Financial Arrangements on Divorce
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When dealing with financial matters both parties are required to provide full and frank financial disclosure. The duty of disclosure is an ongoing obligation and includes the duty to disclose any material changes after initial disclosure has been given.
The Court can make a range of Orders for lump sum payments, transfer of property or maintenance and pension sharing. The financial arrangements can be settled on a “clean break basis”, which means a lump sum payment and/or property transfer and/or pension share but no ongoing maintenance payments.
The Court has a wide discretion in applying the law and therefore it can be better to agree your own financial arrangements and avoid the delay and uncertainty of a Court hearing.
Many people are able to agree on a financial settlement upon having taken independent legal advice on what may constitute a fair division of the matrimonial assets.
Mediation providers can help couples reach a financial settlement, however a solicitor will be required to advise on the implications of any agreement and to convert the agreement into a legal and enforceable Court Order.
It is always important to secure a Court Order setting out financial arrangements to provide you with certainty and to prevent future claims. It is a common misconception to think that obtaining your Decree Absolute gives you a clean break and that you do not need to record financial terms that have been agreed in a Court Order. We are able to draft Consent Orders, recording those terms for you to ensure you need not worry that at any time in the future a formal claim could be made against you, as in Wyatt and Vince 2015.
In light of the recent case of Wyatt and Vince 2015 it is increasingly important to secure a financial order at the time of divorce ensuring future claims are dismissed. In this case a wife brought a claim for financial remedy against her former husband almost 20 years after the conclusion of the Divorce Proceedings and 30 years after they separated. The case has been referred back to the family court for an FDR hearing to determine the wife’s financial claims. The wife seeks to claim a lump sum from her former husband’s significant wealth, which he acquired in recent years despite him being homeless and penniless at the time of the separation leaving the wife struggling financially and single handedly raising the three children of the family. Watch this space for the outcome of this interesting case. The lesson here is to always ensure that financial aspects of divorce are dealt with alongside the divorce proceedings and concluded at that time. It is a common misconception that a divorce effects a clean break
The Court process for Divorce:
It is now a pre-requisite to a court application to attend a Mediation Information and Assessment Meeting
To issue an application for Financial Relief/Remedy, a document known as a ‘Form A’ must be filed with the Court. A fee is payable, at present in the sum of £255.00.
Upon the Court issuing the application you will receive a timetable for your case making directions for exchange of financial disclosure in a format known as ‘Form E’ and the Court will fix a date for the First Appointment.
At the First Appointment the District Judge will identify the issues between you and your partner and make directions, for example formal valuations of assets to be carried out.
The Court will then list the matter for what is known as a ‘Financial Dispute Resolution’ (FDR) hearing.
Both parties will be required to attend Court on this date together with their Solicitor/Barrister in the hope that a financial settlement can be negotiated with the assistance of a District Judge.
The Judge will give guidance to assist you in reaching an agreement, often indicating what he/she thinks would be a reasonable settlement in the circumstances of your particular case. If it is not possible to settle, there will be a final hearing listed at a later date to be heard before an independent District Judge.
Any time before the final hearing it is possible to reach an agreement and to submit a draft of the proposed Order, called a “Consent Order” to the District Judge for his/her approval.
The Matrimonial Causes Act 1973 and Civil Partnership Act 2004 sets out the factors to be considered in deciding what is fair.
The factors to be considered by the Court are as follows:
- Welfare of any children of the family
- Income, earning capacity, property and resources of each party now and in the foreseeable future
- Financial needs, obligations and responsibilities of each person now and in the foreseeable future
- Standard of living enjoyed by the family before the breakdown of the marriage or partnership
- Age of each person and the duration of the marriage or partnership
- Contribution made by each person to the welfare of the family, including looking after the home and bringing up children
- Conduct of each person, but only if it is so bad that it would be unfair to disregard it
- Physical or mental disability
- Any benefit lost because of the divorce or dissolution (in practise this is restricted to loss of pension benefits)
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