This example is based on a ficticious couple: Bill and Brenda.
Bill and Brenda were married for 20 years when the decided to divorce, Bill is 50 and Brenda 45 they have one child a boy aged 15, they are both still friends and have agreed the boy will spend time living with both parents as and when Harry their son decides.
They both agreed to each talk with a solicitor for an hour or two and then they would both talk with a mediator to look at possible solutions. Bill Brenda and Harry are all in good health.
Bill earns £3,200 net working in IT, he has a final salary pension which after being valued by an actuary (an expert in valuing pensions) its stated value is £200,000. Brenda earns £800 net working part time as a florist, she has no pension.
The former matrimonial is valued at £200,000 with an outstanding mortgage of £60,000 which will end in 10 years time, the monthly payment is £400. Brenda and Harry live in the former matrimonial home, Bill rents a house with a friend, his share of the rent is £300 per month. They have no debt, they both have a car but they are of low value.
The mediator suggested they focus on the main issues, Child maintenance. Bill and Brenda decided to make a private arrangement after reading the guidance on the child maintenance options web site, this works well and allows their son to spend what time he likes with mum and dad.
Division of assets.
The only assets of value are the equity in the family home of £160,000 and Bill`s pension valued at £200,000, the mediator explained pensions don`t have the same value as assets that can be sold in real terms. Bill and Brenda decided Brenda will keep the marital home and have 25% of Bill`s pension, this is mainly due to the fact that Bill earns so much more than Brenda and will earn even more in the next few years, they will both keep their own cars and other assets they have in their own homes, they will also be responsible for their own small debts.
Brenda needs some help to pay the mortgage until it ends in 10 years time, this is even after a full benefits check, they both agree a sum of £400 per month until the mortgage is paid.
The Consent Order
This is how their consent order could read.
UPON the applicant and respondent agreeing that the provisions of this order are accepted in full and final settlement of all financial claims and claims in respect of any property whatsoever which either may be entitled to bring against the other howsoever arising.
AND UPON it being it being recorded that each party shall retain those assets in their respective sole name;
AND UPON it being recorded that each party shall retain those liability's in their respective sole name;
AND UPON the applicant wife undertaking and agreeing to use her best endeavors to procure the release of the respondent husband from the Halifax Bank mortgage account (account number xxxxxxxxx sort code xxxxx) secured on the former matrimonial home situated at (address) and in any event to indemnify the respondent husband from any liability under the aforesaid mortgage secured thereon.
AND UPON it being recorded that the applicant wife intends that the periodical payments pursuant to paragraph 2 below, are to be used to pay the Halifax mortgage account (account number) and (address).
BY CONSENT IT IS ORDER THAT
1. The respondent husband shall transfer forthwith and in any event within 28 days of the date of this order all his legal and beneficial interest in the former matrimonial home situated at (address) to the applicant wife subject to the Halifax mortgage account (account number) secured thereon.
2. The respondent husband shall pay or cause to be payed the applicant wife periodical payments from (date) of £400 per month, the said periodical payments shall be paid by the respondent husband into the applicant wife`s Halifax bank account (account number) sort code (xxxxxx) or any other account of which the respondent husband may be notified in writing from time to time, by no later than the 1st of each month, the said periodical payments shall cease on the first to occur of the following events.
a. The wife`s remarriage
b. The wife`s cohabitation with another man for a period of six months
c. The wife`s death
d. The wife attaining 55 years of age
3. There be provision by way of pension sharing in favour of the applicant wife in respect of the respondent husbands rights under his pension arrangement with pensure pension scheme in accordance with the annex attached to this order.
4. Upon implementation of paragraphs 1 and 3 hereof and save as set out in paragraph 2 above, the applicant wife`s claims for lump sum, property adjustment orders, pension sharing and or attachment orders do stand dismissed and she shall not be entitled to make any further applications under the Matrimonial Causes Act 1973, section 23(1)(a) or (b).
5. The respondent husband`s claims for lump sum, property adjustment orders, pension sharing and or attachment orders and periodical payments orders do stand dismissed and he shall not be entitled to make an application under the Matrimonial Causes Act 1973 sections 23(1)(a) or (b).
6. Save as to set out in paragraph 2 above,Pursuant to the Inheritance (Provision For Family and Dependents) Act 1975, section 15, the court considering it just to do so, the applicant wife shall not be entitled to apply on the death of the respondent husband for an order under section 2 of the Act.
7. Pursuant to the Inheritance (Provision of Family and Dependents) Act 1975 section 15 the court considering it just to do so, the respondent husband shall not be entitled to apply on the death of the applicant wife for an order under section 2 of the Act.
8. Liberty to apply as to timing and implementation.
9. There be no order for costs.
What is the overall effect of the order?
In short the husband is to transfer the marital home to the wife along with 25% of his pension and pay £400 per month for ten years, they both keep their own household items and cars and the husband keeps 75% of his pension.
The first part of the order is known as the recital or preamble, it sets out the basis for the order that comes later with the numbered paragraphs.
All of the order can be enforced by should it become necessary, both the recital and the order part.
What does each part mean?
1. The husband must sign over the house to his wife within 28 days, this is quite easy all he needs is a solicitor to complete a form called TR1 and sign it then its sent to land registry.
2. The husband must pay his wife £400 for ten years, this is called a term order for spousal maintenance, he can stop paying if his wife dies lives with another man for six months, she marries again, or when Brenda is 55, the only other reason he can stop paying is if a judge says he can, this is known as a variation or discharge of the order.
3. Bill must sign a form called a pension annex that is then sent to the pension provider known as the trustee, the trustee then gives Brenda 25% of Bill`s pension, in Bill`s case the pension provider allow an internal transfer meaning Brenda`s new pension stays in the same scheme, if they did not allow this Brenda would have to talk with an independent financial adviser to find another scheme to place her pension. Pension providers do charge to share a pension so you must always check first to see what the best option is.
4. Providing Bill and Brenda stick to the agreement they have made all of Brenda`s future claims are gone, she cannot apply to court to ask for another share of Bill`s assets or pension.
5. Under no circumstances can Bill apply to court to ask for anything Brenda has, all his claims are gone.
6. The only way Brenda can make a claim on Bill`s estate should he die is if he still owed her some money he was paying toward the mortgage, other than that she can make no claim if Bill dies.
7. Bill cannot for any reason make a claim against Brenda`s estate should she die.
8. All this means is that Bill or Brenda can go back to court if either Bill or Brenda don`t do as the order says they should, in this case that could mean Brenda ask court to enforce the payment of £400 should he stop paying it, or Bill could ask court to reduce the £400 per month if say he is ill and can`t work for a few months, Bill and Brenda are just made up but everyone who has a consent order has the right to go back to court should they need to.
9. No order for costs just means Bill and Brenda don`t owe each other any money for what they spend on the solicitors and the mediator.