Financial Settlements
Sorting out the finances, including any legal costs that may have been incurred, can be one of the hardest parts of getting divorced or dissolving a civil partnership. Our family law team is here to make it as straightforward as possible.
Our solicitors have been recognised in both the Legal 500 and Chambers & Partners for their work on high-value financial remedy cases, which are often complex and span multiple jurisdictions. We are proud to have some of the country’s leading matrimonial finance experts in our large, specialist team with the knowledge and resources to handle any situation.
The family law team includes experts in dealing with divorce and financial settlement agreements and has been described as “leaders in their field, with knowledge, skills and passion to provide a high-level service” that go “the last mile to secure their client’s best interests”.
To speak to an expert family law solicitor, call us on 0800 652 5577, or complete our online enquiry form and we will get back to you.
Alternatively, if you are in need of professionals to facilitate a separation, visit our divorce solicitors page.
How JMW Can Help
Working alongside you, we will:
- Help identify what’s important to you
- Give realistic, practical advice on the likely outcome
- Agree a strategy from the outset
- Modify our approach in response to emerging information and events
- Be upfront about costs
The law on financial affairs associated with divorce or civil partnership dissolution in England and Wales is highly discretionary to allow for solutions that fit each family’s unique circumstances. However, discretion can make the law uncertain and it is often difficult to predict what a court would do if a fair financial settlement agreement cannot be reached.
Our family law solicitors will try to protect your future against an uncertain legal system, formulate a flexible strategy and have your back, come what may. Read more about what our clients have said about us here.
Additionally, learn more about financial orders and how to apply for them here.
Agreeing a Financial Settlement
Most financial settlements are agreed following a process of negotiation. Whatever form these negotiations take, the legal criteria used by the court are crucial in setting the parameters for any settlement. First, there must be a full, frank and clear exchange of financial disclosure. In broad terms, the financial settlement should be “fair” taking account of all circumstances. There is no presumption of a 50/50 split and there can be many reasons why this is not a “fair” outcome in a given case.
No agreement you reach is final unless it has been converted into a consent order and approved by the court. It becomes legally binding once a decree absolute or final order has been granted, at which point you are officially “divorced” or “dissolved”.
Although the court needs to approve your financial settlement - and grant the divorce or civil partnership dissolution - the court does not need to be involved in the process of exchanging disclosure and negotiating an agreement, even if the assets are complex and require expert valuation. There are many alternatives to court and only a minority of financial settlements are imposed by the court following a contested hearing.
Going to Court
Not all cases are suitable for a negotiated settlement and we may advise you to begin court proceedings for a variety of reasons. The court process is structured to ensure a full exchange of financial information and encourage agreements where possible. The court will set a timetable for producing relevant financial information and, if necessary, obtaining expert reports on the value of assets, such as properties, businesses or pensions.
There is usually a court-led negotiation hearing called a financial dispute resolution (FDR) hearing. The majority of cases settle at or shortly after this hearing, if not before.
If the court does decide your case, the judge will strive to reach a “fair” outcome, taking account of certain statutory factors. They will listen to each party’s reasons for wanting a particular outcome and hear evidence from them and any relevant witnesses in order to reach a decision.
Safeguarding Assets and Non-Disclosure
It is essential for there to be a full and frank exchange of disclosure. We have experienced a variety of ways in which individuals attempt to frustrate this process and provide incomplete or misleading information. This can be particularly challenging where assets are located offshore or in complex trust structures. We recognise the signs of non-disclosure and will devise proportionate strategies in order to deal with it.
In some cases, either party may deliberately dissipate assets or attempt to remove them from the country. It may be necessary to get an injunction to stop such action and safeguard assets until a financial settlement can be reached. The court will need very persuasive evidence that an injunction is justified.
Unfounded allegations of non-disclosure are sometimes made, often due to general mistrust between the parties. We will work to address these allegations head on and enable the case to move forward.
We have long experience of obtaining and resisting applications for injunctions. If you think that assets relevant to your divorce are at risk - either from being dissipated or from being frozen without justification - you should take immediate legal advice.
Our size and expertise means that we can take decisive action at very short notice where the circumstances demand it.
FAQs
How is a financial settlement calculated?
This is a complex area of law and there is no single formula. However, some of the main principles can be summarised.
The court will look to achieve fairness, which in the majority of cases will mean sharing the assets built up during the marriage itself while balancing the ‘needs’ of each party, taking into account their resources, obligations, income and earning capacity. First consideration will always be given to the welfare of minor children of the family. Fairness may mean equal division but there are many situations when a simple 50/50 split would not deliver this objective. For example, a person with a lower earning capacity who is the principal carer for dependent children may receive more than 50% of the available capital to enable them to rehouse.
Where both parties’ needs can be comfortably met from the available resources, a 50/50 split is more likely to be appropriate, subject to considerations such as whether certain assets should be treated as non-matrimonial (e.g. certain types of inheritance or pre-marital business assets). Other factors such as the length of the marriage, particular health needs/disabilities, or the existence of a pre or postnuptial agreement may also be relevant.
The court can grant a combination of orders, depending on the circumstances of the case. These include:
- Lump sum orders
- Orders for the sale or transfer of assets
- Orders that neither party will pay ongoing maintenance to the other (a clean break)
- Orders for spousal maintenance to be paid for a fixed or indefinite period of time
- Pension sharing orders
These orders can be decided by the court or - as in the vast majority of cases - simply approved by the court after the parties reach agreement. This is known as a financial consent order. It is really important that the order setting out any financial settlement is properly drafted to ensure that it delivers the finality and closure you are looking for, and is enforceable in the event of a future dispute.
Does length of marriage affect a financial settlement?
Yes. The court has a very wide discretion to make a financial order that is fair, given all the circumstances of the case. The length of a marriage will be an important factor in this balancing exercise.
Longer marriages will usually bring with them a higher degree of financial interdependence. In short marriages, the parties may be expected to move more quickly towards financial independence after divorce and greater emphasis may be placed upon who brought what assets into the marriage. However, this is not always the case, especially where there are dependent children.
The length of a marriage will always include the amount of time the parties lived together before marrying if the transition from cohabitation to marriage is ‘seamless’.
For a more detailed look at how the parties’ ages and the length of their marriage can impact upon the financial settlement, read our article on the subject.
Can a final order be granted without a financial settlement?
Yes. There is no requirement to wait for financial matters to be resolved before a marriage (or civil partnership) is dissolved. However, there is often a potential financial benefit to putting the final step in the divorce or civil partnership dissolution process on hold until a financial order has been approved and sealed by the court.
There can be situations in which the need (or wish) to obtain a decree absolute or civil partnership final order outweighs the importance of awaiting the resolution of financial matters. These are few and far between but would include cases where one party has a very strong desire to remarry before finalising matters.
The main reason for delaying decree absolute/final order until a financial order is in place is to avoid the situation where a party to the marriage or civil partnership dies, leaving the other person without a financial order but lacking the status of widow/widower. This is particularly important where pensions are concerned. Once a spouse or civil partner has died, a pension sharing order cannot be made in respect of the deceased’s person’s pension benefits, which die with them.
Pension benefits available to widows, widowers or surviving civil partners are rarely, if ever, available after divorce or dissolution. Such benefits may be more or less generous than what could be obtained via a pension sharing order but they should go some way to compensating for the inability to obtain a pension sharing order after the pension holder’s death.
If a person would be substantially disadvantaged in the event of their spouse or civil partner’s death before a court approved financial settlement is in place, there is a possibility of obtaining a court order to prevent the decree absolute/financial order from being granted. This can be a complex process and it is essential to take early legal advice.
Talk to Us
For help from a family law solicitor in relation to financial settlements following a divorce or civil partnership dissolution, contact JMW on 0800 652 5577, or fill in our online enquiry form to request a callback.