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Quick links

- Handling Financial Matters after Divorce
- Amicable Agreements
- Court Financial Orders

- Other Types of financial court orders


Handling financial matters after divorce

Sorting out finances and deciding, hopefully by agreement, who should receive what, is often the most difficult and important aspect of any relationship ending.  It can also be the most time consuming and costly aspect, often completing some time after the divorce is finalised.

The assets of any marriage are known as the ‘matrimonial assets’.  How they are divided depends on many different things. The court will first think about the welfare of any child under the age of 18 and then take in to account:

  • the financial needs and  resources (including income, earning capacity and other financial resources) which each of the parties to the marriage has or is likely to have in the foreseeable future.
  • the standard of living enjoyed by the family before the breakdown of the marriage;
  • the age of each party to the marriage and how long the marriage lasted;
  • any physical or mental disability of either of the parties to the marriage;
  • the contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family.
  • the conduct (behaviour) of each of the parties where it is relevant.

Matrimonial assets will also include matrimonial debts but may exclude debts owed by one party where the money was spent for the benefit of that party and not the family.

financial matters

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Amicable agreements

If both parties remain able to negotiate amicably after a separation then a settlement may be agreed without having to go to court. If you are drawing up a settlement in this way, there are many factors you will need to think about:

  • the well-being of any children
  • any outstanding debts or liabilities that you or your former spouse might have
  • the value of any property owned, whether joint or individually
  • assets (money or valuables) held by either party
  • financial obligations and responsibilities of each party
  • pension arrangements
  • comparative earnings and earning potential of the spouses
  • physical or mental disabilities
  • contributions made to the marriage by either party, financial or otherwise

Whether a settlement is arranged independently by the spouses or with the help of a solicitor, it needs to be approved by the court. If an arrangement has been arrived at amicably without the intervention of a solicitor, a solicitor can draw up a Consent Order for a judge to inspect. The court needs to be convinced that the agreement is reasonable and that both parties are fully aware of what they have agreed to. The couple may be invited to court to discuss the settlement if the judge requires further information.

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Court Financial orders

The court can impose an order if the spouses cannot reach an agreement. Before going to court for a financial order the couple must attend a Mediation Information and Assessment Meeting ('MIAM').These meetings are designed to raise the awareness of the benefits of mediation in relation to disputes about children or finances. Without attending such a meeting, or being exempt, e.g. in cases where there is violence, it will not be possible to proceed to a court hearing on the issue.

During a MIAM it is the role of the mediator to inform the parties about the mediation process, how it works and the benefits to all parties. Once completed, the mediator will certify that the MIAM has taken place and whether or not the case is suitable for the mediation process to proceed. Where one party is eligible for legal aid the cost of the MIAM will be met for both parities. If neither is eligible the cost is met by each party but in either case it is not necessary for both parties to attend together.

Legal aid may be available for mediation, and legal support with the mediation, where it would not be available for a court hearing.

Going to court for a financial order can be very expensive. The court strives to be as fair as possible to both sides, and will take into account many factors (see Section 25 of the Matrimonial Causes Act 1973).

These include:

  • the duration of the marriage
  • the age of the couple
  • contributions during the marriage
  • the financial resources of each spouse, including their income and how much they are likely to make in the future
  • the needs of each spouse, including their outgoings and any special circumstances
  • the needs of any children who are minors

Disputes about how assets would or should be divided, can be lengthy and very expensive.  In order to reach any agreement it is necessary to have all assets valued including any pensions.

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Other Types of financial court orders

The courts are able to issue a number of different types of order in divorce proceedings. These types of available orders are usually rolled up into one final order and this can be agreed or ordered by the court.

The court can make orders for:

  • maintenance for the husband or wife
  • maintenance for children with agreement of the parties
  • a lump sum for the husband or wife
  • a 'property adjustment' or 'transfer of property' order, or an order for sale
  • sharing or claiming on the other's pension fund — this could mean being given a share of the fund now which forms a pension fund of your own, or receiving a payment from it.

Maintenance for the husband or wife (spousal maintenance)

The husband pays a sum of money to the wife at regular intervals, or less commonly, the wife to the husband. This can either continue for a fixed amount of time or for the rest of the spouses’ lives. However, if the recipient remarries, and in some cases cohabits with a partner beyond a specified time, they may lose their right to the maintenance and the arrangement ends.

The purpose of this sort of maintenance is to financially support the less well-off half of the marriage financially. The sum payable is calculated based on a number of factors, and is decided on a strict case-by-case basis.

Lump sum

Rather than be paid in instalments, maintenance from one spouse to the other can be paid in one lump sum, often referred to as capitalising the maintenance entitlement.

Also, if there are savings and investments within the marital asset pot that need to be fairly divided, the court can order that one party pay the other a lump sum to fairly divide the assets. The same principle can be applied if one party is to keep the home and needs to buy the other party out of their interest.

Clean Break

A clean break settlement will sever all financial ties between a husband and wife. No payments will need to be made leaving both parties free to be financially independent.

Often done as a consent order, a clean break order is designed to ensure that all claims by the parties against each other for a share of the marital assets is agreed with no continuing liability. It is intended to be sure that no further claims can be made against each other so that you have peace of mind.

A clean break can cover:

  • Property
  • Maintenance
  • Pensions
  • Shares and savings
  • Debts
  • Personal property

Maintenance for the children

The divorced couple can choose to arrange a child maintenance arrangement privately, or get the Child Maintenance Service to do it for them. Our section on Children has essential information and advice on child maintenance.

Property Adjustment order

The court has the authority to order a sale or transfer of any type of property (typically the family home). It also has the power to say how the money made from selling a property is divided.

Pensions

Pensions are increasingly valuable asset and in some circumstances can be a pivotal part of financial negotiations. Where necessary the pension plans need to be valued which is then used to as part of the overall assets. How pensions are considered can be very complex.

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