Category Archives: Expenses

How Retirement Assets Are Divided In Divorce

In a divorce, one of the assets that may be subject to division are retirement assets. For many individuals, the thought of having to divide this asset is painful especially when a lot of blood, sweat and tears have gone into an individual’s work over the years and the retirement assets are essentially the evidence of such hard work. Similar to other assets such as cash, property and personal property, retirement assets may be included in the overall asset pool subject to division during a divorce pursuant to Section 7 of the Matrimonial Proceedings and Property Ordinance, Cap 192 (“MPPO”).
Let us take a closer look at the division of assets in a divorce:

1. Asset Division in Hong Kong in Divorce:

In Hong Kong, the Family Court will look at several factors pursuant to Section 7 of the MPPO, Cap 192. These factors include the following:
• Income: The Court will look at each parties’ income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future.
• Financial Needs: The Court looks at financial needs, obligations and responsibilities that each party has or is likely to have in the foreseeable future.
• Standard of Living: The Court will consider the standard of living enjoyed by the family before the breakdown of the marriage.
• Age of the Parties: The Court looks to age of each party and also the duration of the marriage.
• Any Physical/Mental Disability: Here, the Court will look to see if there are any physical or mental disability of the parties.
• Contributions: The Court will look to the contributions made by each of the parties to the welfare of the family, including any contributions made by looking after the home or caring for the family.
• Value: Under this category, in the case of proceedings for divorce or nullity of the marriage, the Court will look at the value to either of the parties to the marriage of any benefit (for example, a pension) which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.

2. The 3 Step View to Decide Asset Division and Provision for Maintenance:

The Court in Hong Kong will look at the factors listed above pursuant to Section 7, Cap. 192 MPPO and will compute all the available assets of the parties and distribute it according to 3 key principles:
• Need
• Compensation
• Sharing
In first identifying the assets in the matrimonial pool, the Court will include assets under both parties’ names, both during the marriage and also assets one party would have acquired before the marriage. Yes, it is important to note that in Hong Kong a party’s inheritance could be included in the division of assets in a divorce. The goal of the Court is to achieve fairness in the distribution of a couple’s assets and not necessarily a 50/50 equal division. Generally speaking, the Court may also depart from equality if the marriage is a long-term marriage and the view of the Court is to assess the financial needs with a generous assessment of needs post-divorce.
In identifying the asset pool, the Court will look at the parties’ Form E which is the financial disclosure form that is filed and exchanged by the parties at the beginning of a divorce.

3. Retirement Assets:

So, the question is whether retirement assets will be included in the asset division. Yes, it will be and likely awarded to the party associated with the retirement asset. However, upon distribution of the assets, the party associated with the retirement asset will then have to make up for that payment owed to the other spouse from another source. For example, if a husband is awarded his retirement funds from his employment, he may need give the wife a larger share in the matrimonial home division to equal out the division based on the fact that he received his entire retirement asset.
It is important for you to consult with a solicitor so they can provide you with a better idea as to how the Court will handle the division of the asset pool and what you are entitled to given your own specific circumstances. Your solicitor can provide their analysis on whether the Family Court Judge will depart from equality as it is highly dependent on the facts of your case. Your solicitor can also help you come up with creative ideas as to how to approach the asset division especially if you are working towards a settlement with your former spouse.

Cost Considerations in a Divorce

When individuals consider divorce, the main focus is generally centered around child support and maintenance (i.e. alimony/spousal support). What many individuals do not consider when filing for divorce are the costs related to the actual divorce such as filing fees, fees for solicitors and barristers, fees for experts and other cost considerations such as trial.

In this article, we will dive deeper into some of the “hidden” fees you will need to consider when you are planning your divorce case.

Court Fees: When you file a Divorce Petition, the court has mandated filing fees for the filing of your papers. If you have hired a solicitor to take care of all the paperwork and filing of your Divorce Petition, these filing fees and the fees incurred for clerks at your solicitor office to travel to/from the courthouse to file such paperwork will be included in your monthly bill. You should speak to your solicitor about the court fees so you are aware of what it costs to file your paperwork. You should also be informed of the hourly rate charged by your solicitor’s clerks to travel to/from the courthouse to file paperwork and also to serve papers to your ex-spouse’s solicitors.
Solicitor and Barrister Fees: If you have hired a solicitor, your solicitor will be charging you for the work done on your case. The hourly rates are generally outlined in your solicitor’s retainer agreement. This retainer agreement should be read carefully as it will list out the terms of your agreement with your solicitor. If you do not understand the agreement, you should ask questions so that you are fully aware of the terms before you sign the agreement. In addition to the fees incurred by you for your solicitor, you may also need to hire a barrister for your case if you proceed to a hearing and/or trial. Generally speaking, a barrister is hired by your solicitor firm. Therefore, your barrister will bill your solicitor firm but these fees are then charged to you in your monthly bill. You should have a discussion with your solicitor before a barrister is hired on your case, so that you are aware of your barrister’s fees and what you will owe for their work on your matter.
Fees for Experts: In the more complex divorce cases, you will need to hire experts. Experts can be hired for various reasons including valuations for real property, businesses and valuable items such as art and jewelry. Experts may also be hired for tax issues or issues related to trusts. Experts may also be called upon for child custody cases where a psychological evaluation of the children are needed. Another example of a third-party “expert” may be a parent-coordinator who assists you and your spouse with child custody issues. If your case requires an expert, there will be costs associated with the hiring of these experts. Generally speaking, both parties would be required share the costs of the hired experts unless an agreement is reached otherwise. Similar to barrister fees, the experts are hired by your solicitor firm. Therefore, your experts will bill your solicitor firm but these fees are then charged to you in your monthly bill. Before you agree to retaining an expert for your case, it is important that you speak to your solicitor about the fees associated with the expert so you have full transparency about what you will owe for these third-party costs.
Fees for Hearings/Trial: When you are going through a divorce, there will be many hearings leading up to a trial. For example, any time you or your spouse file an application, a hearing will be set by the court. In addition to these hearings, as you go through the divorce process there may be other mandated hearings that you have to attend such as a children’s dispute resolution hearing or a financial dispute resolution hearing. If your case is set to go to trial, you will also generally be required to attend a pre-trial review hearing in preparation for trial. Trial itself can last several days depending on the complexity of your case. It is therefore important to discuss these anticipated costs with your solicitor so you know how much it will cost you depending on what route you will take. Many times, individuals will come to the conclusion that it is much more cost-effective to compromise on key issues and come to an agreement with their spouse rather than move forward with hearing after hearing and then ultimately a trial as hearings and trial is extremely expensive. If you move forward with a trial, there will be high costs not only for your team of solicitors but also the barrister(s) and experts involved in your case. For many litigious and complex cases heading to trial, your legal team can consist of 5 to 10 individuals who many times, all charge on an hourly basis.
Other Miscellaneous Fees: In addition to the above-fees, you should also discuss with your solicitor whether there are other “hidden” fees you might not be aware of. For example, you will be charged by your solicitor firm for photocopying, faxes, and service of documents. Ask for transparency when you hire a solicitor so you are aware of all the fees that you will be charged each month. Most of this is outlined in your retainer agreement so again, it is important for you to read the entire retainer agreement before signing the document. It is also important that when you receive your monthly bill, you read through the bill rather than gloss over it. If you have questions about your bill, speak to your solicitor so you can clarify what the charges are for.

It is important that you take charge of your finances during a divorce and this includes the fees and costs that you will be responsible for in your divorce. It is therefore imperative that you have full transparency of what you are being charged and what the anticipated costs are. Do not be afraid to speak to your solicitor about costs as this may determine the course of your divorce. If you are looking to resolve matters quickly without additional costs, it may be a good idea to work on a settlement with your spouse without the need for court litigation. Mediation is a wonderful alternative to court litigation and should be considered!

Potential Risks When Litigating Relocation in Divorce

For our last installment in this three-part relocation series, we are going to explore the potential risks that you may face when you decide to litigate a relocation application in the Family Court in Hong Kong. Generally speaking, it is always a better option to come to agreements with your ex-spouse rather than litigate matters in the Family Court. However, it is sometimes an impossibility you’re your ex-spouse is not reasonable and/or not willing to resolve matters outside of Court, whether it be agreements made directly with one another or through mediation. Relocation is a heated discussion between divorcing couples if there is no agreement. Thus, let’s look at some of the potential risks you should consider before you proceed and make your case before a judge. Bear in mind that these are only “potential” risks and each outcome will depend on the circumstances of your case and the judge deciding the outcome.

1. Less Time With Your Children: In our previous article, we explained that if you file an application in bad faith (eg. To alienate the other parent from the children) and this is revealed to the judge, you may expose yourself to a change in your custody and visitation orders. Thus, it is extremely important that the focus of your relocation application is the welfare of your child. A relocation application should never be filed to cause a rift or disrupt the bond between your ex-spouse and your child.

2. Money and Time Spent: A relocation application is not a quick and easy process. You may find yourself waiting for months before you are heard before the Family Court and once the process begins to move through the Court process, it could take significant time before an order is made by the judge. Moreover, solicitor and barrister fees and costs will also pile up rather quickly and you should anticipate having to pay significant fees to litigate your matter.

3. Psychological Damage: There is no definitive evidence to suggest that a relocation will have any psychological impact on your children, but there is some research out there that suggests it could have a long-term impact on a child’s psychology. This is definitely something to consider and watch out for. Look for signs of stress and anxiety in your child. Think about what kind of effect this might have long-term knowing your child’s unique personality and bond with the other parent. If anything, a relocation could potentially cause more distress than the usual divorce due to your child being uprooted.

4. Hague Convention Risks: In the event that you make a unilateral decision and you move your child to another country without consent or a court order, you will be subject to The Hague Convention on the Civil Aspects of International Child Abduction. It is considered child abduction if you wrongfully remove a child from their home state. Fleeing Hong Kong without written consent by the other parent or court order is risky business and you should seriously reconsider your decision and you should consult with a solicitor who can inform you of all the risk.

Being prepared will help you overcome any obstacles you may face in a relocation application before the Hong Kong court and should be taken seriously to avoid any significant adverse repercussions upon yourself or the children.

Finding The Right Solicitor In A Divorce

When a decision is made to divorce, you are forced to become familiar with the legal world and what may seem like, a legal minefield. This is not an easy task given the legal jargon and technicalities involved in filing for divorce and navigating it until the end. Whilst some couples attempt to navigate the legal process on their own, others choose to hire legal representatives (solicitors and barristers) to assist them and take charge of the legal process. Finding legal representation should not be taken lightly because your relationship with your solicitor will last for a significant period of time and may even extend beyond the actual divorce if there are post-divorce issues to be ironed out.
Here are tips on what to look for when searching for the right divorce solicitor:

1. Do Your Research: Before you decide on a solicitor to assist with your divorce, conduct your own research on who you might want to hire. Conduct an online search and see if any articles or reviews have been posted about the solicitor or his/her law firm. Take your research outside of the Web and ask friends or extended family for a referral. Word of mouth is a great resource. By chatting with others in your community, you will get a better sense of the solicitor’s reputation in the community and whether he/she will be a good fit for you and what you are hoping to achieve in your divorce. Some solicitors have a more aggressive approach to divorce, whilst others are more mediation/settlement minded. You should consider how you want to approach your divorce and your goals and whether it aligns with your solicitor. You should also consider the financial impact a divorce will have on the matrimonial pot and approach your solicitor with that in mind as legal fees will skyrocket the more you litigate.

2. Ask Questions: Before you sign an engagement letter to hire your solicitor, do not be afraid to ask a lot of questions. How does the solicitor bill for his or her work? What is the solicitor’s hourly billing rate? Does the solicitor have assistants and paralegals? If so, will they be doing a significant portion of the work on your case? What are the hourly billing rates for assistants and paralegals working on your case? These questions are important because it will help you determine if you can afford the solicitor’s services going forward. Divorce is a long and expensive process. The initial retainer fee/costs on account will only get you so far and often, you can expect to pay additional fees and costs going forward. An initial meeting with the solicitor is also important because you can see if you and the solicitor are on the same page and whether your personalities gel together. This will be a long working relationship so it’s important that you and your solicitor work well together.

3. Don’t Be Afraid To Make Decisions: If you’ve hired a solicitor and come to find you are not happy with the relationship, do not be afraid to first discuss the issues you have with your solicitor in a transparent and frank conversation with your solicitor. If that is insufficient, then do not be afraid to change your solicitor and find a solicitor that is right for you. While you do not want to get into the habit of switching solicitors on a frequent basis, it is not unreasonable to change your representation when there is a true breakdown in the relationship between you and your solicitor. You may be hesitant to switch your solicitor after investing so much time and money, but remember you are likely to save more money in the long run with the right solicitor and get the results you desire with the right partnership.

Finding the right solicitor to handle your divorce is crucial. The right working relationship will determine the trajectory of your divorce, so make an informed decision before you navigate the legal landscape.

Clean Break In Divorce

When you divorce in Hong Kong, the term “clean break” may be floated around when discussing ancillary relief or financial provision (or more commonly known as “maintenance” in USA jurisdictions). So what is a clean break in a divorce? Clean Break simply refers to the distribution of property and/or payment of a lump sum to settle all financial matters, allowing the parties to move forward with a fresh start and without having to be reminded of the breakdown of the marriage by being tied to ongoing payments.

Under section 7 of the Matrimonial Proceedings and Property Ordinance (Cap. 192), the courts in Hong Kong are under a duty “to have regard to the conduct of the parties and all the circumstances of the case” including the following matters:

The income, earning capacity, property and other financial resources…;
The financial needs, obligations and responsibilities…of the parties…;
The standard of living enjoyed by the family before the breakdown of the marriage;
The age of each party to the marriage and the duration of the marriage;
Any physical or mental disability of either of the parties to the marriage;
The contributions made by each of the parties to the welfare of the family…’
…the value to either of the parties to the marriage of any benefit (for example, a pension) which, by reason of the dissolution…of the marriage, that party will lose the chance of acquiring.

In Hong Kong, the courts are not under any duty to consider whether a clean break is appropriate or not but it may be considered. Generally speaking, a clean break is only an option when there is sufficient monies in a matrimonial pot which would allow the parties to move forward after the payment of one lump sum payment/distribution of property which would settle all financial claims.

In one such case, C v F [2008] HKFLR 1, the parties had a long-term marriage which began in 1965 and a Petition for divorce was filed by the Husband in February 2000. Throughout the marriage, the Husband’s business had grown to the extent that he valued his assets at approximately HK$36 million with an income of approximately HK$800,000 per month. The Husband alleged he had considerable debts as he was heavily indebted to the company and to his business partner. The court ordered a transfer of the former matrimonial home, mortgage free, to the wife and a clean break lump sum to her of HK$15 million.

In YN v NA [2014] HKFLR 517, the court stated that “in big money cases, where the matrimonial assets are sufficient for a clean break to be achieved, a wife with ordinary career prospects is likely to have been compensated by an equal division of the assets and consideration of how the wife’s career might have progressed is unnecessary and should be avoided.”

It should be noted that once a clean break is achieved, a party cannot come back to the court and make an application for maintenance. This in itself is the benefit and advantage with respect to a clean break: it allows the parties to move on with their lives, without being tied to each other by having to make monthly payments to one party and allows each party to live independently without any burdens of the past.

If you are going through a divorce, speak to your solicitor about a clean break and whether it’s the right option for you. If there is a possibility of self-sufficiency, a clean break should be considered an option. If you are concerned about an immediate clean break, discuss alternative options such as a deferred clean break or even consider nominal maintenance which would then allow you an open door to make an application for periodical payments in the future if need be, but at the same time lift the financial burden on the paying party at the current moment.

How Retirement Assets Are Divided In Divorce

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