Finances are more often than not a sore spot for any couple, but sorting out money can be an even more daunting task when dealing with divorce.
It’s important to know that in England and Wales, the act of divorce itself doesn’t put an end to the financial relationship between you and your partner.
To separate your finances, you need to reach a financial settlement and turn that into a court order that is different from the divorce itself.
Getting a financial settlement when you’re separating from your partner is important because outstanding financial claims may come back to disrupt your lives even years after your divorce has been finalised.
In England and Wales, even when you’re divorced, you still retain the ability to make financial claims against your ex and vice versa, and there’s no time limit for making these.
This is why it’s crucial to put your financial affairs in order and have a binding court order stating what your financial arrangements with your ex-partner are.
These arrangements are covered by the financial settlement and can include;
- money, shares
- division of debt and pensions
- children / spousal maintenance
When you should obtain a financial settlement
You can get a financial settlement any time during the divorce proceedings – so, before or after the divorce has been finalised.
It’s advisable to do so before your partner or you have remarried.
Normally, the divorce takes around five to six months, but delaying your paperwork may prolong the process.
Reaching a financial agreement, however, will depend mostly on what your relationship with your ex-spouse is like and how complex your financial affairs are.
In most cases, you can reach a financial settlement within the same period as the divorce proceedings.
Once the court has ruled on the settlement, it will be confirmed by a consent order.
Even in the most complicated of cases, most people can reach a financial settlement within months after the divorce has been initiated.
Scenario A: Both parties agreeing to a financial statement
If your relationship with your spouse is good, you haven’t been married for long or your financial affairs are not that complicated, in England and Wales both parties can come up with their own agreement.
You can choose to work out the asset, money and property issues yourself without involving a lawyer, regardless of whether you’re divorcing or ending a civil partnership.
Coming to an agreement between you helps avoid going to court.
To make the agreement legally binding, however, you need to use the services of a solicitor.
If you decide to go down this route, make sure you and your ex-partner agree on child maintenance, which can be done at the same time or separately from the financial settlement.
If you decide to agree to a financial statement, you need to get a solicitor to draft a consent order, which will then be approved by the court.
The consent order states the division of financial assets such as property, money, savings, investments and so on, and can also include clauses for arrangements for child or spouse maintenance.
Before you go to court with the consent order, you need to make sure you have started divorce proceedings, but before applying for the final decree, which ends the marriage.
This will be a decree absolute in the case of divorce or final order if ending a civil partnership.
Each partner needs to sign the draft consent order and keep two copies of the signed original.
You will also need a statement of information form, and one of the spouses needs to fill in a notice of an application for a financial order.
To apply for a financial statement, in this case, you need to send the signed forms and copies and pay the £50 fee to the court.
In case you’re on benefits or have a low income, you may be able to receive financial help with the court fees.
Normally, when both partners agree to the financial settlement, there will be no court hearing.
If the judge deems the consent order to be fair, they will approve it, making it legally binding.
If the judge believes that the settlement is not fair, they can either change the consent order or make a new court order telling you how to divide your assets.
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Getting help agreeing on your finances
In some cases, getting your spouse to agree to a financial settlement can be difficult, in which case it’s best to involve a mediator.
A mediator’s role is to help you and your ex-partner come up with a fair split of your money and property, without taking sides.
It’s always better to reach an agreement with your ex-spouse, either on your own or with the help of a mediator or a solicitor.
As a rule of thumb, the more you can agree on your own, the less the cost of getting a financial settlement will be.
Scenario B: Applying for a financial settlement
Sometimes, even involving a mediator may not solve the issue.
When negotiations are difficult, you and your ex-spouse have a complicated financial situation or your ex-partner refuses to even discuss finances, you may consider applying to the court to get a financial settlement.
If you or your partner own a business, if one is financially dependent on the other or you have dependents (children), if one is against the divorce or dissolution or has a medical problem or disability that affects their ability to earn an income, or one has significantly more assets than the other, this may be a sign that you’re better off applying for a financial settlement to the court.
In a nutshell, if both parties can’t reach an agreement, they need to go to court and have a judge issue a financial settlement.
However, you need to show to the court that you have attended a mediation meeting (unless there has been domestic abuse or social services are involved in which case you can go straight to court).
The deadlines for applying for a financial settlement are the same: before applying for the final legal document but after you’ve started the paperwork to divorce or end your civil partnership.
The financial settlement can cover any financial issues such as lump-sum payments, property ownership, regular maintenance payments to help with living expenses or children, or a share of your partner’s pension payments.
To apply for a financial order to the court, you will need to send two copies of the form to the court dealing with your paperwork (but keep one copy for yourself).
The application itself costs £255 and you may need to attend several court appointments and court hearings.
How quickly the financial settlement is issued depends on a variety of factors but it could take anywhere between 6 and 12 months.
How assets are split in divorce
The judge has the final decision on how your assets will be split.
The division of assets depends on how long you’ve been married or in a civil partnership.
It takes into account factors such as;
- You and your partner’s ages
- Your ability to earn
- Property and money
- Standard of living and living expenses
- Role in the marriage (e.g. were you the primary breadwinner or the stay-at-home-parent) and so on.
The court strives to decide what the fairest way to divide the assets is, but arrangements regarding the children (in terms of housing and child maintenance) have the highest priority.
What if I don’t have any assets to split?
In case you and your ex-partner have no assets to divide, you should also apply for a financial settlement.
Instead of a consent order, however, the judge will issue a clean break order, which ensures all financial ties between the ex-spouses are cut.
It’s important to do so, even if you don’t have any assets to divide at the time of the divorce.
There’s no guarantee you won’t come into some money in the future and if you haven’t obtained a financial settlement, your ex is still within their legal rights to make a financial claim.
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