For example, it is important that any second home is transferred between the parties in the tax year that they separate.
They would be ill advised to separate immediately before the end of the tax year as this would give rise to less flexibility in relation to a tax effective settlement.
Inheritance planning
Once the headline issues have been addressed, consideration can be given to ancillary, albeit important, points.
An opportunity might arise for some inheritance tax planning with gifts or even trusts for the benefit of offspring.
To be on the safe side, before those gifts are made in circumstances where adult children have a partner or propose to marry, thought should be given to a declaration of trust over real property or even a pre-nuptial agreement.
Whilst not strictly enforceable, a pre-nuptial agreement properly drafted, which meets the needs of the parties, is likely to be followed by the court.
Wills
A formal separation will give silver splitters the occasion to revisit their wills.
A will provides an opportunity to distribute items of particular importance to the family.
An agreement can be made for either party to make provision in their will for a particular artefact, such as a family heirloom or engagement ring to be left to a member of the family.
It is worthy of note that should a case progress through the court on a contested basis, a judge only has power to make certain orders relevant to property, pensions and income, however a negotiated settlement can encompass a whole array of issues that a judge is unable to impose upon the parties.
A negotiated and amicable settlement should therefore be the ambition of the parties from the outset of their instructions.
To achieve this, the financial adviser, tax expert, pension expert and valuer may be required to join forces with the lawyer.
The divorcing parties will first need to exchange financial information and will then be in a position to sit round a table for negotiation.
This stage of the process can be quite amicable; at my most recent round table negotiation, my client collected her soon to be ex-husband’s dry cleaning and brought it to the meeting to save him a journey.
If the parties can not reach full agreement, they can turn to mediation or, as a last resort, they can make a court application.
In my professional experience, if an amicable agreement can be reached, the parties are more likely to retain shared friendships and their offspring will be more likely to support the outcome of the divorce.
