Finances on Divorce
How can Lovedays help with you Finances on Divorce?
When a divorce application or an application for dissolution of Civil partnership is made, the application give rise to the right of either party to the proceedings to apply for the financial issues arising from the break down.
The court will consider claims in respect of capital (including property, pensions and income).
In order to consider the possible ways to resolve the financial issues and to see what claims either party may have, it is necessary to have full information regarding what is involved in all areas of the couples’ finances. This is most often achieved by the both the parties producing documents which evidence all the financial matters involved jointly and separately.
For many separating couples their difficulty is that the income which supported one household has then to support two households. This means that there can be a deficiency and the difficult is that there is not enough to go around. With the capital this is most likely to be the money which is equity in the family home (the amount which the couple would have as cash if the house were sold and any mortgage and costs of sale paid off). Again, that money which went to providing one home may well be very stretched if it is then used for providing two homes.
As far as the court is concerned the first step in the process is to see what money there is. Thereafter the process involves looking at meeting the needs of the adults and any children.
In addition to the capital, most often in bricks and mortar, the other main assets of main couples is their pension or pensions. These also form family assets and the court can make orders taking money out of one person’s pension pot to pay to the other party.
The court can also consider whether, in certain circumstances, one of the parties should continue to pay monthly payments to the other. This rarely arises in modern times and the court has an obligation to consider in each case whether the payments can and should cease. Such payments are known as spousal maintenance and often the outcome requires that there are no such maintenance payments to be made going forward. The court is always keen to ensure that both the couple move forward independent from the other.
The consideration of finances on divorce or dissolution of marriage is one of the most complex areas of the law. Unfortunately, there is no set formula and it is not possible to put numbers into an equation and get a right answer. The court has jurisdiction to deal with the matters and judges are given the flexibility to deal with matters at their discretion based upon what they consider is just and equitable in the circumstances. Every case is decided on its facts and most cases have the potential of very different outcomes depending on the judge.
What will the court consider?
The court is obliged to consider the following matters in respect of the claims for financial issues on divorce to be settled:-
- the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future, including in the case of earning capacity any increase in that capacity which it would in the opinion of the court be reasonable to expect a party to the marriage to take steps to acquire;
- the financial needs, obligations and responsibilities 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 the duration of the marriage;
- 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, including any contribution by looking after the home or caring for the family;
- the conduct of each of the parties, if that conduct is such that it would in the opinion of the court be inequitable to disregard it;
- in the case of proceedings for divorce or nullity of marriage, the value to each of the parties to the marriage of any benefit which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.
Whilst the court can be asked to make a decision and conclude the outcome for the couple going forward it usually wise for the couple to find a resolution to these matters between themselves as if the court make a decision it might be an outcome which neither of them like or want.
The emphasis in these matters is always to encourage the parties to agree and settle how things can and should be dealt with. This can be by direct discussions, via mediation, through solicitor negotiations or within court proceedings. However, once agreement has been reached it is ALWAYS necessary to obtain an order which reflects that agreement and formalises the same. The order will also deal conclusively with the claims which the parties have against each other and ensure that there is an end to their respective obligations.
In order to properly consider how the financial matters should be dealt with it is important that should put yourself in a position where you fully understand the finances on your divorce by:-
Knowing the true financial position
- Unless you have proper up to date and detailed documentary evidence of every aspect of the financial situation of your spouse and provide your spouse with the documentary evidence of your financial situation you cannot know for certain what is involved financially.
- If you do not have the detailed financial documents and information then your consideration of the finances may be misguided and incorrect.
- A proper knowledge of everything that is involved financially allows negotiations and agreements to be based upon reality and not upon assumptions or belief.
- If you base the negotiations and agreement upon incorrect information then the outcome will be wrong and any agreement may be subject to a possible challenge: any court order might potentially be overturned
Knowing the Law
- The law relating to the financial matters on a divorce is complex. It is not a straight forward formula and often there is no “right answer” as to the ultimate claim or entitlement which you could achieve. Knowing what matters are relevant to any dispute on financial matters is important in that it provides guidance as to the way in which finances are likely to be handled if the matter were to be decided by a court.
- Knowing how the finances are considered legally gives a framework for you to work with. This helps you to understand your options and consider what is possible. An understanding of the Law allows you to apply these principles to your negotiations. You can use the information to help you reach a deal or settlement.
- A good understanding of what is “fair” within the Law allows you to reach an agreement or settlement which you are confident is reasonable. If one of you wants too much, or is not prepared to agree something that is fair and reasonable, then you do not have to settle for that: you can go to court. Knowing what the court is likely to order can give you a focus for your discussions.
- Without advice as to the law on finances on divorce you will not be aware of what it is possible to actually achieve in legal terms.
Getting a formal final court order
Whatever your financial circumstances, it is important to have a formal financial court order. Even if you have no assets and no income, it is worthwhile having the court make an order so that neither of you can make claims against the other in the future. If this does not happen, it is possible for your ex-spouse to make a claim against you, even years after the divorce. This might happen if you got an inheritance, or if your finances improved for some other reason.
The court has the power to make a formal order in the terms of your agreement. This is called a Consent Order.
Buying, Selling or Transferring the Legal Title of A Property
If you are buying or selling a property our conveyancing department will be happy to help you with this.
If you are transferring the legal ownership and title of a property from joint names into one person’s name then you will need to instruct solicitors to deal with that legal process. Again, our conveyancing department will be happy to help you.
Click here to find out more information.
Making a Will
If your marriage has broken down you should consider making a new Will to ensure that your wishes are settled in the event of anything happening to you. Our Wills and Probate department will be happy to assist you in this respect.
Click here to find out more information.
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