Financial Orders

Financial Orders

Although a divorce ends a marriage or civil partnership, it does not end the financial liability between a husband and wife/civil partners. Only a Court approved Financial Order severs financial ties. It is important for financial matters to be dealt with alongside divorce/civil partnership dissolution.

Financial agreements can be reached in a number of ways – for example between the parties themselves, through mediation, negotiations with the help of solicitors, arbitration, private court hearings, or, as a last resort, through Court. Whilst agreement within Court proceedings is always encouraged, ultimately, if agreement cannot be reached, then the Court will order a financial settlement. It is now a requirement to use out of Court methods (Non Court Dispute Resolution)  for settling finances before issuing proceedings, and you will need to explain to the Court if you have not done so. At Ellisons we offer Resolution Together (where one lawyer can advise a separating couple jointly) and Collaborative Law.

Regardless of how the agreement is reached, there will be financial disclosure which will allow the Court to consider if the agreement is fair and reasonable. If the Court approves the Order, it will become legally binding.

Most financial Orders record agreement about:

• The equity and ownership of the family home
• How other capital (savings, investments) will be shared
• If pensions will be shared
• If there will be child maintenance
• If one person will provide the other with spousal maintenance and if so, for how long
• Whether a clean break can be achieved

Decisions about child arrangements, such as who the child lives with, are not part of a financial Order. If you cannot agree on child arrangements you can apply for a Child Arrangements Order. When you separate, it is vital to seek legal advice about child arrangements, as they will impact on financial arrangements.

Why are Financial Orders important?

Without a clean break financial Order, there is always the possibility of a claim at some point in the future. Clients often assume that, because they are divorced and even remarried, this means their ex-spouse cannot make a claim against them, but unless there is a financial Order in place this is not the case. Claims can be made years later. However, if you have re-married, you may no longer be entitled to make a claim – another important reason to get legal advice and make sure that finances are tied up when you get divorced.

What Orders can the Court make?

• Transfer or sale of property
• Payment of lump sums
• Pension sharing Orders
• Pension attachment Orders
• Payment of spousal maintenance
• In certain circumstances, payment of child maintenance

What factors have to be considered when negotiating or deciding a settlement?

The first consideration is the housing needs of any dependent children.

Section 25 Matrimonial Causes Act 1973 also provides that the following must be considered:

• Your incomes, earning capacities, properties, other financial resources now and in the foreseeable future;
• Your financial needs, obligations and responsibilities now or in the foreseeable future;
• The standard of living before the breakdown of the marriage;
• The ages and length of the marriage;
• Any physical or mental disability;
• Contributions made to the marriage, now and in the foreseeable future;
• Your conduct towards each other, but only if it is ‘inequitable to disregard it;’
• Pensions, and the value of any loss of benefit from pensions or other assets on divorce.

Where appropriate there should be a clean break, which is a settlement with no spousal maintenance payments – you both become financially independent from the other.

Whether you reach an agreement for a financial settlement, or the Court decides for you, it must be fair to both of you.

We recommend getting legal advice as early as possible as it can be difficult balancing the needs of the children and both parents to achieve a fair settlement. We offer a free exploratory call, so that we can discuss your needs and look to match your specific circumstances with the right specialist family lawyer in our team.