I am getting divorced; how will my finances be dealt with?

I am getting divorced; how will my finances be dealt with?

If you are going through a divorce, you of course must also deal with the division of your assets. Often, people do not know where to start when considering how to deal with their assets. There are many things that may affect the settlement that is ultimately reached, including your financial resources, needs, contributions, ages, and other factors. Our expert family solicitors can help you to tackle the complexities of negotiating a financial settlement, without the need for matters to become overcomplicated or contentious. 

What is a financial settlement?

After issuing financial proceedings, a 20-week ‘reflection period’ begins. During this period, you and your spouse can begin to think about how your assets will be divided after you separate. Once a settlement is reached, your solicitor will draft this into a formal court order, which is sent to the court online so that a judge can review it. If the judge considers the settlement fair and believes it to meet both of your needs, they will approve it, and it will then become legally binding and enforceable.

How do I reach a financial settlement? 

To reach a financial settlement, you and your spouse must exchange financial disclosure, so that you are both aware of what the assets involved in the marriage are. You will then have the opportunity to raise any further queries that you may have. If an expert needs to be instructed, for example a pension or tax expert, your solicitor will advise you accordingly and will deal with this. 

Once there is full visibility as to all of the assets involved, your solicitor will begin to discuss potential offers of settlement with you. Once a settlement is reached, they will prepare your financial remedy order.

What happens if my spouse and I cannot agree on how to divide our assets?

If a settlement cannot be reached, there are a number of ways in which an agreement can be achieved. In the first instance, this is likely to be non-court dispute resolution, including mediation, arbitration, round table meetings, or private court proceedings, with a neutral barrister acting as a judge to help you to try to reach a settlement by advising on what you can expect if you do go to court. 

As a last resort, we would need to issue court proceedings. This usually includes one to three hearings, with the majority of matters being settled at the negotiation’ hearing, which will be the first or second hearing. We will always try our best to avoid court proceedings unless absolutely necessary. 

Will our assets always be divided equally? 

In a long marriage, the starting point for division of assets is 50/50. However, there can be a departure from this in either party’s favour to meet need. For example, if one person has less income (and therefore, a lower mortgage capacity) than the other, the lower earner may have an argument for a departure from equality. If any children of the marriage are to live with one parent, again that person may have an argument for a departure from equality and/or a delayed sale. 

Another situation where assets may not be divided equally is if it would be unfair, such as with a short marriage, you are both relatively young without children, and perhaps one of you already owned substantial property prior to the marriage, for example the matrimonial home. 

Sometimes, certain assets can be ‘ringfenced’, which means they are kept separately from the assets which are to be divided. This could include properties which either person owned before the marriage or inheritance. These are known as non-matrimonial assets. Do keep in mind that if there are limited matrimonial assets and needs cannot be met, a court could evade non matrimonial assets to meet need. 

What happens if our settlement is not approved by a judge?

Occasionally, even if you reach a settlement and your solicitor prepares a financial remedy order reflecting this, when it is sent to the court the judge reviewing it may not approve it. Usually, this would be if the settlement was clearly unfair, or one person’s future needs cannot be met. In these circumstances, the judge will advise on why the settlement was not approved, and your solicitor will be able to help you to address this.

Can I agree with my spouse on how we wish to divide our assets without a financial remedy order?

We would strongly advise against simply dividing your assets without formalising this into a financial remedy order. If you do not have a court order recording the settlement that you have reached, this means that future financial claims are not dismissed and any agreement you have reached is not binding. Until you have such an order, your spouse can make a claim against your assets at any point. 

This can often be an issue where people have limited assets at the time of divorce so do not consider it necessary to have a financial order in place, but they later come into money, and their spouse then commences financial remedy proceedings. If you do have limited or no assets, at the very least you should have an order in place providing for a clean break between you. 

Sometimes, legal costs may be a deterrent to a person instructing a solicitor to help them to address their finances following a divorce. However, we consider this a small investment in comparison to the assets, both present and future, that you wish to protect.

Speak to an expert 

If you are unsure on where to begin, book a free no-obligation call back so that you can better understand your position.