Financial Settlements After Divorce and Dissolution
Whilst a divorce or dissolution will legally bring your marriage or civil partnership to an end, the financial and property issues on the ending of your relationship require separate consideration. The aim is always for you and your ex to agree the financial arrangements, rather than the outcome being imposed by a Court. Ideally you and your ex will use one or more ‘non-Court’ methods of resolution, for example mediation, negotiations led by your respective solicitors, or perhaps arbitration.
There is a legal framework in respect of financial matters on divorce and dissolution which requires the Court to take into account all the circumstances of the case. The Court is specifically directed to a ‘checklist’ of factors, which include the available financial resources, the length of the marriage, your ages, the standard of living enjoyed during the marriage, amongst others. The overall aim is a fair outcome, in which both yours and your ex’s needs are met, with first consideration being given to any children.
However the law in this area is otherwise very discretionary and can be complex. There is usually more than one possible outcome that could be considered fair by the Court ie there will be a range of possible ‘right’ answers. This often makes negotiating a settlement tricky, particularly when emotions are running high.
The starting point in seeking to arrive at a fair settlement is to ensure that everybody knows what the financial resources of the marriage are, namely the assets, the income and the pensions. Lawyers refer to this as ‘financial disclosure’. Exactly how your financial disclosure will be dealt with will depend on what method of resolution is being used. For example, if you and your ex are seeking to resolve matters with the help of an independent mediator, disclosure will ordinarily be dealt with within that process. If you are in a Solicitor-led settlement process, your Solicitor will help you collate the relevant documents and information, to exchange with your ex (via his or her Solicitor if they have one).
If you and your ex are unable to reach an agreement, then as a last resort, the final arrangements may need to be decided by a Court. The process of resolving financial matters in a Court process is known as ‘financial remedy’.
The financial remedy Court process provides for a specific form to be completed at the start of the process. This is known as a Form E and is often used for disclosure when employing non-Court dispute resolution methods.
Sometimes the financial disclosure process cannot be considered to be complete until the advice of relevant experts is obtained, for example from a forensic accountant if there are issues relating to a business, or perhaps from a chartered surveyor in respect of the value of a property, if that cannot be agreed. In many cases, expert advice is needed in relation to pensions, which require special consideration.
Once financial disclosure is complete, settlement discussions can take place. Again how these proceed will depend on the method of resolution being used in your case. In the financial remedy Court process, they generally take place in advance of and at a specific hearing that is arranged for this purpose, known as a Financial Dispute Resolution (FDR) hearing.
The agreed settlement terms will then need to be formally recorded in a Consent Order, which, once approved by the Court, will bring matters to a close.
A Consent Order will usually include a variety of different provisions, for example setting out whether the family home is to be sold or transferred to you or your ex, or the amount of any payment that is perhaps to be made by one of you to the other, and by when. Sometimes it is appropriate for there to be orders providing for the sharing of pensions between you, or to deal with any business assets.
In a small minority of cases, it may be appropriate for there to be provision for one of you to provide ongoing financial support (‘spousal maintenance’) to the other, perhaps for a fixed period of time following the separation. However far more commonly, a Consent Order will provide for there to be a financial ‘clean break’ between you and your ex. There is an obligation on the Court to consider whether a clean break can be achieved at the earliest possible opportunity. This does not apply to any financial obligations in relation to children, which in the vast majority of cases, are a separate, statutory obligation that do not fall within the remit of the Divorce Court.
For information on Financial Settlements after Divorce and Dissolution, please contact us.
