Divorce Financial Settlements

Divorce financial settlements can be reached either by agreement or, if an agreement isn’t possible, the court will make an order stating what should happen.

Generally, before an agreement can be reached, or a court order made, both parties must disclose what income and capital they have to each other.   This enables negotiations and gives the court the information it needs to make a decision.  Most people come to an agreement on how to divide their assets either before or during court proceedings.

At the first appointment in court proceedings, the court can order further evidence to be filed such as valuations of property or pension valuations.  After this, there is a further hearing called an FDR hearing, which is solely for the purpose to try and assist both parties to reach an agreement. Most cases settle either before, during or shortly after this hearing.

In the rare cases that don’t settle, the court will hold a final hearing, where both parties can present evidence and submit their proposals as to what settlement they want. The judge will then make an order.

It is in the best interests of both parties to try to reach an agreement as this reduces costs and tensions but (more importantly) you know what the final settlement is going to be. If the judge makes the decision then you are bound by that and it can be difficult to predict what the order is going to be as the court have a wide discretion to judge the case on its individual circumstances.

You can find out more about the step-by-step process of divorce financial settlements below:

What Are Divorce Financial Settlements?

It is necessary to obtain a divorce financial settlements, as the divorce itself does not automatically end the financial obligations you have to each other.

A financial settlement does this and means your former spouse can’t make further claims against you. This provides you with certainty and peace of mind and enables you to make a fresh start without worrying about a claim being made against you in the future.

The court can make orders in relation to any property that you own, including the matrimonial home and contents, any other properties or things of value you own such as savings, investments, timeshares, cars, caravans and jewellery etc.  The court can also make maintenance orders if it feels they are appropriate, although child maintenance is usually dealt with by the CMS.

At What Stage of My Divorce Should I Apply for a Financial Settlement?

It is always better to reach an agreement on a financial settlement as this reduces costs and makes what is a difficult time, easier to cope with.

Except for in cases of domestic abuse or urgency, it is a requirement that you attend mediation before you can make an application to the court. Mediation is designed to help you see each other’s point of view and help you reach an agreement.

A mediator is not allowed to give legal advice though, so it is essential you also speak to a solicitor during the mediation process. If mediation doesn’t work, then your solicitor may be able to negotiate an agreement on your behalf.

At Best Solicitors, we recommend that you start speaking about finances as soon as you can, either before or shortly after the divorce process has started, as this gives you more time to try and resolve matters amicably.

If an agreement is reached either through mediation or through negotiations, then that agreement can be drawn up into a court order “by consent”, sometimes known as a “consent order” or clean break agreement.

It is essential to have an agreement drawn up into a court order as this prevents further claims in the future and finalises all financial matters between you both. If mediation or negotiations aren’t successful then an application to court can be made.

The First Court Appointment

The first court appointment is usually brief, unless an agreement seems possible, in which case the judge may extend the appointment and actively assist both parties in reaching a resolution.

If an agreement is reached at this stage, the first appointment is treated as a **Financial Dispute Resolution (FDR)** hearing (see below).

If an agreement cannot be reached, the judge will issue orders requiring both parties to:

– Answer any questions the other party has about their financial situation.
– Provide any additional expert evidence that may be necessary. This could include a **property valuation** if there is a disagreement on the value of the property, or a more detailed expert opinion on matters such as pensions.

Additionally, the judge may order both parties to file information about their ability to secure a mortgage and what amount of the settlement would be needed to help them establish a new financial start post-divorce. This may include details about what each party requires in terms of liquid assets or long-term financial security.

The Financial Dispute Resolution (FDR)

This is a hearing designed specifically to help you reach an agreement. For that reason, it is held “without prejudice” (which means you can’t be bound by anything said or proposed in the hearing at a later hearing).

The judge will say what financial settlement they would be likely to make should they have to make a decision. This can often help parties to compromise on some issues and to reach a final settlement, which avoids the high cost of a final hearing.

If the parties cannot reach an agreement at this hearing, the court will set a date for the final hearing. The court will also usually require both parties to submit statements outlining their case and any additional evidence they believe is necessary. A different judge will preside over the final hearing, ensuring they are not influenced by the discussions that occurred during the FDR hearing.

The Final Hearing

At a final hearing, the discussion typically takes place between the legal representatives, with the aim of reaching an agreement if possible.

If an agreement is not reached, the hearing will proceed, with both parties giving their evidence and being cross-examined. Experts, if involved, will also present their evidence. Once all evidence has been heard, the judge will make a final order to divide the assets. If necessary, the judge may also order one spouse to pay maintenance to the other.

It is relatively rare for a final hearing to take place, as most people reach an agreement beforehand to avoid excessive legal costs. The advantage of reaching an agreement is that both parties know exactly what they are agreeing to.

If the judge makes an order, you won’t have prior knowledge of the exact terms, but you will be legally bound by it. If you wish to appeal, you must meet specific criteria, and appeals can be expensive and carry similar risks as the final hearing itself.

The court can make various orders, such as adjusting how a property is owned, ordering the sale of a property, transferring assets, or splitting (transferring) part of a pension from one party to another. The court may also order one party to pay maintenance to the other and/or issue “top-up” orders for child maintenance.

How does the court decide?

The starting point for a judge in reaching a decision on how to divide assets is an equal split of the assets. However, this is a broad generalisation as the court have the power to adjust an equal split in favour of either party (so they get more than half) depending on their “needs”.

Needs are judged on how much both parties need to enable them to start again. So, if one party earns significantly more than the other a judge may feel the person earning less, needs more of the assets. The judge will also consider any dependent children first and divide the assets unevenly to ensure they can be housed adequately and with as little disruption as possible.

The court may also “ringfence” assets (which means they don’t count them as matrimonial assets and don’t include them in the settlement). They do this for things such as inheritances and pensions, but not always.  Even if an inheritance or pension has been acquired before marriage or after separation or kept separately within the marriage, if the court feels there is a need for the asset to be included, they will do so.

The length of the marriage is key in such decisions, with a judge more likely to ringfence assets brought into the marriage by one party where the marriage is very short.

The longer the marriage, the less likely the judge is to ringfence or make allowances for significant contributions by one party.

When looking at contributions the judge will give as much significance to a contribution to the care of the home and family as they will to a financial contribution.

It can be seen from this why it can be difficult to predict, with any degree of certainty what orders a court is likely to make and it will depend on the individual circumstances of each case.

How Can A Solicitor Help Me Throughout the Process?

A divorce solicitor can help you through the process of obtaining a financial order by providing you with legal advice on how the court is likely to view your case. And by guiding you through, what can be a confusing process, when you are trying to cope with the breakdown of your marriage.

A good solicitor will be sympathetic to the fact this is a stressful time for you and will try to help you reach an agreement by compromise, whilst at the same time helping you to be firm in your approach, if necessary. They will use plain English and explain things in a way that is easy to understand.

The support of a good solicitor is invaluable at this time. Here at Best Solicitors, we have experts based in both Barnsley and Sheffield who are experienced in providing the support and expertise you need. We pride ourselves on our sympathetic but professional approach and will give clear, easy to understand advice throughout the procedure.

What Are the Implications of Not Obtaining Divorce Financial Settlements?

Many people, who have assumed divorce ends the potential for a financial claim have felt the financial and emotional cost of not obtaining a financial order.

Every year there are thousands of financial claims by former spouses. There is no time limit on when a former partner can make a claim against your assets. Divorce does not prevent such a claim.

Such claims can be made twenty years or more after the marriage has ended. Claims can be made against future assets and any sudden windfall you may receive. Even if such claims are not successful, the costs involved in defending such a claim can be very high as it will involve obtaining as much evidence as possible, sometimes over a period of many years.

It is therefore essential to obtain a final order, which prevents this.

Think of it like an insurance policy that means once you have it, you can go forward without worrying about a claim against a new business you may set up, a pension or even a big lottery win!

What Are the Costs Involved?

At Best Solicitors, we offer an extremely affordable, fixed fee, no-obligation appointment. During this, we will take details from you and provide written advice.

There is absolutely no obligation after this appointment, if you like us and want to instruct us, we will deduct the cost of this appointment from any future costs going forward.  We also offer free, short appointments, where we can give some basic, general advice over the phone.

We understand that budgeting for legal costs is important, so we will always provide you with an estimate of our fees. Additionally, we can arrange flexible monthly payments and offer options to settle fees at the end of the case in certain circumstances, such as from a matrimonial settlement.

Our expert support can be invaluable at this difficult time and we can save you a lot of time and money by tailoring costs and services to your individual circumstances.

Get in touch with our Family Team today on 0114 353134 or contact us via our contact page.