and that gift becoming inheritance tax-free. You’ll also have the pleasure of seeing a loved one benefit from your generosity during your lifetime.

To understand more about the ways in which you can maximise the relief applicable to lifetime gifts, in this way minimising the inheritance payable by your estate, expert advice should be sought as soon as possible. The sooner you start to plan ahead, and make lifetime gifts, the faster the inheritance tax clock will start to tick in your favour.

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.

BSG Raise £2500 in Honour of Andie Brown

BSG Solicitors have raised £2,500 for St John’s Hospice in honour of their late Partner Andie Brown, who sadly passed away in 2021. 

Andie would have been 55 on 1st March and as she was always the life and soul of the party, so the firm organised a bake sale at their offices to mark her birthday with all manner of delicious treats produced by staff and friends of the firm. Their aim was to raise money for St John’s Hospice who took such good care of Andie. The bake sale was so well supported it lasted a whole week, just the kind of party Andie loved. Scott & Wilkinson accountants based in Lancaster also supported the fundraising by running their own bake sale at their offices.

Rebecca Lauder, Partner at BSG Solicitors commented: “We’d like to say a huge thank you to everyone who contributed to the bake sale, those who baked and the many friends, family and local businesses who donated. As a firm we are devastated to have lost Andie who was more like a 'work mum' or sister to all of us. Since Andie’s passing the volume of messages we have received from previous clients has reflected the huge and positive impact she had on the lives of many people.”

It costs over £5.1 million a year to run the hospice with around a third of this amount provided by local NHS funding. The remaining two thirds must be raised through events, community donations, grants and legacies.

Stuart Nelson, relationship manager at St John’s Hospice added: “This is a wonderful gesture on behalf of Andie and we would like to thank all who helped. We are reliant on the support of the many wonderful businesses in Lancashire and South Cumbria who run events in support of the hospice. BSG Solicitors have been involved with our fundraising activity over many years and we look forward to continuing our relationship in the future.”

Using a Will Trust to protect a vulnerable loved one

Planning for your family’s future once you’ve gone can feel daunting. For those of you with a disabled child or grandchild, or other vulnerable loved one, this feeling may be amplified, not least because leaving a substantial inheritance could create all sorts of practical problems.

In particular, a loved one may not have the mental capacity to manage their own finances or live independently. You may also have concerns, regardless of their age, of exposing a loved one to a risk of exploitation — after all, a sizeable legacy could put them in an even more vulnerable position when it comes to opportunists. Equally, being bequeathed money or assets could impact their eligibility for means-tested benefits, leaving a loved one no better off.

By including a Trust in your Will, you can make financial provision for a disabled relative when you’re no longer around, safe in the knowledge that the money will be managed by Trustees for the benefit of that individual during their lifetime. In this way, your loved one will not be forced to look after their own finances, or be exposed to any risk of exploitation from unscrupulous characters, and nor will any inheritance affect their benefits.

What is a Will Trust?

A Will Trust is a legal arrangement, contained within a Last Will and Testament, that places any legacy left to a loved one in the hands of appointed Trustees. Upon your death, the Trustees will be tasked with managing that inheritance on behalf of the beneficiary, for example, by ensuring that your loved ones’ care needs are adequately met.

You can choose who to appoint as Trustees, including family members or even professionals. You can also leave a Letter of Wishes, setting out your preferences on how the Trust assets should be used, helping to guide the Trustees' decisions once the Will Trust comes into effect.

What are the risks of not having a Will Trust?

For some of us, the idea of putting in place a formal trust arrangement to financially protect a vulnerable loved one may seem wholly unnecessary, especially where there are, for example, siblings of a disabled child or grandchild that can be entrusted with their legacy. However, this is a risky strategy, even if you implicitly trust a surviving relative to honour your dying wishes. This is because an outright gift to another family member means that this legally belongs to them, where unforeseen circumstances may arise, such as debts, divorce or death.

For instance, if you have two adult daughters — one with a mental disability and one without — you may choose to leave your entire estate to the mentally able daughter, provided they promise to use half of that inheritance to financially support their sister. However, if the daughter without the disability accumulates debts or gets divorced, this will expose everything she owns, including the money intended for your disabled daughter, to creditors and divorce proceedings. If that daughter then dies a few years later, her estate may be distributed equally between her children, leaving your disabled daughter with nothing.

Why is a Will Trust beneficial?

A Will Trust offers a number of benefits for the parents or grandparents of disabled children, or those otherwise looking to make provision for a vulnerable loved one, including:

•   the beneficiary will be able to benefit from the assets at the Trustees' discretion, without having to personally manage their own finances

•   the beneficiary won’t own the assets contained within the Trust, so they cannot be coerced into using the money for other purposes and it won’t affect their means-tested benefits

•   the Trust assets aren’t owned by anyone else in a personal capacity, so cannot form part of a person’s estate for the purposes of debt, divorce or death.

A Will Trust can be used to effectively ring-fence the inheritance earmarked for a vulnerable loved one. However, specialist advice advice should always be sought, ensuring that any trust mechanism contained within your Will is tailored to your family’s needs after you’re gone.

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.

Does living abroad stop you from getting a UK divorce?

If your marital relationship has permanently broken down, you may be looking to apply for divorce to enable you to move on with your life — but what happens if you’re living overseas?

Can I get a UK divorce if I live abroad?

The simple answer to this question is “yes”, you can get divorced in the UK, even if you currently live overseas. That said, there are certain statutory requirements that must be met to be able to demonstrate that a court in England and Wales has jurisdiction to entertain proceedings for divorce. There are different rules applicable for Scotland.

Below we look at the basis of these jurisdictional requirements, as set out under section 5(2) of the Domicile and Matrimonial Proceedings Act 1973. However, this is a complex area of law, where expert advice should always be sought from a family law specialist.

What are the jurisdictional requirements?

In order to establish jurisdiction to get divorced in England or Wales, one of the following criteria must apply on the date of application:

•   Both you and your ex are habitually resident in England and Wales

•   Both you and your ex were last habitually resident in England and Wales, and one of you continues to live there

•   The person receiving the petition is habitually resident in England and Wales

•   The person issuing the petition is habitually resident in England and Wales, and has resided there for at least the last 12 months

•   The person issuing the petition is domiciled and habitually resident in England and Wales, and has resided there for at least 6 months

•   Both you and your ex, or either of you, are domiciled in England and Wales.

Habitually resident means that you have established a fixed stable base in the country, and you usually live there or spend most of your time there and your life is centred there.

Domicile is acquired at birth, and is essentially the place where you have, or consider to have, your permanent home, even if you’re not currently living there. This means that you can be domiciled in a different country from the one in which you’re residing, for example, you can be resident in Europe but still domiciled in the UK. However, you can only have one domicile at any given time, where moving to a new country in the long-term, whilst severing all ties with your domicile of origin, may mean that you’ve acquired a new domicile overseas.

Should I get divorced in England and Wales?

Divorce laws differ around the world, where the financial outcome in some countries may be more likely to favour either you or your ex, depending on your circumstances.

In addition to the types of financial orders that the court is likely to make, the country in which you divorce can also have a significant impact on other important factors, such as the costs involved, the length of time it takes to get divorced, any arrangements for children, and how easy it is to enforce orders made by the court.

It can therefore be best to seek legal advice at the earliest possible opportunity, in this way allowing you to explore the benefits and drawbacks of your jurisdictional options, not least before your ex issues proceedings first. Becoming embroiled in a forum dispute can be costly and time-consuming, which is highly unlikely to be in anyone’s best interests.

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.