Form E

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Form e financial disclosure

As we discovered just before Christmas, the online divorce Form E provided on the Court website was faulty.  It appears a section of the Form which summarises, amongst other things, the capital and income of divorcing couples, failed to carry forward the liabilities from an earlier section.  The result was that the net capital values produced in the summary section may have been falsely inflated by missing out any liabilities.

The person who claims to have noticed the error (a self-styled family expert)  used the publicity to criticise solicitors, barristers and judges for not having noticed it themselves.   This fed into the usual lawyer-bashing on public forums and comment pages.  Most family lawyers were taken aback by this particular slew of criticism because:

  • It is the Court service’s form, so nothing to do with lawyers;
  • 99% of family lawyers don’t use the court’s online Form E as we pay to have our own software;
  • Family lawyers pay no attention to the summary page of the Form E anyway as it is not helpfully laid out and does little to aid understanding;
  • The Form E financial information is quickly superceded by later rounds of  financial disclosure any way;
  • Family lawyers tend to reproduce the Form E information in separate Excel spread sheets (to model likely settlement options) so any error would be quickly spotted.

In short, although I have not been slow to have a pop at my fellow lawyers on the pages of this blog, I did think this particular story, as a vehicle to slag off family lawyers, was a bum rap.

The real story is that LiPs have been let down.   These people, the vast majority of this blog’s readership, cannot afford legal advice or struggle to maintain paid legal representation.  I’m guessing it would be LiPs in the main who would have been using the Court service online Form E.  I mean: it’s there to use, it’s free, and it’s on the official court website, so it must be safe to use, right?  Right?

The Minister responsible issued a statement to Parliament: “Update on investigation into faulty online form used in divorce proceedings”.  We now know the number of people likely to have been affected:

A total of 36,527 cases contain a version of Form E filed from these periods. HMCTS staff have now reviewed all these cases and found that 3,638 files – 10% – contained the faulty calculator version of Form E with an incorrect figure for net assets figure in the summary table.

1,403 of these cases are still live, allowing HMCTS to intervene immediately to clearly flag these cases to the courts in order to avoid the error affecting the final orders in these cases.

The remaining 2,235 files – 6.1% – were closed cases….I have instructed HMCTS to write to all parties in the 2,235 closed cases. The letter expresses our sincere regret for the error, sets out what happened and explains that, although Form E is just one part of the evidence used in their case, there remains a possibility that the error affected the final outcome.”

If you are one of the people with a closed case receiving a letter from the court service you will need to work out whether you may have been prejudiced by the software error.  Apparently, the letter sets out the options available for those parties who think they have been adversely affected, which includes seeking to set aside any final order made or varying such an order.  The letter also contains a link to a specific court form to be used by those who wish to set aside or vary their settlements.  If anyone has received such a letter or has the link I would be happy to post a copy (suitably anonymised) on this blog.

If there is anyone out there who thinks they are affected but has not yet contacted the court to register their concerns then please use the specially designated email address:  [email protected].  Only 51 people have done so as at 21 January 2016.

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Journey cost calculator for Divorce Finance Toolkit

I like calculators. They are really useful when you’ve run out of fingers to count on.

This is a journey cost calculator. In many divorce and separation cases the earned income has to stretch a long way. Here are a few scenarios where this calculator may prove useful:

    1. If you are divorcing and making a financial claim you will probably have to complete a financial disclosure questionnaire called a Form E. It asks for all sorts of information on people’s finances and one of the sections in particular is called income needs. Invariably, at first attempt, many people underestimate their true levels of expenditure. This calculator can help to focus on the true cost of the mileage that may be clocked up in getting to work.
    2. Or, you are negotiating with your ex over the amount of spousal maintenance or child maintenance that should be paid. One of you may require a car to get to work. That wage may be providing for maintenance payments. The cost of getting to and from work can be significant with the cost of fuel at the moment. This calculator may help to show just how much is being spent. This unavoidable cost could be factored into the discussions.
    3. Or a level of maintenance has been agreed and in place for a number of years but the paying or receiving party has a change of circumstances involving more motor travel, perhaps in relation to a work relocation. So the calculator could assist in showing why the change of circumstances means an adjustment in maintenance is required.
    4. Another scenario is where contact to children is being discussed. One of the parents may have to do a fair bit of mileage over time picking up or dropping off the kids for contact. It is a cost that could demonstrate why the parent paying maintenance will struggle unless this essential expenditure is taken into account. Or, for instance, if it is a mother working part-time and doing most of the motoring around to allow contact, why the maintenance she is receiving may need to have an element in it to cover this cost of travelling.

Ideally, I wish I could find a calculator that would allow road, tax, servicing and insurance to be incorporated but no luck so far.

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Completing Form E within divorce proceedings is difficult enough but one of the main mistakes is to underestimate the length of time it takes for pension providers to cough up the pension information.  But in the first place, it helps to submit the correct document: this is Form P (Pension Inquiry) to each pension fund holder. Using Form P is essential, otherwise the pension providers will not know the context of your request is a divorce and therefore will not give you the information needed for Form E.

Here is a short video on:

  • how to find the Form P for free on the internet;
  • the relationship between Form E and Form P;
  • how to complete Form P.

Form P is essentially used for the majority of private pension funds.  A different pension information request form is used if you are, for instance, in the armed services,  a police officer or a teacher.  As ever, I can always post on these exceptional circumstances if there is enough interest.

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Statement of truth for new Form E

There’s nothing like a rule change in the world of family law and divorce proceedings to get me excited. What divorce procedure rules could change this time, I ask myself?  Could it be the binning of the wilfully old-fashioned and plain stupid requirement for one spouse to put all the blame for the breakdown of the marriage on the other spouse before a divorce can be granted?  Sadly no.  This Government, like the others before it, has no backbone.

The tinkering is all about making the language of law a bit clearer.  One (apparently minor) change is a further assault upon the Latin words that lawyers (but mostly, clients) still love to use.  There shall be no more mention of the word AFFIDAVIT.  Absolutely verboten.  Forget you ever used it and call it a Statement instead.  This means that clients will no longer be SWORN to their affidavits but rather VERIFY their statements of truth.

Now, don’t get me wrong: I’m a modern kind of guy.  I can make my own sandwiches, iron my shirts and think it’s perfectly proper for grown men to cry (under certain, rigidly defined circumstances).  But what is wrong with Affidavit?  It rolls off the tongue nicely, especially after a few practice sessions; it sounds vaguely grand, dustily majestic and quite deserving of the gravitas associated with being SWORN to it.  But no, it has now gone the way of the Dodo.  My clients don’t want statements of truth, they want the full monty AFFIDAVIT.  It is a serious process and they want to be seen taking it seriously.  A statement of truth is the cheap, shiny toilet paper painfully encountered in your local park’s public loos.  An AFFIDAVIT is a plump roll of three-ply cushioned velvet found in the Ritz cloakrooms.

I feel much better now that I’ve got that off my chest.  When I calm down fully, I will deal with the changes brought about which have some relevance to the patient readers of this blog.

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Pension Inquiry Form

Pensions? How Boring…

Tell that to the thousands of public sector workers marching past my office window in Brighton today telling Mr Osbourne that they do not want to work longer for much smaller pensions.  They seemed very excited about it all.  As a divorce finance solicitor I get very exercised about pensions, especially when it comes to carving them up during a divorce.

As most readers of this blog will be aware by now, it is possible within the financial proceedings arising out of divorce or civil partnership dissolution to split a pension fund.  But first, you have to obtain a value of the pension fund, what is called the capital equivalent value – CEV –  (or capital benefit value if the pension is in payment). This is obtained from the pension provider by submitting a Pension Inquiry Form.

The Government, in its March 2011 Budget, announced that they would be devising a new valuation basis for public sector pension schemes.

HM Treasury then released a Guidance Document in October that requires all Public Sector schemes to use a different discount rate for determining Cash Equivalent Transfer Values. So far, so boring, right?

Oh, bugger…

Problem is, the public sector schemes have responded by pressing the pause button on CEV calculations because they first have to change their systems to work out the new values.   The knock on effect has seen the implementation of the Pension Sharing Orders (PSO’s) stuck, apparently like the late Walt Disney, in suspended, deep-frozen animation.

The change in the valuation basis has no impact on private sector pensions or state pensions.  There is no impact where the divorce settlement is to be based on ear-marking or an offset approach using independent, actuarially calculated Capital Values of the pensions.

Pity the poor divorce lawyers up and down the land trying to get valuations for these public sector schemes in order that their clients can comply with their disclosure obligations to the court.  Our old friend, the (dreaded) Form E (financial questionnaire) demands the CEV figure and won’t settle for anything less.

So, I have to wait then?

Yes.  If you have just been ordered by the Court to produce a CEV figure on your Form E, then your solicitors should append the last available valuation but make it clear that they are awaiting the revised valuation and it will be forwarded to the court and sent to the other spouse as soon as it is available.  A good divorce finance solicitor will be able to obtain independent financial advice for their clients on whether it may be possible to consider an alternative settlement that could involve  a full or partial offset approach.  That is, offer your spouse a cash lump sum to keep his or her hands off one of your pension funds. But you need specialist financial advice if you are considering this route rather than wait for the public sector pension scheme administrators to get their act together.  Don’t forget to ask your solicitor to discuss with your financial adviser the application of a discount on the cash lump sum you should pay (after all, cash in the hand is better than a bird in the bush – if you get my meaning).

But you may be advised to obtain a new valuation under the revised rules, even if there has already been an agreed percentage split in your pension fund.  If the court has not approved the settlement yet, it is arguable that the new valuation should be obtained so the true impact of the pension sharing order can be ascertained by the judge.  I would even suggest that advice should be sought in circumstances where the court has approved the PSO but it has not yet been implemented.  If the difference in the CEV figures before the Government’s guidance paper was issued in October 2011 and after is significant, then legal advice should be sought as to whether the basis of the original PSO has been undermined by the change and whether an appeal (which would normally be out of time) should be sought. 


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Divorce, Next ExitI might have known that I could not write a blog aimed at helping people to get their heads around divorce finance issues without coming back, time and again, to Form E.  The magnificent, overblown Form E.  If Form E were a film it would be Citizen Kane.  If it were a novel it would be War and Peace.

Despite the fact that Form E is designed as a financial questionnaire, even its apparently straightforward sections can provoke confusion and mistakes.  A few of my clients had problems with Section 2.3 which asks for the listing of all bank and building society accounts.  Here are a few pointers on this particular section

Form E Section 2.3 

Details of all personal bank, building society and National Savings Accounts that you hold or have held at any time in the last twelve months and which are or were either in your own name or in which you have or have had any interest. This applies whether any such account is in credit or in debit. For joint accounts give your interest and the name of the other account holder. If the account is overdrawn, show a minus figure.

If you have money in another person’s bank account, you must still disclose your interest (the amount you have in the account) at this section of the Form E. TIP If you have online access to your bank accounts you can usually print off the last 12 months’ bank statements directly to your printer.  If you are having difficulty obtaining missing bank statements, your bank is obliged to provide up to the last 6 years’ worth of bank statements provided you state clearly it is a request under the Data Protection Act 1998 for which the maximum charge is £10.00. There are some common mistakes to avoid:

  1. Forgetting to include details (and statements) for accounts closed in the past 12 months.  If your spouse is aware that you had such an account but you do not disclose it, it can arouse suspicion and mistrust.  Remember to include the closing statement so it is clear the account has been closed.
  2. If you do not want your spouse to know where you are living (arising from a genuine concern for your safety or that of your children) and have withheld your address in the divorce or civil partnership proceedings, you should ‘redact’ (blank out with a thick felt pen) any identifying geographical information such as your address and also any local ATM cashpoints that you use.  DO NOT BLANK OUT AMOUNTS OF MONEY AS THAT WOULD NOT BE JUSTIFIED.
  3. Ensure you have complete sets of statements for each account.  Through no fault of your own, you may be missing a few pages and if there are significant changes in the balances of the accounts then your spouse may think you are hiding something.
  4. If the bank account you disclose is a joint one then make sure you only put down 50% of the final balance as your interest.
  5. Finally, do not forget to deduct the value of any overdrawn accounts rather than adding them in.  This happens more often than you may think, especially if there are 8 or 9  bank accounts all jostling for space in this section of the Form E.
There.  Hope that makes it all clear.  
Post-script: I am pleased to say that after many years of effort one of my tech projects has led to the creation of the Siaro platform.  This platform will be available to lawyers but free to their clients and one of the features is the automatic production of a Form E which I hope will go some way to removing the errors that often appear in the completion of this document.

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Very occasionally in divorce proceedings one spouse will forget to disclose one of their assets on Form E, nothing major you understand, just one of those big bricks and mortar things called a house. It’s easily done.  Often, just a gentle nudge by way of an enquiring solicitor’s letter or even a court approved questionnaire if you are in the middle of financial proceedings will do the trick and get the response: “Oh, that house…”

But what can you do if the spouse swears blind that there is no other property even though you distinctly remember them whispering about it to their accountant or investment manager?  What do you do if you have no idea where the property may be, not even which town it may be sitting in?  You can’t do a Land Registry search unless you have a specific address.  Or can you?

Here’s a little trick.  Ask your spouse to help you complete a form from Land Registry called PN1 which allows a search in the Index of Proprietors’ Names. That is, it allows a search against a name and will reveal the details of any properties owned by that person.  The Land Registry will not accept the form unless your spouse has provided their consent on the form.  But if your spouse has nothing to hide they will be happy to complete the form and let you do the search.  If they refuse, you can always ask the court to draw an adverse inference from the refusal by concluding that there is indeed something to hide  In that case, if the court is on your side you can ask the court to order a search in the Index of Proprietors’ Names.  This does not require your spouse’s consent.

This approach is not foolproof though.  It is possible that your spouse owns the property through a company so you will need submit a search in the name of the company as well as the name of your spouse.  More difficult still would be if your spouse had given funds to a private individual who has purchased the property in that individual’s name.

But despite these drawbacks, this is a useful weapon to have in the disclosure armoury.

 

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Fairness, like beauty, is in the eye of the beholder.  Both were in short supply on the occasion I represented a client at a Financial Dispute Resolution (FDR) hearing in an outer London county court whose architect had taken to heart the brutalist aesthetic of the early 1970’s.  My client had divorced his wife some 10 years previously and had been paying her maintenance ever since.  In the original court hearing my client had claimed that his wife was in a relationship of cohabitation with her new partner.  The wife vehemently denied this, my client’s lawyers had said it was a kite that would barely fly and so the case settled on the first day of the trial.

Fast forward to my involvement after the husband discovers that his ex-wife is shacked up with another man and they were happily settled in another jurisdiction.  My client didn’t care in the slightest about the relationship in itself but further investigation revealed that, surprise, surprise, the new man was in fact the same man about whom the husband had harboured suspicions a decade earlier. This new man was working.  Why, therefore, my client asked, should he carry on paying maintenance for his ex-wife when this spousal maintenance was directly contributing to the living standards of a man quite capable of earning his own living?

This was a case in which the children were grown up and quite independent of the former spouses.

My attempts to invite voluntary financial disclosure from the ex-wife with a view to negotiating a cessation or downwards variation of maintenance met with little success.  My client therefore had to issue variation proceedings (Matrimonial Causes Act, 1973, section 31) asking the court to either terminate his spousal maintenance payments or at least to reduce them.

The ex-wife made two attempts at producing her Form E but the contents were evasive to say the least. Eventually, I was able to obtain an admission that she had cohabited with her new partner for the past seven years.  It was clear that she had gone to considerable lengths to conceal the fact of the co-habitation from my client.  Legally, there was no reason for her to do so as the original court order from ten years ago, awarding her spousal maintenance, had not stipulated that the payments should end or be reduced in the event of her cohabitation with a new partner.

The proceedings were settled at the FDR with the wife agreeing a reduction in her spousal maintenance.  The judge, whose role at the FDR is to assist the parties to reach compromise and avoid the lottery and costs of a trial, was not required to reach any conclusions (what lawyers would call a finding of fact) about whether the former wife had deliberately attempted to conceal her co-habitation from my client, or whether she had attempted to mislead me, my client and the court by filing inadequate Forms E before making a late admission that she had, indeed, been cohabiting.  The judge was unwilling to comment adversely upon these matters and criticise the wife.  My client was not willing to incur the further expense of going to trial so that is why a deal was struck.

I had to explain to my client that if his ex-wife had married her new man, then the spousal maintenance payments would end automatically.  But shacking up was different.  The English family court does not regard a relationship of cohabitation as having the same gravity as one of marriage.  So, the logic goes, my client’s obligations to his ex-wife arising out of his marriage, were of such significance that they could not be displaced by the ‘inferior’ relationship of mere cohabitation entered into by his ex-wife.  He must continue to pay maintenance, enriching the joint financial position of his former wife and her new (working) partner.

I wondered if the ex-wife would appreciate that her relationship of seven years (I suspect closer to ten years) was inferior to the relationship of marriage she had formerly enjoyed with my client.  I wondered if any cohabitees, the length and breadth of this jurisdiction, would appreciate the second-class nature of their relationships compared to their married counterparts.

Why then was the ex-wife so intent on concealing her new relationship when there was nothing in the original court order that would prevent her co-habiting and losing her spousal maintenance?  I think the answer is that she knew, instinctively, morally if you will, that it was wrong to continue receiving the maintenance when she was in a new and settled relationship.  That is why she concealed her partner.  I think this judicial attitude towards co-habitation has to change.  I consider it is out of step with how a significant proportion of the English population choose to lead their lives.   The Matrimonial Causes Act 1973 belongs to, well… 1973 and brutalist architecture.  Society has moved on since then.  Forty per cent of all children in this jurisdiction are born to unmarried couples.

I had hoped that Parliament would revisit the rights of cohabitants and in so doing, enable cohabitants to seek financial relief from each other in certain circumstances.   This would then open the way for ex-spouses to be relieved of their financial maintenance obligations when their ex was in a settled relationship of cohabitation with a new partner.  Unfortunately, the recommendations of the 2007 Law Commission Consultation Paper suggesting legal rights and remedies as between cohabitants was quietly shelved by the Government last week.  That is a spineless and neglectful decision.  Previous administrations have at least had the courage to wait until the Daily Mail ran an adverse editorial before running for the hills.  The present Government, whose earlier decision to take the axe to public funding for most family law cases, is hardly covering itself in progressive, legislative glory.

 

 

 

 

 

 

 

 

 

 

 

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I’ve had a few clients come unstuck on the dreaded Form E financial disclosure form.  It’s a beast of a document and is the foundation of the disclosure process in divorce and civil partnership proceedings.  I will be posting on some of the more problematic sections of this document such as paragraph 2.3 which asks for:

2.3 Details of all personal bank, building society and National Savings Accounts that you hold or have held at any time in the last twelve months and which are or were either in your own name or in which you have or have had any interest. This applies whether any such account is in credit or in debit. For joint accounts give your interest and the name of the other account holder. If the account is overdrawn, show a minus figure.

If you have money in another person’s bank account, you must still disclose your interest (the amount you have in the account) at this section of the Form E.

If you have online access to your bank accounts you can usually print off the last 12 months’ bank statements directly to your printer.  If you are having difficulty obtaining missing bank statements, your bank is obliged to provide up to the last 6 years’ worth of bank statements provided you state clearly it is a request under the Data Protection Act 1998 for which the maximum charge is £10.00.

There are some common mistakes to avoid:

  1. Forgetting to include details (and statements) for accounts closed in the past 12 months.  If your spouse is aware that you had such an account but you do not disclose it, it can arouse suspicion and mistrust.  Remember to include the closing statement so it is clear the account has been closed.
  2. If you do not want your spouse to know where you are living (arising from a genuine concern for your safety or that of your children) and have withheld your address in the divorce or civil partnership proceedings, you should ‘redact’ (blank out with a thick felt pen) any identifying geographical information such as your address and also any local ATM cashpoints that you use.  DO NOT BLANK OUT AMOUNTS OF MONEY AS THAT WOULD NOT BE JUSTIFIED.
  3. Ensure you have complete sets of statements for each account.  Through no fault of your own, you may be missing a few pages and if there are significant changes in the balances of the accounts then your spouse may think you are hiding something.
  4. If the bank account you disclose is a joint one then make sure you only put down 50% of the final balance as your interest.
  5. Finally, do not forget to deduct the value of any overdrawn accounts rather than adding them in.  This happens more often than you may think, especially if there are 8 or 9  bank accounts all jostling for space in this section of the Form E.

Good luck!

 

 

 

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Form E – Towards a new theory of relativity

With all apologies to Einstein I would like to propose a re-formulation of his classic theory E=MC2.  As follows:

E = Form E

M= Matrimonial

C = Confusion

2= both spouses/civil partners

The expense of the divorce case is accelerated by the Form E creating Matrimonial Confusion in the minds of both spouses.  Many people struggle with the Form E  (some lawyers too, I dare say) and it is a form that can catch out the unwary.  Luckily, instead of just one Form E, we now have three Forms E.  Simple.

The Family Procedure Rules 2010 came into force on 6th April, 2011.  One of the changes introduced is the splitting of the olde worlde Form E into three new forms:

Form E – this is the document that should be used by husbands and wives or civil partners in divorce or civil partnership dissolution proceedings to disclose their finances when applying for a Financial Order or if applying for financial relief following a divorce or dissolution overseas.  This is by some margin, the largest and most complex  financial disclosure document designed to torture lawyers and clients alike.  Fortunately, I expect the Siaro platform to be able to generate a Form E for family lawyers with virtually one click which should produce costs savings for clients.

Form E1 – this is the document that should be used for any other financial remedy in the County Court (in other words, do not use this form if you are divorcing your spouse or civil partner).  Form E1 is suitable for claims made on behalf of children under Schedule 1 Children Act 1989 (for instance, if the children’s parents are not married or in a civil partnership).

Form E2 – this is the document to use when applying for a financial order in the Family Proceedings Court (the Magistrates’ Court).  It is simplified and presumes that the parties will have a small capital base and modest income.

To attempt to shine some light on these Forms I will be dealing with certain pages or sections of the documents as and when they appear to cause some difficulty right here

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