Financial Settlements in Divorce : FAQs
In the breakdown of a marriage, one of the main issues which can cause a dispute between you and your spouse is the struggle to reach an agreement over finances.
To formally and legally set out the financial commitments between you and your former spouse and to ensure their enforceability, you will need a financial agreement that sets out these obligations on divorce. If approved by the courts, it becomes a legally binding document – a consent order – that records with the court the agreement reached between the separating couple. Such an Order is then enforceable by either spouse and often draws a line under the finances to ensure there is a full and final clean break, preventing any further claims.
Under UK law, a separation contract, similar to that mentioned in the Bill and Melinda Gates divorce, is technically not legally enforceable. However, it is possible to establish a financial settlement agreement that is dependent upon certain criteria being met that may be upheld by a Court in the vent of a dispute.
Financial settlements can be complex and can raise many questions. We have answered some of the FAQs that tend to arise regarding Financial Settlements in Divorce. If you have any further questions, do not hesitate to contact our Family Law and divorce specialists or find out more about what we can do for you on our Family Law page.
Will the settlement negatively affect the partner at fault?
It is rare and is only in exceptional cases that the Courts will consider “bad behaviour” during a marriage. To justify behaviour being capable of reducing a share of the pot a spouse would have to prove significant financial harm to the entire functionality of the marriage. For example, if there is a case of excessive gambling which has impacted the funds available to share. Such behaviour does not include cheating or other such matters that could be considered a “fault” of the partner.
Is every financial arrangement different?
Every divorce case is different. The courts work on a case-by-case basis. The judge will have complete discretion on how the assets will be divided, and there is no standard routine or formula to follow. However, there is a list of factors within the legislation which a Court must address when deciding how to divide the pot. If you and your partner relinquish control completely, by applying to the Court for a decision, it may be very difficult to predict how the Court will deal with your assets.
Does the breadwinner get more than the homemaker?
In most marriages, one spouse will earn more than the other. When it comes to financial settlements in divorce, considerations are tempered by non-financial contributions. Examples include raising the children, taking care of the home and other elements in this vein. Both the breadwinner and the homemaker are considered equal in the marriage, and this is reflected in the financial settlement that the Court awards.
Will the finances be split equally?
The Court starts by calculating how much there is in the matrimonial pot by way of capital and then starts at an equal division. The Court then considers both parties in relation to the list of factors within the legislation and tries to deliver a fair outcome by considering each spouse’s and any children’s needs, the funds they will need for re-housing and their respective income needs. The factors include the length of the marriage, the parties ages, any children, re-housing needs and affordability. The list includes other factors and, of course, each case is different. Depending upon the position of each party within each individual case the 50/50 division can and does get moved to provide more capital to one spouse.
Will the financial needs of children be taken into consideration?
The Court is required to consider all circumstances, one at the forefront being the welfare of your children. This includes stepchildren if they are classed as children of the family.
Although the children’s needs are considered along with a multitude of issues.
What happens to pensions?
Pensions can be overlooked in the process of dividing financial assets, but as they are often one of the most significant assets, care must be taken to ensure full consideration is given to them. Pensions are sometimes shared between parties to the marriage if they are available to be realised within a reasonably foreseeable time period, or the pension can be earmarked for splitting at the point the pension is crystallised.
What if I need urgent maintenance?
You can obtain an interim order as soon as the divorce proceedings are issued at Court, even though financial matters have not yet been addressed. This is called “maintenance pending suit”. This lasts until the final order is made and the application can be considered if the primary earner makes no payments to the other spouse who has no income or insufficient income to meet the bills and may also have the daily care of the children.
Is there an ideal time to deal with the issue of finances?
At the point of separation and certainly, when a decision is made to commence divorce proceedings, the financial responsibilities need addressing. Mediation can be helpful to make these decisions in a supported and knowledgeable arena.
Once you have completed these discussions, it is best to apply to the Court straight away. You can do this with a set of terms for the Court to approve if you are both in total agreement or with the Court making this decision after full financial disclosure by both spouses. There is no deadline for making a financial application, but a delay could affect the amount that you are awarded.
Financial Settlements in Divorce with Russell & Russell Family Law Specialists
All Russell & Russell’s family solicitors are specialists in their field and adhere to the Resolution code of conduct. They can guide you through the complexities of family law, helping you make the right decisions to ensure your and your family’s well-being.
Russell & Russell Solicitors provide a Family Advice Clinic, free of charge, providing you with 20 minutes of general legal advice. We can also advise on the availability of legal aid. Russell & Russell hold these clinics at our Atherton, Bolton, Bury, Chester and Farnworth offices on Tuesdays and Wednesdays between 1 pm and 4 pm.
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