Financial Settlements on Divorce
It is advised that wherever possible you reach an agreement without the need to involve the Courts. The way that you can consider doing this is through the following methods:
- Negotiation between yourselves with or without advice from a Solicitor
- Negotiation between your respective Solicitors
- Collaborative Law
- The factors which are considered when reaching a Financial Settlement
If a financial agreement can be reached by any of the above methods then it will have much easier, less stressful and much more cost effective than making an application to the Court. If an agreement can be reached by any of the above methods then it is imperative that an agreement is signed by both of you.
We have financial packages available to assist our clients when it comes to drafting the agreement and our specialist solicitors will advise you as to whether a Consent Order (an order reflecting the financial agreement on Divorce) or a Separation Agreement is more appropriate in the circumstances.
Application to the Court
If an agreement cannot be reached voluntarily, an application can be made to the family courts.
It may also be necessary for an application to be made to the Court to protect financial assets and for further information read our Protection of Financial Assets and Injunctions in Financial Proceedings page.
It may also be necessary to apply to the Court for Interim Maintenance if your spouse is not providing you with appropriate financial support and you are having difficulties paying the mortgage for example. Such an application would be made by way of an emergency and the Court would consider ordering the other spouse to pay a fixed monthly sum until a final settlement can be agreed.
Types of Orders the Court can make:
Payment of lump sums:
The court can order one of you to pay a lump sum or a series of lump sums to the other. For example, the court could order you to transfer to your spouse your interest in the matrimonial home, and for your spouse to pay you a lump sum by way of exchange.
Sale or transfer of property:
The court could order the property to be sold and also state how the proceeds of sale are to be divided. The court can also order the property to be transferred from one of you to the other
The court can order one of you to pay the other maintenance. It is most common for the court to order a husband to pay maintenance to his wife. The maintenance can be paid for joint lives, until the recipient’s re-marriage or for a fixed period of time. In many cases it may not be appropriate for an order to be made for spousal maintenance, in which case the court will order a ‘clean break’.
After the former matrimonial home, a pension entitlement is often the next largest asset in a marriage. The court has the power to order the division of pension policies.
There are options for the Court
A Pension Sharing Order creates a separate fund and the recipient receives a pension in his or her own right. The recipient may be able to remain a member of the pension holder’s pension fund (depending on the rules of the scheme and the financial advice obtained) or may transfer to a new pension fund.
A Pension Attachment Order allows the Court to make an Order directing the Pension Trustees to pay a percentage of the lump sum or pension on maturity to the person named in the Order. A Pension Attachment Order will cease if the pension holder dies and the income payment will end if the recipient remarries, it does not create a separate fund for the recipient and consequently these orders are unpopular given that the courts are able to make a pension sharing order.
A court can also decide to offset the Pension against other assets to keep the Pension in tact. So for example one party could receive a larger amount of cash assets in return for no order being made on the other party’s pension.
Delay in Sale of the Matrimonial home:
The court could make an order that the family home remains in joint names until your youngest child reaches 18 at which point the property would be sold. The court would order how the proceeds of the property would be divided. These orders are more common in times of a recession to ensure that the child or children of the family are housed appropriately.
Wherever possible the court should consider as to whether a Clean Break is appropriate. This effectively means that neither of you would be able to bring a further financial claim against the other in relation to the marriage or upon the others death for example for inheritance.
To arrange a discussion at your convenience with a family law solicitor please do not hesitate to contact us.