Financial Matters on Separation or Divorce
When married couples separate or divorce the family courts have a wide range of powers to ensure a fair financial settlement.
Most couples will manage to reach agreement after a period of negotiation, often using solicitors or mediation.
Once an agreement has been reached through negotiation it is drafted into a Consent Order, which can be submitted to the court for approval by the District Judge as a paperwork procedure. No attendance at court is usually necessary in these circumstances. The Consent Order will set out the agreement reached and ensure that it is clear, binding and enforceable. The Consent Order can also ensure that there is a Clean Break in the future, with the right to make further financial claims either prevented or limited. Unless and until a Clean Break Order is made within divorce proceedings it remains possible in most circumstances for either party to make further financial claims against the other, even some years later.
The powers of the Family Courts to make financial orders, whether by consent or after contested proceedings, are very wide. The courts can make pension sharing orders, lump sum orders, orders transferring property interests or requiring the sale of a property, and orders for monthly maintenance payments to be made. If maintenance for children cannot be agreed then this issue is usually dealt with through the Child Support Agency.
In cases where negotiation or mediation does not lead to agreement within a fairly short period, then the court litigation process can be started. This provides a timetable for negotiations. The court process encourages negotiation at all stages and the District Judges can become involved in helping the parties to reach agreement at a preliminary hearing called a Financial Dispute Resolution Hearing. It is only in the minority of cases where agreement does not prove possible that the court will list a hearing for evidence to be given and for the Judge to make a final decision.
In exercising its financial powers, whether with the consent of the parties or after a final hearing, the court has to bear in mind a number of factors, set out in the Matrimonial Causes Act 1973. The first consideration is always the welfare of any children under the age of 18. The court must also take into account 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 be reasonable to expect a party to the marriage to take steps to acquire. The court must also consider the financial needs, obligations and responsibilities which the parties have or are likely to have in the foreseeable future, the standard of living enjoyed by the family during the marriage, the age of the spouses and the duration of the marriage, any physical or mental disabilities and the contributions which each of the parties has made or is likely to make in the foreseeable future. Contributions towards raising a family and running the home are as valuable as contributions made through paid work. The courts will only consider the conduct of the parties in making financial orders if it would be “inequitable to disregard it”. This means that only very serious bad conduct will affect a financial division. The court will also consider the value of any benefits which will be lost as a result of the divorce, such as widow’s benefits from a pension.
The court’s decision as to a fair financial order will involve a careful balancing of all these factors to achieve a fair and workable solution.
Even where the spouses have reached an agreement and submitted a Consent Order to the court, the Judge will consider all these factors and review whether the Order appears to be fair and workable. The court does not rubber-stamp agreements reached between the husband and the wife.
The whole process of applying the statutory factors to reach agreement or present a case to the Judge depends upon each party to the marriage giving full and frank disclosure of their financial circumstances. Often, this is done on a voluntary basis, but the court rules provide detailed procedures for financial disclosure, to be used where necessary.
It is not always necessary to divorce for a financial settlement to be put in place. For spouses with some objection to divorce proceedings it is possible to bring formal separation proceedings through the courts (judicial separation proceedings), which will give the court jurisdiction to make many of the financial orders available on divorce. If the husband and wife do not wish to start court proceedings immediately (for example if they wish to wait for two years from separation before applying for a divorce) then a Separation Deed can be negotiated and drafted to record a financial agreement reached. However, a Separation Deed does not prevent either of the spouses subsequently applying to the court for orders within divorce or judicial separation proceedings. A Separation Deed cannot provide for all the financial options on divorce. For example, it is not possible for a pension share to be implemented without a court order.
At Franklins we have very extensive experience of advising on financial matters on separation or divorce. We can assist you in obtaining financial disclosure and negotiating a settlement. We can represent you in any litigation and we can draft all the necessary legal documents.
We can provide you with bespoke advice as to your particular circumstances and options and we recommend a fixed fee meeting for an initial discussion of your case.
If you have lived with your partner without marrying, then the law which applies to your case is very different. Please click on our “Living Together” section for further information.
The above information is intended to provide a general guide only. Advice as to your specific circumstances should always be taken.