Why you must get a financial settlement following a divorce
Finances are more often than not a sore spot for any couple when going through a divorce.
Sorting out money, property, pensions and children can be an even more daunting task when you don’t know where to start or what you’re entitled to.
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.
What is a divorce financial settlement?
A divorce financial settlement is a term the court use to describe financial proceedings within a divorce.
In any undefended divorce case, it is the mechanism by which the court can deal with separating assets and finances in what is known as a consent order.
Obtaining 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-husband or wife are.
These arrangements are covered by the financial court order and can include;
- money, shares, savings
- division of debt and pensions
- children / spousal maintenance
Why 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 agreement within months after the divorce has been initiated.
How are assets usually split in a 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 for as well as other 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.
We’ve heard about 80/20 and 70/30 splits before, but in our experience, the best way to achieve a fair division of assets is to start with a 50/50 split and work from there to ensure both parties are in agreement.
Need advice on your financial settlement?
Our solicitors can provide you with a full consultation to ensure the agreement you’ve reached is fair.
Professional legal advice is provided
A detailed and tailored, written report
30-minute phone call with your solicitor
A low-cost fixed-fee payment
Both parties agreeing to a financial settlement
If your relationship with your spouse is amicable, 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 assets, 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 and can save you a lot of time and money.
To make the agreement legally binding, however, you need to use the services of a qualified 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 financial 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.
Applying to the court 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 them with a financial court order.
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 order 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.
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