Financial Settlement after Divorce
- Not concluded a financial settlement after divorce?
- What is included within a financial settlement?
- Factors to consider in a financial settlement?
- What is a financial order in divorce?
- What is the family pre action protocol for financial divorce settlements?
- What is a Financial Dispute Resolution Appointment (FDR)?
- Does the reason for the divorce affect how the financial settlement is worked out?
- Does length of marriage affect divorce settlement?
- How is a divorce financial settlement calculated?
- How assets are divided in a divorce settlement?
- Are assets split 50/50 in divorce settlement?
- How soon within the divorce process do we need conclude a financial settlement?
- Can you get a divorce without a financial settlement?
- How can I protect savings in a joint account before a financial settlement is agreed?
- Is a Consent Order a financial order?
- Can I get a consent order before divorce?
- What is a fair consent order?
- Is a clean break order the same as a financial order?
- Child maintenance after a divorce
A divorce financial settlement are terms which set out the division of financial assets involved in a marriage after separation. Those terms are approved by a Court within financial proceedings.
In undefended divorce and financial cases a financial settlement can often by obtained by a consent order which is effectively the terms approved by the parties before the Court seals the Order as being final. If you fall into this category is it incredibly important that you consider securing legal advice to check the terms of the financial settlement after divorce is not only fair but accounts for the future needs of yourself as well as any children of the marriage.
You should finalise a financial settlement before you divorce otherwise they may come back to disrupt your life years after your divorce.
Not concluded a financial settlement after divorce?
In England and Wales you can still retain the ability at any time to make financial claims after you have divorced against you ex and vice versa if neither of you concluded financial settlement. If you have divorced but not concluded your finances after divorce then speak to our divorce law experts for advice today on 0330 094 5880 or arrange a telephone appointment.
Financial settlements can be complex cases depending on the needs of parties, type of assets and income available which is why it can be helpful to get legal advice to secure a suitable settlement that is in your best interests.
What is included within a financial settlement?
The financial issues to consider during a divorce will differ from family to family.
All assets should be considered as a starting point which may include:
- Interests in businesses, stocks or shares, trusts
- Division of debts, pensions and savings
- Future earnings
- Children and Spousal Maintenance
Factors to consider in a financial settlement?
Any financial settlement should be properly considered in terms of being fair, practical and realistic in both short and long term.
Other factors we recommend you consider are:
- Immediate financial concerns after separation – you need to consider how you can financially continue after you separate without falling in financial arrears
- Maintenance after divorce – calculate you income needs and have this figure ready to hand when you speak to a divorce law specialist so you can better assess how long you will need maintenance support for
- Whether the matrimonial home can be retained or needs to be sold
- Future savings and pensions
Whether a divorce financial settlement includes a paying party agreeing to a regular monthly financial contributions over a period of years towards settling the mortgage, paying parties health care, promotional prospects and ability to continue earning should be carefully considered.
You may want to consider placing a charge against an asset, if available, as a form of security in the event of the paying party being unable to fulfill their financial commitment to you; so you can recoup the shortfall balance from the asset.
At Kabir Family Law we see financial settlements drawn up which don’t factor for practical securities being put in place against contingencies; it is incredible important that you secure advice from an experienced divorce law expert.
Our divorce law specialist are able to explore how to devise a proposal in a way that minimises a risk of a financial settlement not being fulfilled in the future. Equally our divorce law specialists regular advice and assist on challenging or reopening a financial settlement where there has been untruthful disclosure or the maintenance is no longer capable of being adhered to.
What is a financial order in divorce?
A financial order divorce is the phrase which describes the financial proceedings within a divorce matter. Applying for a financial order divorce is known as ancillary relief given that its separate to the divorce proceedings and is made in addition to the divorce. When considering financial order divorce the separating partners will need to comply with the pre-action protocol.
What is the family pre action protocol for financial divorce settlements?
When considering a divorce settlement, the parties must ensure they comply with the pre-action protocol for divorce settlements. The pre-action protocol deals with the disclosure of documents and evidence.
Section 2.1 of the practice direction states the purpose of the protocol which is that parties should take to seek and provide information from and to each other prior to the commencement of any application for a financial remedy. Financial remedy covers divorce settlements and financial order divorce. The court expects the parties to comply with the terms of the protocol.
Failure to comply with the pre-action protocol could result either party in paying their partners fees. The pre-action protocol is designed to give you and your ex-partner the chance to resolving the divorce settlement matter without asking the court to make a decision. Could save costs and reduce stress.
What is a Financial Dispute Resolution Appointment (FDR)?
When dealing with divorce settlements parties will make an application. Following the application, the separating parties will complete the financial statement which is known as the Form E. This document provides information on the parties’ financial status and is required to be completed should you apply to court for divorce settlements.
Once the financial statement which is known as the Form E is exchanges, the courts will list the matter for a first appointment. This will be before a district judge to see what other information needs to be disclosed or supplied and to understand what the issues between the parties are.
The purpose of the Financial Dispute Resolution Appointment (FDR) s to hear the outstanding issues to determine if the matter can be settled. During this hearing the district judge can give their view on the likely outcome if they were hearing it. This has now led to most cases settling at this stage of the divorce settlement proceedings.
Following the Financial Dispute Resolution Appointment, the parties will attempt to go away and try and reach an agreement between themselves. A successful FDR hearing could lead to the couples resolving their divorce settlements and moving onto their new life. If, however the FDR is not successful then the case will continue in the courts. Quite often during these hearings the judge will try and use their skills to persuade the parties to negotiate.
Does the reason for the divorce affect how the financial settlement is worked out?
All assets should be considered as a starting point which may include:
The reason for a divorce doesn’t usually affect the calculation of a financial settlement award. This is because the primary focus of a financial settlement is the welfare and needs of any children before the parties and the parties needs will often trump the reason for a marriage breakdown.
While it is rare for the reason of divorce to affect the financial settlement, it doesn’t mean that it is impossible. There are certain reasons that may affect a financial settlement, for example, if one partner’s violence or behaviour has had an impact on the other or if one partner has been reckless or deliberate in excessive spending or destroying assets. An easy example would be if the partner gambled monies away due an addiction.
Does length of marriage affect divorce settlement?
The length of marriage does affect a divorce settlement is also set down as one of the most important factor to be considered in section 25 of the Matrimonial Causes Act 1973. The length of time a couple had lived together prior to marriage is also relevant when considering the length of marriage. Generally, where there is a financially weaker partner, the longer the marriage is the more likely they will be given a settlement which enables them to be financially secure for the remainder of the life. With long marriages the division of assets and finances is likely to be equal, or very close regardless of whether or not the finances and assets have all come from one party.
However, the length of marriage in only one factor amongst others. Each family matter depends on its facts. Contact us today and we could provide you with a consultation to provide you tailored advice based on your individual circumstances.
How is a divorce financial settlement calculated?
There is no set formula in calculating a financial settlement because no case is the same, as each family will differ from one to the other. Our financial settlement specialists are highly trained and experienced in carefully helping you quantify a settlement before considering your basic needs.
How assets are divided in a divorce settlement?
In divorce settlements assets can be divided between the parties without the need of court intervention. In such circumstances there is no set way of how assets should be divided and is based on agreement between the former partners. If partners are unable to reach an agreement, then the courts will need to direct on the division of assets.
The courts will follow the guidelines stated within s.25 of the Matrimonial Causes Act 1973 when dealing with divorce settlements. The starting point for the courts would be to consider a 50/50 split of the assets and finances. The courts however will take in account further considerations and factors before reaching its decision. The paramount factor is the welfare and the needs of dependent children. When considering the divorce settlements and exercising its powers the courts will have regard to the following:
- The income, earning capacity, property and financial resources which each party has or is likely to have,
- The financial needs, obligations and responsibilities which each party has or is likely to have,
- The standard of living enjoyed by the family before the breakdown of the marriage.,
- The age of each party and the duration of the marriage,
- Any physical or mental disability to any party,
- The contributions made by each party to the welfare of the family,
- The value to either of the parties to the marriage of any benefit which they will lose as a result of the divorce (Such as pensions).
Having considered these factors and the individual circumstances of each party the court can order the division of the assets as it sees fit. If you would like more advice on your personal circumstance contact us today to see how we can assist you in looking to reach an agreement for your divorce settlement.
Are assets split 50/50 in divorce settlement?
The starting point in divorce settlements is that the assets are split 50/50. The general principle is that the family assets should be divided equally. This principle is known as the “yardstick of equality” and was specified in the case of White v White.
However, the court can deviate from this approach where it is fair and reasonable to do so. The factors considered by the court before moving away from the 50/50 division of assets in divorce settlement are:
- The effect on the welfare of any children from the marriage – if one partner is responsible for the care and upbringing of children then their needs will be prioritized. This could include them being entitled to more finances in order to support the children
- The reasonable needs of the parties. A partner who is economically weaker can be prioritised and the courts could order a greater share of the assets for them.
- The current and potential earning capacity of each party. If one partner is financially weaker due to them sacrificing their career to allow their partner to excel will be taken into account. This could result in the financially weaker spouse obtaining a greater share of the finances and assets to allow them to buy a big enough house to accommodate the children if they go back to work. One partner who may have the ability to pay a higher mortgage than the other is also likely to receive a smaller share than the weaker spouse.
How soon within the divorce process do we need conclude a financial settlement?
A financial settlement can be concluded any time before or after divorce providing neither party remarries and financial claims have been properly preserved within the divorce process. It is advisable to conclude a financial settlement during your divorce before the Decree is made Absolute.
Can you get a divorce without a financial settlement?
A divorce can be obtained without a financial order divorce or divorce settlement. However, there could be implications for both separating parties. Despite divorcing your partner will still be able to make a claim for financial settlement at any stage. Furthermore, if you remarry without having reached a financial settlement with your former spouse you may lose the right to make a financial claim against them, whereas they would still be in their rights to make a financial claim against you.
Quite often parties may overlook a financial settlement on the basis of neither party having much assets. However, if you fail to reach a settlement or agreement, any finances or assets you acquire in the future may be considered if your former partner makes a financial claim in the future.
Although a divorce can be concluded without a financial settlement our family specialist’s advice you to consider dealing with the financial settlement at the same time as the divorce. Contact us today to arrange a consultation and see how we can assist.
How can I protect savings in a joint account before a financial settlement is agreed?
You may want to consider either placing a restriction on the account so no monies can be taken be taken out without both your consent or freeze the account, if possible so they are preserved as part of the financial settlement or later used by agreement.
You will be jointly responsible for any overdrawn overdrafts so it is important that precautions are taken to protect the account.
Is a Consent Order a financial order?
A consent order is a document which details the financial arrangements which have been agreed by both separating partners. The consent order will detail how the assets, finances, debts, pensions and income will be split following the divorce. The consent order once approved by the court is a legally binding document which will prevent any party from changing their mind in the future. In contrast, the financial order divorce refers to the financial proceedings within a divorce settlement when partners have been unable to agree on the division of assets or finances.
Can I get a consent order before divorce?
The consent order can only be applied for once the decree nisi has been granted in the divorce proceedings and not before. You cannot have a consent order without a divorce having been issued first. Although separating partners can decide and reach an agreement on their divorce settlements the consent order can only be approved once the divorce has taken place.
What is a fair consent order?
A fair consent order is one that will take into account the need of the parties. In most cases the starting point of dividing assets is a 50/50 split. However, this may not be applicable in every family case. In order to ensure a consent order is fair consideration will need to be given to the parties earning potential and childcare responsibilities.
It would be unfair to include a 50/50 split in a consent order where one person has a reduced earning potential due to leaving a job and looking after the family. Likewise, if one party has made significant contributions to the assets it would be unfair to provide them a lower share of the assets. It is important to note that the judge will only grant the consent order if they are satisfied the order is fair to both parties. If the judge feels the order is unfair to either party, they will question how you came to the settlement and ask for more information to ensure both parties understand the proposed order.
In order to agree a fair consent order in divorce settlements the most important aspect is ensuring you have full financial disclosure. A fair consent order will be reached if both separating partners have full understanding of each other’s full income, assets and pension values. If you are unsure as to whether you have sufficient information to be able to reach an agreement on a fair consent order, then you should seek legal advice. At Kabir Family Law, our specialists can assist you in reviewing your financial disclosure to assess whether a proposed agreement is fair and could also assist in situations where you believe your partner may be hiding assets.
Is a clean break order the same as a financial order?
A clean break order is a voluntary financial agreement to ensure that the financial affairs are completely severed. With a clean break order the parties will no longer be able to make claims against each orders finances once signed. Without a clean break order through a court, your spouse may in the future apply to the court for money from you which could include any inheritance you acquire. A clean break order is usually for couples that have no ongoing financial dealings such as maintenance or asset division and simply want to end their mutual financial obligations. This differs slightly from the financial order divorce as it is drafted for couples that have assets and finances to divide. A financial order divorce refers to the proceedings in divorce relating to finances where the couple have been unable to reach an agreement.
Child maintenance after a divorce
Child maintenance should be considered for the parent who is retaining care of the children after the divorce. The amount of child maintenance payable depends on the paying parent’s income, expenditure.
Where the paying parent is a normal rate tax payer you should consider usual child maintenance rates otherwise speak to our family law specialists about pursuing a top up on child maintenance above the usual rates. Our divorce law specialist would advise that any child maintenance payments are factored into a financial settlement.
Arrange a consultation with our Divorce and Financial Settlement Specialists today
If you have reached an agreement on your financial settlement after divorce or simply require further advice, our divorce specialists are happy to speak to you on 0330 094 5880 to help you better explore your options. We have experience in helping countless separated conclude their financial settlement and we are confident that we can also help you.