Financial orders and settlements on divorce
Aside from the shock and emotional upheaval of divorcing, resolving finances and ensuring the children are put first are the 2 issues which often create the most friction.
With some marriages there are very few assets and with others the parties are arguing over the division of millions. The middle ground is the most common and often the most complex. Typically, there will be a marital home and 1 or both parties will have a pension. The assets are not sufficient for both parties to buy 2 properties of the same size and type, so compromises are needed or the court will end up deciding, which is expensive, slow and creates uncertainty and friction.
All current assets of either party must be disclosed and may form part of a claim to entitlement by the other party. Where children is involved there can be no final financial order until the children are adults.
In many divorces, assets cannot be immediately accessed (such as pension entitlements) or the value of an asset can be difficult to accurately asses, such as where 1 spouse owns shares in a privately owned business and he or she is the driving force in that business.
Entitlement to an inheritance can also be a contentious area. If an inheritance has not been received at the time of divorce, the court will usually treat it as speculative and not include it in assets. Even if an inheritance has been received, if the marriage has been fairly short, the court may disregard it.
Financial entitlement on divorce
There are no hard and fast rules about what a court must order and no 50:50 starting point.
The established factors a court must consider include :
- the needs of the parties,
- each party's likely future financial earning capacity
- the age of the parties
- any disabilities of the parties
- the length of marriage.
The best approach, encouraged by the courts, is for the divorcing parries to resolve matters, or as much as possible, themselves. Mediation is an excellent way of exploring common ground. If you can agree on finances between you, the standard way to deal with this is to set out the full terms agreed in a consent order. An application is then made to the court for the court to turn this into a court order. The advantage of this is that a breach can be enforced by court action.
Clean break settlement?
Depending on the available assets and other factors, the basic options for finances on divorce break down into :-
- Whether a clean break is possible – this is where all financial payments or allocation and transfer of assets takes place once and for all after divorce so that neither party has a financial claim against the other in future, except for financial needs where there are children under 18.
- Agree division of assets but implement later - ownership of assets agreed now with no ongoing maintenance, but assets will be sold at later date. This type of arrangement is focused more on the matrimonial property, where ownership proportions are fixed but the property will only be sold when children are over 18. This kind of deferred solution is also known as a Mesher Order.
- Ongoing maintenance – generally for a limited period, with provisions for reduction in certain circumstances (such as employment or new relationship) and possibly with an agreement in place for division of certain assets in the future, such as pension or house
What’s the position with new relationships or remarriage?
If you start cohabiting with a new partner this can be taken into account by the court in a divorce n order. The court would consider financial support you are getting from a new partner.
If you remarry you will automatically lose any maintenance you were receiving.