Reaching Financial Settlement
A ‘Financial Order’ is the name for the financial settlement you reach when a marriage or civil partnership ends in divorce. This can be a difficult process for many people. Every case is different. They will usually involve shared assets, such as properties, savings, investments, pension funds and businesses, and obligations such as the payment of maintenance and the provision for children.
In general the split should be fair. There should be no discrimination between the parties.
Most people manage to reach an agreement through negotiations via solicitors in preference to making an application to the court.
Financial Settlements and the law
The aim of the law is to arrive at “fairness”. Although a starting point may be 50/50 the overall situation of the parties will normally mean a departure from equality in the majority of cases, especially if there are children involved.
If there are children the first consideration is their welfare, including their housing needs.
When reaching a financial settlement consideration is given to the fact in each case including:
(a) the 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, including in the case of earning capacity any increase in that capacity which it would in the opinion of the court be reasonable to expect a party to the marriage to take steps to acquire;
(b) the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;
(c) the standard of living enjoyed by the family before the breakdown of the marriage;
(d) the age of each party to the marriage and the duration of the marriage;
(e) any physical or mental disability of either of the parties to the marriage;
(f) the contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family;
(g) the conduct of each of the parties, if that conduct is such that it would in the opinion of the court be inequitable to disregard it;
(h) in the case of proceedings for divorce or nullity of marriage, the value to each of the parties to the marriage of any benefit which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.
The courts are required to assess whether the financial relationship between the parties can be terminated immediately or whether there is a case for one party receiving ongoing financial support from the other.
Minor children must naturally be provided for. In some cases this is done via the Child Maintenance Service, but it will depend on the facts of the case. If a child has a particular need, for example for the payment of school fees, it may be that the financial settlement covers that also.
Property can be transferred between spouses or one may choose to but the other out if financially viable and considered fair bearing in mind the housing needs of minor children are a priority. Often the property is sold to enable both parties to re-house from the sale with the equity being split according to the factors outlined above with a view to producing a fair outcome.
These are often the next most sizeable asset next to the parties’ property and in some case pension may be worth more. The financial settlement can cover whether or not any pensions should be split and if so on what basis.
How we can help
We aim to reach an agreement without the need to make an application at court. We try to reach a negotiated settlement via solicitors wherever possible, as this is less acrimonious and costly than the alternative. Any final agreement reached in this way is then drawn up into a consent order, an order that the parties have reached amongst themselves which is then submitted to the court for its final approval.
Please contact us if you need assistance in reaching a financial agreement with your spouse or would like more information.