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Finances on Divorce or Dissolution
Finances on divorce or dissolution
One of the most contentious issues, upon the breakdown of a marriage, is deciding how any property, pension and income, should be shared. It is preferrable, in most cases, for couples to discuss and attempt to reach an agreement that they are both happy with; but what is a fair arrangement and what can you do if you can’t agree?
What financial orders can the court make?
The Court can make a range of orders in relation to the finances, the principal orders:-
- Periodical payments (commonly referred to as spousal maintenance);
- Lump sum payment;
- Property adjustment orders; and
- Pension sharing orders, in various forms.
The court can also be asked to order a spouse to pay maintenance pending suit (i.e. interim financial support for the spouse to help maintain their outgoings pending a final decision) and a range of financial orders for the benefit of any children. Unfortunately, it is not possible to obtain an interim property or lump sum order.
How will the court decide who gets what?
When deciding what orders to make, and how to distribute any property, whilst the welfare of the children is paramount, the courts will also have regard to a range of issues in seeking to achieve a fair outcome. These include, but are not limited to:-
1. The income, and financial resources of the parties both now and in the foreseeable future;
2. The financial needs, obligations and responsibilities of each of the parties both now and in the foreseeable future;
3. The standard of living enjoyed by the family prior to the relationship breakdown;
4. The parties’ ages and the length of the relationship;
6. The financial and welfare contributions which have been made to the relationship (including looking after the home and children);
7. The physical and mental health/disability experienced by either party;
8. The conduct of the parties (but only in such extreme circumstances where the court would deem it inequitable to ignore this); and
9. The value of benefits lost by reason of the divorce, for example lost widow’s pension.
10. The value of pensions generally.
Some factors will carry greater weight than others, with the length of the marriage, the impact of any order on the children’s welfare, and ability of the available assets to meet the parties’ respective needs can have a significant impact on the arrangements that should be made.
It should also be noted that, generally, the court will apply a ‘broad brush’ in determining what arrangement is fair for the parties. Parties should, therefore, exercise caution when getting caught up in arguments over the minutiae.
What can I expect once I make an application?
The application for a Financial Order should be submitted online
It is important to note that a respondent in a divorce cannot issue a financial application once the Final Order has been made and that party has remarried, so it is very important to resolve the finances prior to remarriage.
Once the application has been submitted the court will process the paperwork and notify all parties of the following:-
- Directions for financial disclosure and statements summarising the issues in the case;
You will have to complete a financial statement, using a document referred to as Form E and provide evidence of your financial resources as requested throughout the form, such as 12 months’ of bank statements, mortgage redemption statements, pay slips, trading accounts and so forth. These should be exchanged with the other party.
Before the first appointment, you will have an opportunity to set out, in writing, any questions that you have about the financial information you have received and summarise the issues you want the court to decide.
- List the matter for the first directions appointment (around 12 to 16 weeks after the application has been issued) known as an FDA.
This hearing is strictly to consider the information provided by the parties thus far and determine what further evidence, if any, is required to determine the issues. Commonly, parties may need to consider replies to questionnaires, valuation reports and other instruction of experts and whether any 3rd parties should be invited to intervene.
Generally, the next stage of the proceedings is the Financial Dispute Resolution Appointment known as an FDR. The purpose of the FDR is to see if an agreement on any, or all, issues can be agreed between the parties and, commonly, the court will give an indication to assist the parties in their negotiation.
If agreement cannot be reached, then the court will set a date for a Final Hearing at which both parties will give oral evidence of their position, be cross-examined and the Judge will make a decision.
Do I need a Financial Order?
Whilst a court order is not required to arrange transfer of property, payment of a lump sum or periodical payments, the benefits of having an order significantly outweigh the risks of not having one.
The principal risk for both parties is that their partner will change their mind at a later date and apply for a Financial Order and if they have not remarried there is nothing to prevent them from doing so, as there is no limitation period or deadline for applications to be submitted following divorce and any agreement previously reached is not legally binding on the court. Special care should also be taken when transferring property, in exchange for a lump sum, without the security of finality of a Court Order.
Having a court order in place gives all parties peace of mind that the financial arrangements can be implemented with confidence by you both and that there is no risk of any future claims being brought against each other.
Finally, it should be noted that if you have agreed to a pension sharing order you will need a) a Pension Sharing Order from the court, and b) the Final Order in divorce proceedings (or decree absolute).
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If you would like a no obligation discussion, please feel free to contact us either by phone on 02920 345511 or emailing us below.