Complex Divorce Settlement reached with assistance from Osborne Morris & Morgan
After suffering catastrophic brain damage in a motorcycle accident, our client Paul Jones* £800,000 compensation award was placed in a Personal Injury Trust. When his wife subsequently petitioned for divorce, the arrangements were far from straightforward, particularly as the couple also had three young children.
* not his real name
At the time of the case coming to court, Mr and Mrs Jones were aged 36 and 38 respectively, and had been married for six years. They had three children, all under the age of 5.
Osborne Morris & Morgan were asked to advise Mr Jones on his position should the marriage break down, as his wife had indicated that she may wish to seek a divorce against him.
The situation was a complex one. Earlier during the course of the marriage, Mr Jones had suffered catastrophic brain damage as a result of a serious motorcycle accident. Subsequent litigation had resulted in a compensation claim and award of £800,000, which was placed into a Personal Injury Trust for the benefit of Mr Jones.
When Mrs Jones issued divorce proceedings against our client, there was a great deal to be negotiated and agreed.
The matrimonial assets needed to be divided so that both parties’ income and capital needs could be adequately met.
Both parties agreed to undergo mutual financial disclosure and Form E (details of each party’s financial positions) were exchanged.
Mrs Jones needs related to being able to house herself and the three children with a weakened income position until such time as the children entered school.
Mr Jones also needed to be housed in a property which would allow him to stay in contact with his children, but also had a significantly weaker earning capacity due to his head injury.
It was further envisaged that Mr Jones would at a future stage in his life need to fund a Case Manager to assist him in daily chores, once his parents were no longer able to fulfil that role.
The marital assets
The marital assets consisted of:
- Equity in the former marital home of approximately £240,000
- Mr Jones’s Personal Injury Trust assets, worth approximately £500,000 (the balance having been used to purchase the former marital home itself)
- Each party’s pension assets:
- Mrs Jones’s (the Petitioner’s) pension value was £40,000
- Mr Jones’s (the Respondent’s) pension value was £8,000
Further to the assets, each party had restricted working capacities. The Respondent, due to his head injury, received approximately £1,000 per month, while the Petitioner, due to a gap in her career from having the children and childcare arrangements, received approximately £1,500 per month.
Under current law, the treatment of personal injury damages are not protected from division between the parties in cases of divorce. The potential was therefore that all assets could be equally split, despite Mr Jones having additional long-term capital and income needs that were distinctly more difficult than those of the Petitioner.
After a long period of negotiation, the parties agreed that the Petitioner’s imminent need – as a result of her primary role in the care of the children – was for a property in which they could all reside and, due to her limited income ability, on an ongoing basis.
It was agreed therefore that the former marital home would be transferred into Mrs Jones’s sole name with her keeping all of the equity. In exchange, she paid to Mr Jones a lump sum of approximately £50,000, representing approximately one third of the equity in the property being returned back into his estate.
Mr Jones retained his Trust asset in its entirety, which would be sufficient to meet his needs. An agreement based on the Child Maintenance Agency calculation was also reached between the parties and, subject to these agreements, there was a full clean break.
This was agreed by way of a court-approved Consent Order and was made legally binding.