Financial Settlements on Divorce
When a marriage breaks down, there are a number of important areas to consider in relation to finances.This may include properties, savings, pensions and businesses. Our Legal 500 recognised divorce solicitors are here to guide you through the complex area of financial settlements to ensure you gain financial security. Whether you’re looking to protect your assets or gain your fair share, you’re in safe hands with Josiah-Lake Gardiner.
To book an initial consultation with our expert divorce and financial settlement solicitors in London, simply call 020 3709 8975 or complete our online enquiry form.
An Introduction To Financial Settlements
After settling arrangements for the continuing care of any children, the area where there is most often dispute between a separating couple (and for which lawyers are accordingly most often instructed) is in relation to the division of the ‘marital’ or ‘family wealth’. A financial settlement is simply an agreement or court order dealing with the division of assets between the separating parties, any ongoing financial provision (maintenance) by one to the other and the severing, as far as it is possible to do, of their financial relationship post-divorce/post-civil partnership dissolution.
Depending on the amount and the nature of the assets and how reasonable each spouse/civil partner is willing to be as regards the other, sorting out the division/sharing of their physical property (eg the family home) and pensions and the amount and duration of any maintenance can be an even more daunting task when they do not know where to start or what indeed each of them would be entitled to.
That is where expert legal advice is required. Obtaining a financial settlement following a divorce or dissolution is important because if parties separate without resolving financial settlement issues by way of a final order of the court (including a consent order) the other spouse/civil partner may come back years later to request a financial settlement whether maintenance or a lump sum/cash payment. In England and Wales, even after a decree absolute of divorce or final dissolution order (before the applicant re-marries) a former spouse/civil partner is still able to make financial claims against the other and vice versa and there is no time limit in this regard.
That is why it is imperative that financial matters are resolved as quickly as possible post-separation and that a binding court order stating what the financial arrangements between the separating couple will be.
How can we achieve a Financial Settlement?
Reaching a financial settlement will depend largely on what your relationship with your spouse/civil partner is and how complex your respective financial affairs are. You may be dealing with assets held abroad, inherited wealth, complicated pensions and business structures, assets held in trust from which the family spending is paid and even the existence of pre or post-nuptial agreements.
Further, one party may be in ill health and unable to work which would bring into sharp focus the possibility of the other possibly needing to consider paying maintenance to them for life in lieu of a substantial capital settlement to provide for housing and living costs.
If the intention of the separating couple is to resolve matters quickly and amicably, they may initially attempt to agree matters directly, but the more complex their finances the less likely they would be able to resolve matters themselves.
Mediation can assist some couples to resolve financial issues with the assistance of a neutral third party independent mediator who is not permitted to offer legal advice to either party, but it would still be helpful for the parties to have their own solicitors in the background to assist them.
If mediation is not successful or is not something that the parties are willing to consider, there are further options for the spouses/civil partners to consider with regard to resolving matters out of court including the collaborative law process and direct face to face negotiating between the spouses/civil partners and their lawyers at round table meetings.
We have solicitors specialising in both the Collaborative Law process, which promotes an open and non-confrontational approach to relationship breakdown (more information in respect of which can be found on our collaborative law page) and conducting effective round table meetings.
Will we need to attend court to reach a financial settlement?
If the spouses/civil partners are able to agree matters between themselves whether directly, through mediation or solicitors or having regard to the collaborative process, it is still important that their agreement is embodied in a financial order from the court (a consent order). That gives them both certainty and clarity and makes what they have agreed legally enforceable should one of them in the future attempt to resile from such agreement.
There is no need to attend court in these circumstances, as a consent order would be filed with the court with a summary of the financial position of each party and such order would be approved by a district judge of the court. In very rare cases, the parties or their legal representatives may be required to attend court to explain why a certain agreement has been, but these cases tend to be where either one or both parties has been unrepresented by solicitors.
About financial settlement proceedings
If the parties are unable to reach a financial settlement out of court, one or other of them will make an application (on Form A) to the court and in that way commence financial remedy proceedings in the court, with the aim of either agreeing or having the court impose a final order/binding financial settlement.
Both parties are required to provide full financial disclosure with supporting documentary evidence and can (subject to the approval of the court) be made to provide additional information and documentation to ensure clarity of their respective financial positions. After an initial fact-finding/information gathering hearing (the First Directions Appointment), there is an opportunity for the parties to reach agreement at court with the assistance of the judge (the Financial Dispute Resolution Appointment/Settlement Hearing) before a final hearing is scheduled and an order made by the judge after hearing evidence and submissions.
The courts are able to make the following orders:
1. Periodical payments (otherwise known as maintenance) for a spouse/civil partner and any child or children of the family;
2. A lump sum order (a cash payment);
3. A property adjustment order including the sale or transfer of any property (eg the transfer of the family home from one spouse/civil partner to the other or from their
joint names to one of them); and
4. A pension sharing order (effectively splitting any pension assets between the spouses/civil partners).
Could the behaviour of my spouse/civil partner affect the financial settlement?
The simple answer to that is no, unless the behaviour complained of is of a financial nature, ie has one spouse been hiding or disposing of assets in order to frustrate the other party? Has one party gambled away the family wealth without the knowledge of the other?
The agreement reached between parties out of court regarding their finances should be based on fairness, the length of their marriage or civil partnership, having regard to the needs/welfare of any children they have. The reason for the relationship breakdown (including adultery or unreasonable behaviour) would not typically be factored into whether one party should possibly be entitled to a larger share of the family wealth.
What if my partner is hiding their wealth offshore?
If either you or your spouse/civil partner has international connections, we can advise you on choosing the best country in which to file for the divorce or dissolution. If proceedings have already started in another jurisdiction, we can partner with family lawyers there to ensure that you are properly represented and that the court has a complete picture of the worldwide assets.
If proceedings are continuing in this jurisdiction and it is apparent that your partner is deliberately hiding assets offshore, we can take relevant action.
If required, we can seek freezing injunctions (including worldwide orders) where there is a concern that assets may be placed out of the court’s reach. Such actions would prevent the transfer, sale or disposal of such offshore assets. If court action is needed in the country in which the assets are being held in order to preserve them, we will partner with family lawyers overseas in this regard. The Family Court has various powers available to it when confronted with this situation including ordering the imprisonment of the offending party eg for breach of orders to repatriate the assets transferred offshore to frustrate the other party’s case.
How are assets split on divorce or dissolution?
The judge dealing with the matter has the final decision on how the assets are divided. The court strives to decide what the fairest way to divide the assets is but arrangements regarding the children (in terms of their housing) have the highest priority.
The way in which a family’s assets are divided on divorce is complex and a whole range of factors are taken into account as follows:
(a) The income, earning capacity (including any increase in such capacity which it would in the opinion of the court be reasonable to expect a spouse/civil partner to
take steps to acquire), property and other financial resources which each spouse/civil partner has or is likely to have in the foreseeable future;
(b) The financial needs, obligations and responsibilities which each spouse/civil partner 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/civil partnership;
(d) The age of each spouse/civil partner and the duration of the marriage/civil partnership (including relevant seamless pre-marriage/registration cohabitation);
(e) Any physical or mental disability of either of the spouses/civil partners;
(f) The contributions which each spouse/civil partner has made or is likely to make in the foreseeable future to the welfare of the family including any contribution by
looking after the home or caring for the family;
(g) The conduct of each spouse/civil partner if in the opinion of the court it would be inequitable to disregard such (note though that this does not mean behaviour such as adultery and would need to be of a financial nature);
(h) The value of any benefit (including pension benefits) which the spouse/civil partner will lose the chance to acquiring by reason of the dissolution or annulment of the marriage or civil partnership.
Child maintenance is now dealt with by the Child Maintenance Service save that by consent child maintenance can be set out in an order of the court. This does not though prevent the paying party or indeed the receiving party from applying to the CMS after one year from the date of the order to have it carry out a formal assessment of the level of maintenance that should be paid and this assessment will have the effect of overriding and discharging the order of the court.
How Josiah-Lake Gardiner Can Help
We, at Josiah-Lake Gardiner, will guide you through the process required to enable you to secure a financial settlement. Our experienced team of solicitors will always endeavour to minimise the emotional distress of relationship breakdown on all members of the family, with particular emphasis on assisting clients to minimise as much as it is possible to do the emotional impact on any children of the family.
It may be that you and your partner will, with our help, be able to secure an out of court agreement, but if you do have to go to court, our expert team will be by your side to guide, advise and assist you at every stage. In this regard, we have been named one of the UK’s leading Family Law firms by the independent legal guide The Legal 500 for a number of years.
For more information you should make an appointment with one of our expert solicitors to discuss your particular circumstances.