Parental responsibility: The key points

Families now come in all shapes and sizes, and children may live with parents who are cohabiting, married, separated or divorced. They may be part of a step-family, live with adoptive parents, grandparents, other relatives or a special guardian.

If you have spent many years living with and developing a close bond with a child, you may be concerned your ‘parental’ status is not formally recognised and you may worry you could be excluded from key decisions in the future.

David Anstee, family law expert at KWW Solicitors, explains that parental responsibility is a legal concept defined by the Children Act. “It determines all the rights, duties, powers and responsibilities and authority that a parent of a child has in relation to the child and their property,” says David.

Whoever has parental responsibility has a duty to:

  • Care for the child and provide a home
  • Ensure they receive appropriate education and medical treatment
  • Keep other parents with parental responsibility informed about such decisions.

In return, you have the right to be involved in decisions about the child’s name, where they live, which school they should go to, and whether the child can leave the country. It also means you can give permission for medical treatment and consent to the child’s marriage between the ages of 16 and 18. You can also appoint legal guardians to act in your place in your will.

“These are all sensitive and potentially contentious issues in the event of a separation or divorce,” explains David.

Who has parental responsibility?

A birth mother automatically has parental responsibility. 

A child’s father only has parental responsibility if he is married to the mother or if he is named on the child’s birth certificate when the couple is not married. 

Who can obtain parental responsibility?

A father without parental responsibility can obtain this by marrying the mother, negotiating a parental responsibility agreement with the mother, or applying to court for a parental responsibility order.

A female parent (who is not the birth mother) can acquire parental responsibility by entering into a parental responsibility agreement with the birth mother, applying to court for a parental responsibility order or by being named in a child arrangements order.

A step-parent can also obtain parental responsibility either by agreement with the birth parents or by way of a court order.

Anyone who has the benefit of a ‘live with’ child arrangements order made by the court will acquire parental responsibility but will share this with the parents.  For example, grandparents caring for a child under a live with order share parental responsibility with the child’s parents.

Adoptive parents acquire parental responsibility when an adoption order is made, at which point the birth parents lose parental responsibility.

Anyone who has a special guardianship order in their favour in respect of a child will have parental responsibility. However, this is not shared and they are able to make decisions involving the child without the permission of the parents.

For advice on parental responsibility

If you are concerned that you might not be included in key decisions regarding a child who has been part of your family for some time, it would be wise to seek legal advice. For a confidential discussion about acquiring parental responsibility, please get in touch with David Anstee using the Contact Us facility on our website.

Divorce: Sharing the pension pot

As part of any discussion regarding family finances following divorce, it is important to consider pensions. As David Anstee, KWW’s family law expert, explains, this is particularly so if – compared to your former spouse -you only have a very modest pension of your own or perhaps no pension at all.

“In many cases it may be possible to obtain a share of your former spouse’s pension pot in order to address any inequality in entitlement,” says David, “but it is important to seek legal advice early to determine whether an application to the court is appropriate and, if it is, to ensure any order made is fair.”

When can a pension be shared?

The court can make a pension sharing order where legal proceedings are issued to resolve the financial aspects of your divorce. For an order to be implemented, however, your divorce must have first been finalised; in other words, you must have received your decree absolute. Pension sharing orders cannot be made where you have chosen to officially separate from your former spouse but for personal reasons have decided not to formalise this through divorce.

Your solicitor will be able to help you assess the value of your former spouse’s pension to determine whether it is worth trying to obtain a share. They can also help you to assess a claim for entitlement made against your own pension.

How is a pension valued?

To determine how much a pension is worth, the court will require from the relevant pension company a basic valuation which gives a cash equivalent value for the retirement benefits. However, a cash equivalent valuation will not always be appropriate, for example with final salary pension schemes or pension policies taken out on behalf of public service workers, where a cash equivalent approach may not reflect the true value of the benefits available. Whatever valuation method is adopted, it is important to ensure the valuation obtained is up to date.

Factors to consider when pension sharing

The aim will be to try to make financial arrangements after divorce as fair as possible, taking into account the money available and the needs of you, your former spouse and any children who are still financially dependent. To arrive at a fair result, the court will consider the value of everything you and your former spouse own, or have the right to, and assess this against your respective needs and those of any dependent children, whose needs will take priority.  

Because the value locked up in a pension may not be readily available, particularly where you or your former spouse are some years away from retiring, it may be that a pension sharing order is not appropriate. This may be the case, for example, if what you and your children really need is immediate access to cash to enable you to buy a new house and to tide you over while you look for a job or retrain. In these circumstances it may be more appropriate to make an order giving you full or partial entitlement to the money raised from the sale of the family home, together with regular payments to help support you and your children.

Your solicitor will be able to help explain whether there is anything about your circumstances that make a pension sharing order appropriate where perhaps that may not initially appear to be the case. For example, if your former spouse has a personal pension and is approaching 55 years of age, it may be possible for them to access a lump sum from their pension and to pay this over to you, even though neither of you have yet reached retirement age. This, though, is not possible if you have a public-sector pension.

What paperwork will my solicitor need to see?

Every case is different and the paperwork your solicitor will need to see to advise you on your pension rights will depend on your circumstances.  However, as a minimum it would be helpful if at your first meeting you could hand over:

  • bank statements for all accounts you are named on for the past 12 months;
  • copies of all your credit card statements for the past 12 months;
  • details of all outstanding loans (including bank overdrafts) and the amount owed;
  • copies of your payslips for the past three months;
  • the latest P60 tax certificate given to you by your employer;
  • your last three years of accounts, if you are self-employed;
  • written confirmation of any benefits you receive, whether state benefits such as universal credit or benefits (other than salary) received from your employer;
  • a breakdown of all your income and outgoings; and
  • details of any pensions you have and an up-to-date cash equivalent valuation for each, which you can request from your pension provider and which will either be supplied free of charge or for a small fee.  

For a confidential discussion about pension sharing, or any other family law matter, please contact David Anstee via the Contact Form on our website www.kww.co.uk

Benefits of a clean-break agreement on divorce

You may feel overwhelmed with the changes you are facing as you go through a divorce, and quite often going from a household with two incomes to one can be a struggle. If you do not own a house or have other assets, it can be tempting to cut costs and ignore seeking advice from a solicitor in relation to a financial agreement. Our family law expert David Anstee explains why this could be a costly mistake.

“A divorce does not stop all financial obligations between spouses. I have met people who come into money years after a divorce, only to face an unexpected claim from their former spouse. You may be on amicable terms now but relations can sour over time, especially if one of you enters a new relationship or comes into new found wealth. You can prevent an unexpected claim at a later date by obtaining a financial agreement known as a clean break order.”

A clean break order is a financial settlement between you and your former spouse that has been approved by the court.  It will severe your financial ties and protect you from a claim over any future assets you acquire.

There are a number of legal cases that highlight the importance of obtaining a clean break order. One extreme example is the case of Nigel Page who won £56 million in the Euro Millions Lottery 10 years after he had divorced. At the time of his divorce he had relatively modest assets and did not obtain a clean break order. His former wife capitalised on this omission and negotiated a reported settlement of £2m.

Another example is the case of Dale Vance. In 2015, Kathleen Wyatt successfully argued she was entitled to apply for maintenance from him even though they had been divorced for more than 20 years. He had not obtained a clean break order at the time of divorce, leaving the door open for Kathleen to bring a claim later when her husband had built up a hugely successful business and had accumulated a vast wealth. 

While the chances may seem small that you will have the luck of a windfall to the extent of Nigel’s, you could still be at risk from losing your future pension provision, future inheritance or future earnings. Nigel and Dale could not have anticipated at the time of their divorce how costly their oversight would be.

David Anstee says: “Obtaining a clean break order is a small investment in time and money now to have that piece of mind for your future. It is a relatively straightforward process and normally does not involve you having to go to court.”

For a clean break order to be made, the court must be satisfied that each person entered the agreement in full knowledge of the other’s financial position. This means  both parties to the marriage must provide a full and frank disclosure of their assets and liabilities. David Anstee has a wealth of experience in clean break orders and can represent you throughout the process, advising you on the terms that should be included to ensure your future assets are fully protected.

This article is for general information only and does not constitute legal or professional advice. Please note the law may have changed since this article was published.


Buying a retirement home: Things to consider

The United Kingdom’s population is aging rapidly and, fortunately, higher living standards mean most of us will enjoy a long and active retirement. As we grow older our housing needs often change and, if you are approaching retirement you may have already started to think about your options. Here, Sarah Trickey, our residential conveyancing expert, looks at some of the things you need to consider when buying a home for your retirement.

Funding a house purchase in later life
Many older homeowners can afford to fund their purchase from the net sale proceeds of their existing home. If you are in this fortunate position, you can finally become mortgage-free. However, this does mean synchronising your sale and purchase, or selling your existing home first, so you will need to be organised and find a conveyancer who can keep your sale on track.

If you do need to borrow, finding the right mortgage may be harder as you get older. Many lenders place age restrictions on who can borrow, and some will not lend against certain types of retirement property. Your lender may agree to transfer your existing mortgage, and recent changes have made it easier for older borrowers to take out a fresh mortgage. For example, several lenders now offer retirement mortgages which allow you to pay just the interest each month. The loan is paid off when your home is finally sold. However, this is still something of a niche area and it is important to get specialist independent financial advice to ensure any arrangement is right for you.

The difference between freehold and leasehold
Most properties in dedicated retirement complexes or sheltered accommodation are leasehold. So too are most flats which are another popular option for downsizers. If you are used to owning a freehold, some of the differences between freehold and leasehold may surprise you. With a freehold, you own your home outright. In contrast, a lease only gives you the right to occupy the property for a set number of years. A lease is therefore a diminishing asset. You will also have a landlord, to whom you must pay ground rent and, usually, a service charge to cover insurance and the upkeep of common parts. This can be an advantage if it relieves you of the responsibility for repairs and for keeping the garden tended. However, the downside is that it will also probably add considerably to the ongoing costs of ownership and you will need to factor this into your budget.

Additional restrictions
A lease will also include restrictions on your use of the property. For example, you may not be allowed to keep pets or you may need permission to make alterations. An experienced conveyancing solicitor can explain these provisions to you, so you can ensure the property still meets your needs. This is particularly important with retirement properties, where leases often contain additional restrictions that you would not find elsewhere. For example, leases may restrict ownership to people over a certain age. This means there will be fewer potential buyers when you, or your heirs, come to sell, and this may affect your property’s value. Some leases also prevent you from sharing occupation with another family member or carer who does not meet the age requirement. This could cause problems if your personal circumstances change or you need additional live-in help.

Additional charges
Service charges for retirement properties are often high compared to conventional homes because of the additional healthcare facilities on offer. As well as factoring these costs into your budget, you should consider whether they are likely to increase and by how much. Remember too, that you will still have these expenses even if the property is empty, for example, if you go into long-term care. You may be attracted to a development because of the additional services provided, for example an on-site restaurant or resident manager. However, some of these may be discretionary and could cease in the future. Your solicitor can check which services the landlord is obliged to provide and which can be withdrawn.

What happens on resale?
Some leases of retirement homes impose additional charges if you want to sell. Typically, these range from one per cent to thirty per cent of your home’s value. In some cases, these charges will also apply if you die and your property passes to your loved ones or next of kin. Unfortunately, these types of provision, and their consequences, are not always clear to buyers.

For advice on buying a home for your retirement, or buying or selling a property generally, please contact Sarah Trickey on 020 8979 1131 or email s.trickey@kww.co.uk

The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.

Busting the myths of cohabitation

Unmarried couples are not offered the same protection as married couples and civil partners. Cohabiting couples often assume that moving in together creates similar rights and responsibilities as marriage (so-called ‘common-law marriage’) or absolutely no rights at all. Both beliefs are wrong. If you are moving in together, or you are the parent of someone in that position, you should know how cohabiting affects your/their legal position and what protections there are should the relationship end or one of the cohabitees dies. David Anstee, our specialist family solicitor, explains…

Common law marriage
The concept of common-law marriage has no legal validity in England and Wales. Moving in together does not give you automatic rights to each other’s property, no matter how long you live together. And if your partner dies, cohabiting does not entitle you to inherit. Conversely, however, if a cohabiting couple separates and there are children involved, both cohabiting partners may have rights and responsibilities, even if only one of them is the biological parent.

Moving in together: Cohabitation rights
Cohabitation does not automatically give you rights to the home you share. Problems can occur, particularly when one of you moves into a property the other owns or rents. If the property is rented, only the tenant(s) named in the rental agreement generally has the right to live there and the responsibility for paying the rent. If you are not a named tenant:

  • You are likely to need the landlord’s consent to move in
  • The named tenant can ask you to move out at any time (after giving reasonable notice)
  • You have no right to stay if the named tenant decides to leave (though you might be able to agree a new tenancy with the landlord).

Similar rules apply if the property is owned by one of you. The property owner is the only one entitled to live there. Anyone else can be asked to leave. The owner can also make decisions, such as selling the property, without consulting their partner. However, even where only one of you owns the property, the other may have some rights (eg: to a share of the money if the property is sold). This can happen if:

  • The owner has agreed in writing that the non-owner is entitled to a share of the home
  • The non-owner contributes financially (eg: paying part of the mortgage) to the property on the understanding that this entitles him or her to a share
  • The non-owner has acted to their own detriment (eg: giving up a job) on the understanding that this entitles him or her to a share
  • A partner with children applies to the court for the right to continue living there to ensure the children’s welfare.

Owning a property in joint names can help to protect the rights of both cohabiting partners but there are potential pitfalls. For example:

  • You cannot force your partner to sell the home if you decide to leave, unless you apply for a court order
  • Even if you contributed most of the costs of buying the home, you would normally only be entitled to a half share, unless you have agreed otherwise
  • If your partner leaves you, you are likely to be liable for the full amount of any mortgage payments.

If you are buying a property together, you might consider something called a declaration of trust. This will confirm contributions to the purchase price, purpose of the property, when the property should be sold and division of the proceeds if you split up.

Cohabitation: Possessions and finances
Cohabiting couples have no legal duty to support each other financially, either while you are living together or if you separate. Nor do you automatically share ownership of your possessions, savings, investments and so on. In general, ownership is unaffected by moving in together. So:

  • If you already owned something before you started to live together, it continues to be your sole property
  • If you buy something yourself using your own money, it is your property
  • If you buy something together, you own it in the shares that you each contributed to the purchase price unless agreed otherwise
  • If your partner gave something to you as a gift, you own it (though proving that a gift was made can be difficult unless there is written evidence).

A written cohabitation agreement can help avoid disputes: for example, by setting out how much you each contribute to a joint account and how ownership of any items bought using the money will be shared.If you have any debts in joint names (eg: credit cards), you are normally each liable for the debt. If your partner fails to pay, you can be pursued for the full amount. You may also both be liable for household bills.

Moving in together makes no difference where taxes are concerned. They continue to be assessed in the same way as any other individuals. However, any benefits you claim will be assessed on the basis that you are a couple. This means your partner’s income will be taken into account and your entitlement to benefits may be reduced.

Cohabitation and children
Legally, you only have a role in important decisions about children (such as their education and religion) if you have parental responsibility for them. If the parents of children are not married, only the mother automatically has parental responsibility. The mother’s partner only has parental responsibility if:

  • He is named as the father on the birth certificate (for a child born after December 2003)
  • He enters into a parental responsibility agreement with the mother, obtains a parental responsibility order or child arrangements order, or they get married;
  • He is registered as the child’s guardian and all other individuals with parental responsibility have died (including the mother).

If a cohabiting couple separate, different considerations apply:

  • Decisions about who the children should live with and what contact rights the other should have are based on the children’s best interests rather than on who has parental responsibility.
  • If your children live with your former partner rather than you, you may be required to pay maintenance.

The same principles apply for stepchildren whom you have treated as part of your family and helped to support financially. Ideally, childcare arrangements will be agreed between you but either of you can apply to the court to help resolve things. In effect, children are treated in the same way as when a married couple divorce.

What happens if a cohabiting partner dies?
Cohabiting partners have no automatic right to inherit if their partner dies, although they may be a beneficiary under the other’s Will. If you are a beneficiary, any assets you receive may be subject to inheritance tax. There is no exemption for unmarried couples. If you have lived together as man and wife for at least two years or if you can show that you were financially dependent on your partner, you can make a claim for a financial settlement even if you were not a beneficiary of the Will.

However, making a claim on the basis of a common-law marriage like this can involve a complex and expensive dispute with the other beneficiaries. And even if you are successful, you may only be entitled to a limited share of your partner’s assets.

If you owned your home together, the form of legal ownership has a major impact. If you owned your home as ‘joint tenants’, you will automatically continue to own the (entire) home if your partner dies. But if you were ‘tenants in common’, your partner’s share is dealt with under the terms of his or her Will. If you rented your home, your rights to stay depend on the type of tenancy, whose name(s) it is in and your landlord.

You will not be entitled to state benefits such as Bereavement Support Payment or a state pension based on your former partner’s National Insurance contributions. Whether you have any entitlement under private pension or life insurance arrangements depends on whether the particular scheme’s terms gives rights to a cohabiting partner.

Cohabitation agreements
Written agreements can help to protect you from potential risks if you separate or your partner dies. Drawing up a cohabitation agreement can help you think through some of the key issues in your relationship. Though not all of the agreement may be legally enforceable, it can help reduce the likelihood of disputes and make any disputes easier to resolve. For example, an agreement might cover issues such as how bills will be shared, whether you will have any joint accounts, and what roles you will each have in terms of childcare, household chores and so on.

Other possibilities include:

  • Clear arrangements covering ownership of the home and what rights each of you have to live there
  • Taking steps to get parental responsibility for children
  • Appointing each other to hold a lasting power of attorney (so that if one of you is no longer capable, the other can take decisions on his or her behalf)
  • Reviewing your Wills and ensuring that you have each made appropriate provision for the other
  • Checking – and, if appropriate, changing – key financial arrangements such as pension schemes, life insurances, savings and investments.

Bank of Mum and Dad: Go in with your eyes open

Have you heard of The Bank of Mum and Dad? It’s been around for as long as any of us can remember, but from humble beginnings – 50 quid to buy a car back in the 60s, £250 toward a wedding in the 70s, perhaps £500 toward the deposit for a flat in the 80s – it has grown out of all recognition to become what would on paper be a UK top 10 mortgage lender. The good old Bank of M&D will help to finance a quarter of all UK mortgage transactions this year – at an average amount of around £17,500.

Without The Bank of M&D it’s hard to see how young people (and the not-so-young: the average age of a first-time buyer in the London area is 32) living in this affluent part of the UK could take their first steps on to the housing ladder. In fact, a study by insurance giant Aviva forecasts that by 2025, 3.8 million people aged between 21 and 34 will be living at home with their parents – that’s a third more than at the moment. The study also forecasts that the number of households containing two or more families is also expected to rise, from 1.5m to 2.2m. Aviva’s figures assume house prices will continue to rise t the same rate they have done over the past 10 years.

Still better than renting
At KWW, we are seeing more and more instances of generous parents providing that essential financial boost, often as much as 10% of the purchase price. “House prices may be very high,” said one of estate agent contacts “but mortgage repayments are still less than rental payments and owning a property even with a large mortgage gives the kids an investment rather than paying out dead money.”

If you are a parent or family member looking to help your loved one into their first home, there are some important things to consider from the outset.

Gift or Loan?
It is important the family member who is offering the helping hand confirms whether the financial assistance is a gift or loan. It is sometimes difficult to distinguish between the two. A gift is essentially where the financial assistance is given with no strings attached. This effectively means the family member assisting financially (we’ll call them the ‘donor’) does not impose any conditions on the funds being paid back and will not legally have any interest in the property. So if the donor might want their money back on the future, this may not be the route to choose.

A loan is where the financial assistance is repayable. If the money is repayable, the donor should first consider how the money is repayable (for example, how often, over what term and will there be interest on the loan) and second, whether a charge needs to be registered against the house to protect the donor’s interest.

A charge is a legal document which will set out the terms of the loan. KWW can help you with preparing and registering the charge with the Land Registry on completion. Where a charge is registered against the property, consent would be required by the charge holder (the donor) in order to remortgage or sell the property in the future. If, however, the purchase is also going to be with the aid of a High Street mortgage, consent is required from that lender to register a second charge and is often not granted for fear of the borrower being overextended financially. A registered charge will protect the interests of the donor in the event of future family disputes, marriage or family breakdown/divorce.

Joint ownership
Parents or family members often assist with mortgage applications, helping to increase the amount mortgage companies are prepared to lend. In this situation the donor usually becomes a joint owner of the property. There are two ways you can own a property jointly in England & Wales – as joint tenants or tenants in common. As joint tenants, in the event of the death of one of the owners, the property will transfer to the surviving owner regardless of what it says in the deceased owner’s will or under the rules of intestacy.

With tenancy in common, on the death of one of the owners, the share does not automatically pass to the surviving owner but according to any valid Will or otherwise the rules of intestacy. Because the shares are distinct, the tenants in common can hold unequal shares in the property. KWW can prepare a Declaration of Trust, which is the legal document that sets out how those unequal shares are held by each owner.

Another important thing to consider if you are buying a property with your child or a family member is whether either of you is likely to own another property anywhere else in the world at some point in time. If this is the case, you may be liable to pay the higher rate Stamp Duty Land Tax on completion, being a second home owner. If you are purchasing jointly with a mortgage, you must understand that you are equally responsible for full repayment of the loan, not just a share of it, regardless of how you jointly own the property.

So, using an example, if mum and dad are purchasing a property jointly with their son with a mortgage and the son is to live at the property and repay the mortgage, if he fails to make the repayments on the mortgage then his parents are equally responsible for the full repayment, including the balance of the loan (not just a proportion of it).

We’re always pleased to see families coming together to help dreams come true but we would urge a great deal of thought to go into the decision-making process and the appropriate legal steps to protect everyone’s peace of mind.