A divorce does not automatically sever financial claims between spouses. Without a Court approved financial order, either party may be able to make a claim against the other in the future, even many years after the divorce is finalised.
Assets built up during the marriage are usually considered to be “matrimonial assets” but in some cases, assets owned before the marriage or received as inheritance may also be taken into account.
The financial order provides clarity and finality. It records how assets are to be divided and whether ongoing financial obligations such as spousal maintenance will apply.
Full and frank financial disclosure of income and capital by both parties ensures the foundation of any fair settlement.
Financial orders, often called financial settlements, are governed by the Matrimonial Causes Act 1973. The Court’s objective is to achieve a fair outcome taking into account all relevant circumstances. These factors include:-
- The needs and welfare of any children which are always the Court’s first consideration
- The income, earning capacity and financial resources of each party
- The financial needs, obligations and responsibilities of each party
- The length of the marriage
- The age and health of each party
- Contributions made by each spouse including non-financial contributions such as caring for children
Outcomes are based on need, sharing and where relevant, compensation.
The family home is often the most valuable asset and a key issue in financial negotiations. Common outcomes include:-
- Sale of the property and division of the proceeds
- One party retaining the property with the other receiving a share
- Deferring the sale
Each option depends on affordability, mortgage capacity and the needs of any children.
Pensions must be carefully considered. The Court may order:-
- Pension sharing which is dividing the pension benefits between the parties
- Pension offsetting where one party keeps the benefit of their pension in exchange for a smaller share of the other marital assets.
Financial settlements may include ongoing payments:-
i) Child Maintenance (usually arranged through the Child Maintenance Service)
ii) Spousal maintenance payable where one party cannot meet their reasonable needs independently following divorce.
Spousal maintenance may be for a limited time only or in some cases continue longer term, depending on the circumstances.
Many couples are able to resolve financial matters without contested Court proceedings. This can be achieved through negotiations through solicitors or mediation. Where agreement is reached it must be recorded in a consent order and approved by the Court to make it legally binding.
If an agreement cannot be reached, either party may apply to the Court for a financial remedy order. The Court process provides a structured framework to ultimately achieve a final binding order.
Early legal advice can often reduce conflict, manage expectations, reduce costs in the long run and lead to more effective outcomes.
If you need advice on this issue or any family matter, please do not hesitate to contact RJT Solicitors on 01257 228027 or info@rjtsolicitors.co.uk to arrange a free 30 minute consultation.
