Agreeing a financial settlement as part of a divorce can be a daunting and stressful process. It is always important to obtain legal advice whichever way you decide to resolve the finances.
Whether it be by reaching an agreement on a voluntary basis or requiring the involvement of the court. A financial agreement will only be approved by the court if it is fair and reasonable in the circumstances.
This article goes through the process of resolving the finances.
It is important to consider first whether an agreement can be reached between you or by negotiations through solicitors or mediation. Asking a court to make a decision should be a last resort as it is a time consuming and expensive process.
If an agreement is reached it will need to be included in a consent order, signed by both parties and lodged with the court for approval. A statement of information which is a snapshot of both parties financial situation before and after the implementation of the order is also filed with the consent order. The court uses this statement to help decide whether the agreement reached is fair and reasonable and should be approved.
It is very important to understand that without a financial order in place any agreement is not legally binding and either party can have a financial claim in the future. A verbal or written agreement at the time of separation is not sufficient.
Reaching a financial agreement can take several months to years to finalise for more complex cases. Accordingly, consideration should be made as to whether interim maintenance is required for either party. This is when one party is on a significantly higher wage than the other spouse and they require financial assistance to meet their immediate needs. This can be the case where the higher earning spouse was paying for the mortgage and bills during the marriage. This interim spousal maintenance can be agreed by the parties but if an agreement cannot be reached then an application can be made to the court. It is very important to obtain legal advice prior to any application for interim maintenance.
If the parties are unable to reach an agreement or if one party is unwilling to deal with the finances on a voluntary basis, then it may be necessary to ask the court to resolve the matter.
An application to the court is made together with payment of a court fee. Once the application has been checked by the court, the application will be issued, and the court will list a First Directions Appointment (FDA).
Prior to the First Directions Appointment the court will set dates so that the parties can exchange financial disclosure prior to the first hearing. If an agreement cannot be reached prior to, or at the first hearing, the Court will list a further hearing known as a Financial Dispute Resolution (FDR) and a timetable of further directions will be set to the next hearing, to ensure that the court has all the information needed to make a decision. These directions can include but are not limited to valuation of properties and businesses, reports about the parties’ pensions and that any questions raised by either party towards the financial disclosure are answered. Without prejudice offers should be made prior to any FDR as these offers will be considered at that hearing.
At the FDR the parties will explain their reasons for their without prejudice offers and the judge will provide an indication of how the finances should be revolved. The parties are provided with the opportunity to negotiate on a without prejudice basis to see if an agreement can be reached. The judge at the FDR will not hear the Final hearing if it reaches that stage.
If the case does not settle at the FDR stage, then directions will be set towards a final hearing. However, the majority of cases do settle prior to the final hearing. At a final hearing the judge will hear the evidence from both parties and will then make a decision on how the finances will be settled. The court has a wide discretion when making a decision about the finances and will always be made whilst considering the factors in Section 25 of the Matrimonial Causes Act 1973.
The factors the court considers when deciding how the financial should be settled are.
(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.
It is usually the preference of the court for there to be a clean break when approving an agreement reached by the parties or where the court makes the final decision. This is when both parties are financially separate following the implementation of the approved order and prevents any future financial claims by either party. However, there may be circumstances where a clean break is not suitable for example where one party earns much more than the other and therefore spousal maintenance payments may be appropriate. It is all dependant of the circumstances of each case.
If you require any legal assistance with your finances on the breakdown of your marriage, then it is important to obtain expert advice.
Here at Andrew Isaacs Law our expert lawyers can offer advice and support through this process. You can book a no obligation appointment for a fixed fee to receive tailored advice to you, consider your options and decide how you wish to move forward. Contact us to arrange an appointment today.
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