Going through a divorce can be challenging for people, and planning the approach with clarity will assist with the best outcome.
Many people aren’t aware that a divorce doesn’t end your financial obligation with your ex-partner. A consent order will need to be approved by the judge. It’s important that you formalise the financial settlement to prevent any unresolved financial claims further down the line.
If you need any personalised advice regarding Financial Settlements, contact a member of our team to book an initial consultation of up to one hour.
What is a financial settlement in divorce?
A financial settlement outlines how the finances will work post-separation.
It is a term used when a couple goes through a divorce – this is the financial side of separating and legalising what has been agreed upon, and is known as a financial settlement.
It’s crucial that you both get your financial commitments arranged with a legally binding financial order that outlines the financial settlement.
How is financial settlement calculated in a divorce?
There are many different factors to consider; the misconception that assets will be equally split isn’t always the case.
A financial settlement is calculated by the courts if the parties are not able to agree on a financial settlement. The Family Court will look at the parties resources, current
earnings and potential future earnings, giving a realistic approach of the individual’s skills, age, retraining costs and time out of work.
Standard of living is also considered. The court will acknowledge that there will be an increase in the living cost of running two households compared to before the breakdown and there may or may not be sufficient resources to enable the parties standard of living to continue at the same level.
Who decides the financial settlement in divorce?
The overall settlement decision will be that of the Judge if there has been an application to assist with the financial settlement due to the couple not being able to agree on one in a divorce.
However, even where the parties have agreed a financial settlement, the court is not just a rubber stamp and the Judge must be satisfied that the settlement being put forward for approval is fair and reasonable.
In some cases, where negotiation and mediation has failed, it will be down to the court to determine the outcome of the settlement at a final hearing after hearing evidence from both parties.
How are assets split in a divorce?
Most people assume that assets will be split 50/50 between both parties, but this isn’t always the case, and there are many factors to consider.
The courts will follow a basic guideline using section 25 of the Matrimonial Causes Act 1973.
The most important factor is dependent children under the age of 18. The Act states that the first point of consideration is the needs and welfare of any dependent children.
Following the guidance in Section 25, the Court must have regard to a number of considerations when deciding on the division of assets:
- Current and future financial needs
- Current and future financial assets
- Age of each party and length of time of the marriage/civil partnership
- Family standard of life before the marriage breakdown
- Physical or mental disability
- Parties contribution to the welfare of the family
- Loss of benefits following a divorce such as the loss of pension rights
What am I entitled to in a divorce settlement?
A financial settlement can be agreed upon by you and your former spouse. If you can work together to achieve a financial settlement then you can submit a financial order for approval by the Judge to ensure that the agreement you have reached is legally binding as without a court order it is not likely to be legally binding.
However, it isn’t always possible to agree a financial settlement. There are many matters to consider in a divorce settlement, and also different circumstances in the cases.
Not all divorce settlements are as simple as a 50/50 split and each case should be considered on the basis of its own facts, hence why it is always advisable to seek legal advice from an experienced family lawyer.
If you’re struggling to work out your entitlement or can’t come to an amicable decision, then it may be time to speak to a family law specialist who can help work through the many circumstances to consider or negotiate on your behalf.
How do I protect my assets during a divorce settlement?
It is important that you do not try to hide your assets prior to a divorce, and that you are open and transparent regarding your assets.
If you need guidance on how to split the matrimonial pot if a decision can’t be made amicably, our team can help. We can also provide advice on how to protect your assets when you are divorced.
How long does a divorce financial settlement take?
If your divorce is amicable and the financial settlement has already been agreed upon by both parties, then the divorce and financial settlement could be as quick as 6 months. Not all separations are translucent; advice and guidance can be required by a family law expert to help negotiate or communicate to gain momentum in the process.
A divorce may require a financial settlement through the court when a fair arrangement can’t be made between both parties – this can delay the divorce process.
Speaking to a family law expert about mediation or assisting with negotiation may speed up the process. In a case like this, where an agreement can not be reached, a divorce and financial settlement could take up to 2 years.
How will a financial settlement in divorce be achieved?
VM Family Law believes in resolving disputes in a constructive, non-confrontational way. We understand that acrimony impacts the entire family. We find methods to resolve disputes quickly and efficiently to ease the impact on the whole family.
We can provide advice on mediation or communicate directly with your ex-partner to ensure that the divorce is conducted in a non-confrontational manner.
Speak to one of our family law experts or book a one-hour free consultation.
Can you divorce or dissolve a civil partnership before getting a financial settlement?
You can agree on a financial settlement before or after a divorce is finalised. Ideally, this should be finalised before to guarantee financial security.
A consent order cannot be legally binding until a certain point in the divorce process, namely the Conditional Order, which takes 20 weeks to obtain from the date the divorce is issued.
This means that there is a reasonable amount of time to negotiate the finances, but they would usually take longer than 20 weeks to resolve a financial dispute particularly if expert evidence is needed. For example, from an actuary on pensions, an accountant on business valuations and/or a surveyor on properties will be needed.
It’s therefore always advisable to start a financial settlement as early as possible.
If you can’t agree on a fair division of your assets, then speak to a member of the family law team. We can help with all aspects of the process, including court proceedings and whether your case would benefit from advice from other professionals.