MCR

Divorce Financial Settlement

In a divorce case, finances can be settled by either a consent order with both the parties and / or a financial settlement order by the court.

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What is Divorce Financial Settlement?

A financial settlement for divorce is an agreement that allows a couple to separate their assets and financial affairs upon separation. Ancillary relief is a term that divorce solicitors use to describe any orders of a financial and property nature, or those that relate to pensions, that a Court may make after divorce, judicial separation or Dissolution of Civil Partnership or other nullity proceedings.

Divorce Financial Settlement (Setting Property & Money Issues in English Divorce)

Financial settlements can be reached in divorce cases by either a consent order with the agreement of both sides or by a financial settlement order issued by the court. A consent order with agreement between the parties is much more cost-effective than a financial settlement order issued by the divorce court. It is not always easy to reach an agreement regarding financial settlement outside of court. This requires good negotiation skills and presentation skills. You can reach an agreement on finances either at the mediation stage or as part of financial settlement proceedings. This is done through negotiations between both legal representatives.

You can apply for financial settlement in divorce if you cannot reach an agreement with your fiancée at the mediation stage. It is crucial to reach a financial settlement with your spouse when you divorce. Otherwise, financial claims could come back to haunt your life even years later. Because in England and Wales, even if you divorce, you can still make financial claims against your spouse and vice versa. There is no time limit. It is crucial that you have your financial affairs in order. You should also get a binding court order outlining your financial arrangements with your ex-husband or wife.

Property and money issues (divorce Financial Settlement) can be resolved in a divorce case by mutual agreement, either through a consent order that has been approved by the court or an application for divorce financial resolution order.

Specialist Divorce Settlement Solicitors

MCR Solicitors is a specialist in financial settlements. Our team of expert divorce financial settlement solicitors has a wealth of experience in successfully settling divorce financial settlement cases.

 

Need legal assistance and support with the financial settlement of your divorce in England and Wales? Our team of expert divorce financial settlement solicitors can help you with your financial settlement application. They are friendly, reliable, and cost-effective. For free online advice on your divorce settlement, ask our experts divorce financial settlement solicitors by filling out our inquiry form. One of our divorce settlement solicitors will respond to you as soon as possible.

What is the best time to apply for Divorce Financial Settlement?

After Decree Nisi has been issued by the family court and both parties have exhausted any mediation, a request for financial settlement may be made to court.

A financial settlement can usually be obtained at any stage of the divorce proceedings. You can still apply for financial settlement after your divorce proceedings have been completed. It is a good idea to file for financial settlement before your spouse or you have remarried.

What happens to assets when a divorcing couple settles their financial affairs?

The judge will make the final decision about how assets should be divided. These are the key factors that will be considered when deciding how capital should be divided and whether income should be split:

Children – Their financial needs and other factors that could affect their future well-being;

  • Your financial needs and those of your spouse
  • The length of your marriage and your respective ages.
  • The present earnings and future earning potential of each party;
  • You, your spouse, or any of your children may be affected by health issues
  • Each party’s assets, including pensions.
  • Your standard of living during your marriage.
  • Each of you have made financial and non-financial contributions to your marriage (such as running the house and caring for the children).
  • Only in exceptional circumstances will the conduct of your spouse and/or you be relevant to financial matters.

If you have been married for a while, a judge will not likely consider a 50/50 split. The most important consideration is the needs and welfare of all involved, including children. The assets may be divided if the judge determines that one of the parties has more need than the other.

For example, if two young adults divorce after a short, childless marriage, it may be fair that they each keep the assets and neither pay the maintenance.

 

Imagine a couple who have been married for thirty years. The wife would take care of the children and home while her husband worked. A fair financial settlement could award half of the marital assets to the wife, which would include half of her husband’s pension entitlements and a substantial portion her husband’s income until she retires. This would reflect her contribution as a homemaker to the marriage and the fact that she wouldn’t be able to suddenly begin earning a lot of income.

Children, including maintenance, are treated separately if they are present.

The Matrimonial Home and Divorce Financial Settlement

The family home is almost always an asset and will be included in financial negotiations. Negotiations for divorce settlements begin with a broad equality in the division of assets. One spouse may want to keep the family home. They will need enough assets to be able offset the loss of their spouse’s share by transferring assets that are of equal value to them.

If there are not enough assets available, the family home might have to be sold in order to split the equity.

Sometimes, especially if there are children involved, it is possible to be creative. One spouse could live with the children while the other could leave the house. The spouse who leaves the home could have a financial interest in the property. They will realize this at a later date.

Divorce Financial Settlement & Business Assets

Family businesses are often viewed as income-producing assets that can be used for maintenance, rather than as assets to be sold or shared.

It is not assumed that the person who built the business has greater rights to the assets. One partner might consider the other’s contribution to the marriage to be equal, such as by taking care of the children and home. This could mean that each partner may be entitled to half of the business’s value, depending on the circumstances.

It is possible to reach a settlement in many cases that will allow the business to continue. Take this example:

  • One partner could keep ownership of the company and pay maintenance from the business income.
  • The individual who retains ownership of the company could borrow against its value to pay a lump sum for the other partner.
  • The business could be divided into two businesses.

When possible, courts avoid ordering financial settlements that result in the liquidation or dissolution of a company.

Assets held in a Trust & Divorce Financial Settlement

The value of any trusts that the divorcing party has or is likely to benefit from must be disclosed. It is possible for trustees to have discretion about who benefits from the trust.

 

These assets may also be considered if one spouse in a divorce had previously placed assets in trust. This will happen if the spouse who placed the assets in trust is also a beneficiary of that trust. If the assets are still in the control of the settlor or if the trust was created by the settlor after the marriage ended to protect assets from any claim, it may be possible to file a claim against trust.

The law of trust is complicated. If you are considering placing assets in trust, or if you have questions about what rights you may have over trust assets, you should seek advice.

Pension & Divorce Financial Settlement

Your pension is your marital asset. It is like your home or other assets. In determining a fair settlement, you can take into consideration the value of your pension. There are many practical solutions that you can use.

  • Transferring a lump sum or other assets to the spouse who has a lower pension fund value can be used to offset the difference;
  • Splitting the pension fund into separate pension funds for each spouse.
  • Arranging for the spouse to receive a portion of a pension when it comes due.

Overseas Assets & Divorce Financial Settlement

Any assets held abroad can be considered in the same manner as other assets. A spouse might try to hide assets overseas or transfer assets overseas in order to make it more difficult to retrieve. You should immediately seek legal advice if you suspect your spouse may be doing this.

Life Insurance, Endowment Policies, Divorce Financial Settlement

When settling a fair amount, life insurance and endowment policies should be considered. It is important to agree on how each policy will work, what premiums will continue being paid for regular contributions policies, and who the beneficiaries will be of any life insurance coverage.

You can choose to keep individual policies or sell them (or surrender them). Policies in joint names can be sold or transferred to one person. The expected value of a policy can drop if it is surrendered early. Tax consequences may also result from any surrender, sale, or transfer. Get advice about the best options for your situation.

Inheritance & Divorce Financial Settlement

An inheritance will not be included in your financial settlement. However, a judge will take into account the needs of all parties. The courts will include your inheritance if you received it while you were married. However, if you receive it after your marriage ends, they will exclude it.

Assets held in a Trust & Divorce Financial Settlement

The value of any trusts that the divorcing party has or is likely to benefit from must be disclosed. It is possible for trustees to have discretion about who benefits from the trust.

 

These assets may also be considered if one spouse in a divorce had previously placed assets in trust. This will happen if the spouse who placed the assets in trust is also a beneficiary of that trust. If the assets are still in the control of the settlor or if the trust was created by the settlor after the marriage ended to protect assets from any claim, it may be possible to file a claim against trust.

The law of trust is complicated. If you are considering placing assets in trust, or if you have questions about what rights you may have over trust assets, you should seek advice.

Pension & Divorce Financial Settlement

Your pension is your marital asset. It is like your home or other assets. In determining a fair settlement, you can take into consideration the value of your pension. There are many practical solutions that you can use.

  • Transferring a lump sum or other assets to the spouse who has a lower pension fund value can be used to offset the difference;
  • Splitting the pension fund into separate pension funds for each spouse.
  • Arranging for the spouse to receive a portion of a pension when it comes due.

Overseas Assets & Divorce Financial Settlement

Any assets held abroad can be considered in the same manner as other assets. A spouse might try to hide assets overseas or transfer assets overseas in order to make it more difficult to retrieve. You should immediately seek legal advice if you suspect your spouse may be doing this.

Court Procedure for Divorce Financial Settlement

Court control is very important in the financial settlement of divorce proceedings. The Court will set time frames for the parties to comply with its orders. They will also require them to attend all Court hearings. Failure to comply with Court orders, adhere to timetables and attend hearings may result in costs. Here's the step-by-step process to reach financial settlement after divorce.

Step 1: Notification of Application – Form A

A divorce financial settlement request is initiated by filing a Court Form A (‘Notice for an application for financial order’) with the Court. This will be accompanied by a check in the amount of PS255 without consent or PS50 with consent.

Step 2: First Directions Appointment Date (FDA).

The Court sends each party a sealed version of Form A along with a Notice to First Appointment and a Response to First Appointment. The most important form is Form C because:

  • It includes details about the First Appointment date and time (which will take place in 12-16 weeks).
  • It includes the case timetable up to the first hearing date (the “First Appointment”) This timetable outlines the dates that the parties must file with the Court.
  • A Statement of Information (also known as a Form E), about their financial situation, no later than 35 calendar days prior to the First Appointment.
  • An eloquent statement of the issues between the parties
  • A chronology;
  • You can either complete a questionnaire describing the additional information and documents that each party requires, or you can state that such information or documents do not exist.
  • A completed Notice in form G indicating whether the party is in a position to be treated at the First Appointment as a Financial Dispute Resolution hearing (“FDR”)
  • A Form C also stipulates that a Form H estimate of legal costs must be submitted to the Court at First Appointment. A copy will also be provided to the other party.

Step 3: Financial statement – Form E

Each party to the financial settlement for divorce completes a Form E (Financial Declaration) and submits it to the court at the latest five weeks prior to the First Directions Appointment. The other party also receives a copy of the Form E.

Step 4: First Directions Appointment – Documents

These documents must be filed two weeks prior to the First Directions Appointment.

  • A brief statement of the issues
  • A chronology of events
  • Questionnaire to address the issues raised by Form E.
  • You will need to complete a Form G to tell the court if the FDA meeting and the Financial Dispute Resolution meeting (FDR) can be combined. The FDR meeting usually takes place after an FDA meeting.

Step 5. Legal Costs Incurred By Each Party- Form H

Each party must complete and submit to the court, just before the FDA meeting. It should include all costs they have incurred.

Step 6: First Directions Appointment, (FDA), Meeting at Court

“The First Appointment” is the name of the first hearing in a financial settlement application. Unless the court orders otherwise, the First Appointment is a hearing for direction. Both parties must attend. The First Appointment is intended to resolve disputes between the parties and save money. A member of the judiciary is called a “District judge” and must decide:

  • Answer the questionnaires of parties seeking additional information to determine how extensive they were answered.
  • These documents must be produced. They also provide directions for the production and delivery of any additional documents.

Also, the Judge must give direction to such matters as:

  • Valuation of assets, most often the matrimonial home.
  • If required, the exchange of expert evidence.
  • Each party must produce evidence;
  • Preparation of additional chronologies and schedules (where applicable).

If the District Judge decides that an FDR is appropriate, it is presumed. The court can treat the First Appointment in this manner. You may recall that the Form G can also be completed in this manner. However, it has been observed that very few First Appointments can be treated as FDRs. This is due to:

  • There are often outstanding questions regarding the valuation of assets between the parties, especially the former matrimonial house.
  • Before negotiations can begin, the responses to each party’s questionnaires and requests are needed.
  • Insufficient court time. Most courts list First Appointments for 30 minutes, FDR’s for 1 hour. However, the majority of courts require that parties and their advisors arrive an hour prior to the FDR in order for negotiations to take place and narrow down the issues.

Step 7: Submit your proposals

Both parties’ complete questionnaires and prepare evidence. Then, they submit their proposals to the court for the financial settlement. Each side also submits a second Form H listing the updated costs.

Step 8: Financial Dispute Resolution (FDR) Hearing

The Financial Dispute Resolution (“FDR”) is the second most likely court hearing in an ancillary relief case.

  • FDR appointments should be considered a meeting for discussion and negotiation.
  • Unless the court allows otherwise, both parties must attend the FDR.
  • The FDR appointment hearing judge or district judge must not be involved in any other way than to conduct the FDR appointment, to make consent orders if there is agreement, or to issue further directions.
  • The Applicant must submit to the Court, not later than seven days prior to the FDR appointment details of all offers, propositions, and responses.
  • All offers, responses, or proposals made “without prejudice”, which is usually protected from disclosure by the Court, are included.
  • All documents filed under point 4 and all documents referring thereto must be returned to the person who filed them, and not kept on the Court’s file.
  • Participants to the FDR appointment should use all their efforts to reach an agreement on the issues between them.
  • Sometimes, the FDR appointment can be rescheduled.
  • The Court can issue a Consent Order at the conclusion of an FDR appointment if the parties have reached a settlement. However, it must also give direction for the future course, including the filing of evidence and setting a final hearing date.

It has been proven that FDR appointments are rarely the final point in a case. This can be due to a variety of factors, including:

  • It is not possible to settle certain cases by negotiation. These cases require judicial resolution.
  • In other cases, the observations of the Judge or District judge regarding the basis for settlement of a matter do not favor one, another, or both of them.
  • Some parties want to be able to take more time to think through decisions that could have serious repercussions on their future.

However, it is important to keep in mind that negotiations between the parties after the FDR appointment are not subject to guillotine. If there is one, the parties can continue to negotiate until their Final Hearing.

Step 9: Additional Proposals

Negotiations continue between the parties, with revised settlement proposals being sent to court and the other side.

Step 10: Final Hearing

Only 10% of cases involving applications for ancillary relief will require “Final Hearings”. A final hearing may be necessary if the judge is dealing with the case at FDR stage. The Judge will likely issue an “order of directions” if the matter is listed. In most cases, parties will be required to:

  • You can file statements under “narrative” and “Section 25” of the Matrimonial Causes Act 1973 with the Court. This legislation outlines the issues that the Court must consider when deciding how to handle ancillary relief requests. First, consideration is given to the welfare of minor children of the family, while they are still minors;
  • Update any financial disclosures previously provided by them in their respective Financial Statements, Forms E or later. Keep in mind that between the filing of Forms E and the hearing date, a period of 9-12 months could have passed.
  • Make up-to-date valuations of assets, such as business interests, former matrimonial homes, pension funds, and other similar items.

Recent experience shows that the final hearing will take at least two days, regardless of the fact that the case is complex and there are limited assets or issues. Each party will give evidence under oath, which is open to cross-examination. It is possible that there will be an in-depth examination of all documentation provided by each party. The parties’ cases will generally be presented by barristers (“counsel”), who will each represent their clients and make representations for them.

Depending on the facts of the case, judgment might not be rendered at the end of the hearing. However, it may be “reserved”, to be delivered at a later date.

What are our charges?

The following fee table lists the fixed fees applicable to divorce, dissolution of civil partnerships, annulment, and/or financial settlements:

After we have thoroughly assessed the matter and taken into account all relevant factors, we will provide a fixed fee.

Our fixed fees do NOT cover third-party fees such as court fees or Barrister’s fees.

We can also assist you on an hourly basis if you don’t want to pay a fixed fee. Our hourly rates range from PS200 + VAT to PP300 + VAT depending on the complexity of your matter.

Reviews

FAQ's

A clean break divorce financial settlement is where no ongoing financial commitments remain between you and your spouse. The phrase ‘a clean break’ is particularly used as the opposite of an order where there is ongoing spousal maintenance payable, usually monthly, from one spouse to the other.

A clean break is only possible in relation to the financial claims between spouses. It is not possible to have a clean break in relation to financial obligations towards your children.

In case you and your ex-partner have no assets to divide, you should also apply for a financial settlement. It’s important to do so, even if you don’t have any assets to divide at the time of the divorce. There’s no guarantee you won’t come into some money in the future and if you haven’t obtained a financial settlement, your ex is still within their legal rights to make a financial claim.

Once a ‘clean break’ agreement of this kind has been ratified by court order, neither of you will be able to go back to court in the future to ask for maintenance or further transfer of assets. This gives both partners a much greater degree of certainty and allows them to completely disentangle their individual financial affairs.

In most cases, both parties will have their own solicitor and will be responsible for their own legal fees. Only in unusual circumstances will the court consider conduct in the proceedings or the process of disclosure as a justification for an order for costs being made against the other party.

While negotiating a financial settlement you each use – and are responsible for paying – your own lawyer. As part of the settlement, however, one of you might negotiate that the other should pay part or all of their legal fees.

You can keep your legal fees down by agreeing as much as possible among yourselves. Fees can mount up if hostile spouses insist on conducting all negotiations through lawyers while arguing over trivial details.

You can go to court to ask them to change the maintenance order to reflect your circumstances. For example, you might do this if you lose your job and cannot find another one.