If you are currently going through a divorce and are in the process of negotiating a financial settlement, you would be wise to proceed with caution.
The profound effect of Covid-19 on the economy has meant that workers have been furloughed, the housing market has ground to a halt and stock market turbulence has caused pensions, ISAs and investment portfolios to take a tumble.
Some clients may wish to defer negotiations altogether given the current financial uncertainty and practical difficulties experienced trying to sort things out whilst living in lockdown. Others will benefit from negotiating a settlement when asset values are low. It is probable that in all cases, the process will be slowed whilst people consider their job security and the viability of their companies, and whilst liquidity dries up.
It is worth considering the following options:
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Might you benefit from putting in place a formal interim arrangement to deal with cash flow and whilst you wait for property to sell?
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Ensure you are working from up-to-date asset valuations and revisit these where necessary.
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Do you need to revisit tax calculations? The latest budget included a reduction of the lifetime allowance for Entrepreneur’s Relief and reduction of the Principal Private Residence final period exemption to 6 months.
If there is a lot of risk associated with matrimonial assets, it is now even more important to give thought to how they are distributed between you. For example, would it be preferable to agree that the proceeds of sale of a property be expressed in percentages? Perhaps the payment of a lump sum should be contingent upon a particular event or outcome?
Should you need help or advice with any of the above, a member of the team here at Mills & Reeve LLP will be able to assist.