When people divorce or seek a dissolution of their civil partnership, they often have three priority tasks: the divorce or dissolution itself, arrangements for children, and how to deal with financial matters.
Here we will explain about financial orders and how to achieve a financial settlement.
What is a financial order?
A financial divorce settlement is an agreement between you and your ex on how to divide up your money and assets once the marriage is over. You can draw up a financial order at any point during divorce proceedings or civil partnership dissolution.
Do I need a financial order after divorce?
The answer is almost certainly ‘yes’. Unless you sort out financial claims at the time of the divorce or dissolution, you or your spouse could bring a claim at any time in the future. There is no time limit and there are reported cases of financial claims being brought 20 or even 30 years after a couple have separated. By then, your financial situation may have changed considerably. For example, you may have invested in pension assets, you may have inherited money, built up savings or substantially increased your earnings.
What are the types of financial claims in divorce?
Within divorce or dissolution proceedings there are three types of financial claims (known as financial remedy claims) that one spouse can bring against another:
1. Claim for income. Sometimes known as spousal maintenance, periodical payments or just maintenance, this is a claim for your spouse to make monthly payments to you either for a specified period of time or indefinitely. You will need to demonstrate that you require financial support in order to balance your budget. Courts prefer and actively seek to achieve clean breaks where possible, and sometimes this can mean giving up maintenance claims in return for more capital or a share of a pension.
2. Capital claims. These are claims against capital assets, such as property. Working out what is included in a matrimonial pot can be complex in itself. Sometimes there are arguments about what is, and what isn’t a matrimonial asset.
Complications can come from inherited assets, money one partner had before they came into the marriage or money they made after the separation took place. In a divorce or dissolution settlement, all of these factors can be taken into account.
3. Pension claims. Pensions are one of the more complicated areas of divorce law. Where the pension assets are substantial, it is often important to obtain specialist advice from a pension actuary.
Pensions fall into two categories:
- defined contribution
- defined benefit.
It is difficult to compare one with the other because the retirement benefits from each type can be substantially different, even if a pension company tells you that the overall value of the funds are similar.
But in the end, most couples are able to reach a financial settlement. The earlier this can be done, however, the lower the legal fees tend to be.
How can financial matters be resolved?
There are a number of ways in which a couple can resolve their financial affairs when they part, including :
1. Voluntary financial disclosure and negotiation, whether independently by the couple themselves or with the assistance of solicitors;
2. Mediation;
4. Arbitration; or
5. a court application.
Our family law solicitors are experts in this field and can help you decide the approach that would work best for you and your family. If you are in the process of separation or divorce, we will be happy to have a free 15 minute no obligation telephone conversation with you to see how we can help.
