The new pension freedom rules introduced from 2015 have a profound effect on financial settlements in divorce and separation cases. However, the complexity of pension legislation demands an enhanced level of due diligence which could test the most technically adept members of the legal profession, not to mention their lay clients.

For those at or approaching retirement age, the new pension rules will turn previously inaccessible income-bearing assets into cash, but the temptation to use the proceeds to broker a separation could have disastrous irreversible consequences.

The most complex legislation surrounds Final Salary pensions of which there are 11 million members in the UK, excluding those in Superannuation. At the last reckoning in April, these schemes were only 67% funded on a wind-up basis, which means that one-third of Cash Equivalent Transfer Values (CETVs) offered by scheme trustees are likely to have been discounted and will not reflect the true value of the preserved benefits.

Even if a scheme is fully funded, the CETV will still often be discounted to reflect the likely out-performance of the underlying assets and to protect the benefits of the remaining scheme members.

Finally, the bulk-buying annuity deals struck by pension trustees are likely to mean that any CETV is unlikely to purchase the equivalent income in the open market.

In the case of company Defined Contribution schemes accumulated pre-A Day (6/4/06), there can exist protect retirement ages (from age 50) and enhanced tax-free lump sums which will be lost on transfer. There is also the distinct possibility that scheme trustees will be unable or unwilling to facilitate pension freedom, especially if the member is still an employee.

Personal pensions are not exempt: guaranteed annuity rates, market value reductions on with-profits funds and transfer penalties on some commission-based schemes mean that an early exit could have punitive consequences.

The other main areas of concern revolve around the tax consequences of liberating pension monies and the effect on state benefits.

Barring the tax-free lump sum, all other withdrawals from a pension are taxed as income. Therefore, a significant withdrawal could attract income tax at a higher rate than the relief on the original contribution, especially where the total income for the year exceeds £100,000, resulting in the loss of a personal allowance. A withdrawal that pushes income over £50,000 in a tax year will cause the loss of Child Benefit.

The final matter to be aware of is if a client uses the new rules to access a lump sum from their pension, their annual allowance could be reduced from the current £40,000 to £10,000, which will have a significant effect on their ability to place future monies into a tax-advantaged wrapper.

So, whilst pension freedom will be seen by some to be the new panacea in resolution, the interest of the client will rarely be served without a new level of due diligence and plain English advice from a fully qualified professional.

(With thanks and acknowledgement to Ross Glanfield, Chartered Financial Planner)

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Financial Settlement Scenarios

The scenarios below do not relate to any individual clients of ours but the facts and the outcomes relate to some similar experiences in our practice.

Scenario Analysis Example #1

The Scenario

Mrs G left the home last year due to her husband's alcoholism. The home is in his name and he refuses to co-operate. He works as a Sales Director and has a large pension accumulated from fifteen years with his employer.

Our Solution

Mrs G petitioned for divorce on the basis of her husband's unreasonable behaviour. At the same time we filed a financial application. When Mr G failed to make financial disclosure we obtained an Order requiring him to do so in 14 days or risk imprisonment for contempt of Court.

It was made clear that if he did not co-operate then the Court would make Orders giving Mrs G her share anyway and if necessary Mrs G would be given power to sell the house and to evict him. Mr G then settled the case.

If you have questions, contact us now, we can help you.

Scenario Analysis Example #2

The Scenario

In 1980 Mr G aged 25 was living with his partner.  When she became pregnant he made a Will making her the executor and leaving everything to her.  They separated 2 years later.  The child is now adult.  He re-partnered and had 1 child but the relationship again ended after 2 years.  He continued paying his ex partner’s rent rather than go through the Child Support Agency.  

He met his third partner in 1994 and they had 3 children.  He died in 2010.  He had never made another Will or revoked the one made in 1980, but he had quite substantial assets by the time of his death.  What rights did his ex- partners and 4 children have?

Our Solution

Briefly, Mr G left a huge mess.  His ex-partners challenged the Will in the Courts.  The dependent children had claims.  Did the adult son, who was independent and 28 years old, have a claim?  What rights did the mothers have where they were left supporting children under 18?

Ultimately a judge had to decide on the balance of fairness between the minor children bearing in mind the available resources.  His first partner and adult child did not receive anything.  The cost of sorting this out used almost half the estate.The moral is, make a Will!

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Today I had my free initial consultation with partner Henry Brookman over the phone. He had a clear understanding of my situation based on the info I provided in advance and provided me with sound advice and guidance to move forward. Many thanks.

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I have no hesitation whatsoever in recommending Henry Brookman. His advice came in promptly when solicited, and was excellent. He is a thoughtful and very professional lawyer. He understood perfectly well the issue I presented him with, and gave me excellent advice in a family law related matter.

May 2022   Philip Hands

From my first contact with the firm I was treated courteously and promptly. I was offered a pro bono meeting shortly after making contact. Mr Brookman is clearly a very experienced professional and in our meeting he gave me some well considered and objective advice about my rather complicated situation which spans more than one jurisdiction.

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I had an initial consultation with Henry Brookman regarding prenuptial agreements and found him to be very helpful and knowledgeable.

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I had a free telephone consultation yesterday with Gavin Yeung. He could not have been more helpful and reassuring as he calmly and patiently worked through my situation to provide me with clarity and piece of mind at a time it was really needed and emotions are running high.

Mar 2022   'K M'

I spoke with Aziz at Brookman Solicitors on the phone for an initial consultation and he is one of the friendliest lawyers I have met. He is clearly very experienced as he patiently explained me all the concepts and processes which are quite daunting for someone in my situation, and then focused on the actual questions I wanted to ask... I would highly recommend Aziz and Brookman Solicitors.

Feb 2022   'R'

I am grateful for Henry Brookman and his team for support they provided to me during very frustrating time of divorce. They respond promptly to any request. I felt more confident after I started the process with them. Henry listened carefully to me and took quick actions on my case. I highly recommend this team of real professionals even for non-UK citizens.

Feb 2022   Sezim Beksultanova

I had online consultation with the partner Henry Brookman today. I was very happy with the service. I found him to be very insightful, knowledgeable and provided sound advice, as well as being kind and patient. It was a very comfortable discussion and he sent an email detailing our discussion very quickly discussing in our meeting in depth. I am amazed by the service we got just from a free consultation. I would highly recommend these solicitors!

Jan 2022   Shirley Christopher

We spoke at length and at no point felt like he was rushing us and we felt very comfortable. After our discussion we were also quickly sent an email detailing everything we were discussing in our meeting in depth. I am amazed by the service we got just from a free consultation. I would highly recommend these solicitors!

Dec 2021   Tina

I was fortunate to spend an hour running through a few questions with Natasha Slabas. She was quick to grasp the points raised and proposed a sensible way forward. Would recommend

Dec 2021   Nick Powell

I cannot praise the professionalism and courtesy too highly. The advice given in a very complex divorce matter, was clear, concise, enlightening and inspiring.

Nov 2021   Mary Barn

I contacted Henry Brookman because of the complex international aspect of my divorce and I’m very glad I did... Henry took his time explaining all the pro’s and contra’s... I now have a much clearer view over the situation and feel more confident going forward. I’m very grateful for the excellent advice I’ve received and not feeling rushed during the meeting.

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About The Team

We are a specialist divorce and international divorce family law team, advising clients in the United Kingdom (specifically England and Wales) and throughout the world. We have a very people–orientated approach to working with clients. Henry Brookman has practised law for over 45 years, and our team has a wide range of skills and expertise. We are recommended by the Legal 500 and have been awarded the Law Society’s quality mark, Lexcel.

Partner

Henry Brookman

With over 45 years' experience, Henry Brookman is the senior member of the team. He is described by The Legal 500 as ‘shrewd, savvy, sagacious and highly experienced’.

Partner

Talitha Brookman

Talitha is a Partner in the firm and a very experienced practitioner who has specialised exclusively in family law for over 15 years. Talitha is recommended by The Legal 500.

Partner

Philip Morton

Recommended by The Legal 500, Philip is an expert in all areas of family law, including domestic and international financial disputes, fraud and commercial dispute resolution.

Partner

Natasha Slabas

Expert in all areas of family law, often involving cases that have an international element, including work in relation to financial settlements following divorce.

Partner

Aziz Malik

Aziz is a Partner at the firm and is highly regarded for his expertise on financial matters in divorce and is recommended by the Legal 500.

Partner

Mark Rennie

Mark is the Group Head of the Horsham Family Law team. He specialises in all areas of matrimonial law, including complex divorce and financial disputes, and is recommended by The Legal 500.

Partner

Nigel Winter

A highly experienced solicitor, Nigel has expertise in collaborative law, divorce, contested litigation, relationship agreements, and children matters. Nigel is recommended by The Legal 500.

Partner

Samantha Jago

Partner at our Guildford office and recommended by The Legal 500, Samantha has specialist expertise in divorce, children matters, complex international cases, and is a trained mediator.

Senior Associate

Joanna Potbury

Family law specialist based in Brighton advising on divorce, cohabitation agreements, children, post-nuptial agreements, and domestic violence. Joanna is recommended by The Legal 500.

Senior Associate

Kirsty Kelleher

Kirsty is a specialist family law solicitor recommended by The Legal 500. An expert in divorce, financial matters, child-related disputes and contentious probate cases.

Senior Associate

Kevin Danagher

Kevin specialises exclusively in family law, advising on all aspects of relationship breakdown, divorce, same sex marriage, marital agreements, and international family cases.

Associate Solicitor

Jennifer Douglas

Jennifer is a talented solicitor, recommended by The Legal 500 and experienced in all elements of family law, including high net worth financial proceedings, Children Act proceedings.

Associate Solicitor

Gavin Yeung

Recommended by The Legal 500, Gavin has excellent experience in family law including divorce and financial proceedings and international child abduction proceedings.

Senior Associate

Pippa Marshall

Pippa’s experience covers all areas of family law including divorce, financial remedies, same sex relationships, and pre- and post-nuptial agreements and is recommended by The Legal 500.

Chartered Legal Executive

Lorraine Imms

With over 20 years' family law experience, Lorraine can advise on divorce, matrimonial finances, cohabitee disputes, nuptial agreements and private children matters.

Trainee Solicitor

Rachael Au

Rachael is a highly capable member of the family team in Brighton. She started her training contract in September 2019, her first seat being in Personal Injury and Clinical Negligence.

Accounts Manager

Evdokia Dikova

Eva is an AAT qualified accounts manager and holds full AAT membership (MAAT). She gained her degree in financial accounting from the University of Economics in Bulgaria.

Secretary

Victoria Delatouche

Victoria is a highly experienced Legal Secretary and a long-standing member of the team. She provides secretarial support for the office.

Secretary

Michelle Louison

Michelle provides secretarial support to Henry Brookman. A very experienced family law secretary, Michelle has worked in law for over 12 years.

Front of House Manager

Patricia Antonio

Patricia is an experienced secretary and office administrator, handling the calls that come into the office, greeting clients, and managing office presentation.

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