Resolving Money Issues After a Divorce
At Lupton Fawcett, our family solicitors have helped many couples come to amicable arrangements in disputes regarding finances. We understand that divorce proceedings can be a difficult time and will work hard to reach a satisfactory conclusion as swiftly as possible.
If you need assistance with financial disputes, or would like information on what your rights are, contact us today on 0333 323 5292, email us or fill in the enquiry form on this page and we will get back to you shortly.
We provide specialist advice on a wide range of financial settlement issues to clients around Yorkshire from our offices in Leeds, York and Sheffield. We advise on a variety of methods to help reach a financial settlement, including:
- Negotiating directly with the other party
- Attending family mediation
- Engaging in the collaborative law process
- Using traditional solicitor-based negotiations
- Representing you in court proceedings
About Financial Disputes
When dealing with financial disagreements in divorce and other related proceedings, it is necessary to obtain a full picture as to the income, personal and business assets of you and your partner, in order to establish what is in the pot to be distributed between the parties.
Financial settlements may include what is known as a ‘clean break’, which terminates any future claims that either party may have against the other. It is the court’s job to consider if a clean break is achievable. However, in some cases, it may be appropriate for ongoing maintenance payments to be made either for a fixed or open-ended term.
There are a number of factors that the court must look at during financial settlement cases, with the first consideration being towards the needs of any children involved. These considerations include:
- The financial resources of the parties, including income, capital and property
- The financial needs and responsibilities of the parties
- The standard of living enjoyed by the family
- The age of each party and the duration of the marriage
- The contributions made to the welfare of the family
- The conduct of the parties (in extreme circumstances only)
The specific orders the court can make will broadly cover capital, maintenance, property and pension arrangements.
The starting point for financial division is a 50:50 split. However, this may be departed from as there may be issues to consider such as contributions to the marriage, pre-marital wealth and inheritance payments introduced into the marriage.
The court has wide powers to rewrite the parties’ finances and a wide discretion as to how it does this. There is, therefore, a real ‘litigation risk’ for both parties, so it’s essential you are well advised to deal with these difficult issues realistically to reach a fair solution.
Applying for a Financial Order
Either party can apply to the court for a financial order provided they have not remarried in the meantime. The court cannot make final orders until decree nisi has been pronounced. There are, however, preliminary orders the court can make for regular maintenance payments from one spouse to the other until the overall financial settlement is resolved. The court can also, in appropriate cases, make an order requiring one party to make a financial contribution towards the legal expenses of the other party.
There is every reason to try to reach an early agreement about all financial matters but especially immediate arrangements, as a holding position, until all matters are agreed or determined by the court.
The court will impose a timetable setting out the steps the parties will need to comply with before the matter can be heard at a final hearing, unless the matter is agreed by the parties prior to the final hearing. If necessary, the court will also direct independent valuations of those assets for which the parties cannot reach an agreed valuation.
How Do We Know What is Fair?
This is a broad concept depending on the parties’ individual circumstances and is influenced by recent case law in addition to the statutory criteria as set out above.
The starting point set out in the very famous case of White v White in 2001, is a 50:50 decision. However, there are often reasons to depart from this. One party may earn more than the other, they may be minor dependent children whose primary home is with one party, there may be issues such as inherited assets, premarital acquired wealth, contributions of such a nature which should be taken into account and a whole host of other factors. It is important therefore to be aware that often a 50:50 division of assets is simply not appropriate.
It is also important to understand what powers the court has in relation to dealing with finances associated with the marriage. Courts can, for instance, order properties to be sold or transferred to the other party, or one party to have a deferred charge type arrangement over the property. Courts can also make orders in relation to pension provision.
Judges dealing with such cases have a wide ambit of discretion as the law is based not just on the statutory components of the Matrimonial Causes Act 1973, but a whole host of case law, which is constantly evolving as key decisions of the High Court, Court of Appeal and ultimately the Supreme Court are filtered down.
Financial Interests and Pensions
Parties sometimes do not appreciate that there should be an inevitable unequal division of capital based upon their own financial circumstances. There are other issues that may be relevant, for instance, one or both parties may have business interests, interests under a family trust or other investments, which may need to be valued and considered. There are also potential considerations in relation to pensions.
It is a common misconception that all pensions are the same and one should simply add the values together and divide by two when looking at a long marriage. One person may have a final salary scheme and the other may have a money purchase scheme. They are very different types of arrangements and specialist advice is needed in this area.
Whilst it might seem like a 50:50 split is the fairest answer. There are a large number of circumstances when a departure from equality of division would be more appropriate.
The Law Commission has opined that the lack of a definition of “financial needs” means that it is very difficult for laypeople to understand their responsibilities and agree to meet them following divorce. A report from the Law Commission concluded that the objective of financial orders made to meet needs should be to allow a transition to independence to the extent that is is possible in light of the choices made within the marriage, the marital standard of living, the parties’ expectation of a home and the continued shared responsibilities. The Commission acknowledged that in a significant number of cases, independence is not possible, usually because of age but sometimes for other reasons arriving from choices made during the marriage.
Contact Us for Help
Our specialist team is able to help provide you with assistance on the whole spectrum of family law services. For more information, get in touch with us using the details on the enquiry form.