When you marry or enter into a civil partnership, you do not expect it to end. Unfortunately, separation is a reality for many couples. Even when a separation is amicable, agreeing the division of assets and any future financial responsibility can be amongst the most challenging and stressful aspects of the process.
In this guide, our family law team answer some of the most common questions about financial settlement following divorce.
What is a financial settlement?
A financial settlement is a formal, legally binding agreement that sets out how your finances will be divided when your marriage or civil partnership ends. There are no set obligations on what it should include but typically it covers matters such as:
- jointly owned property (including the family home)
- savings and investments
- pensions
- business interests
- debts and liabilities
- ongoing financial support including spousal maintenance.
Where children are involved, arrangements for ongoing financial support may also form part of the wider discussion. If you are unable to reach agreement as to the financial support for your children, you may be able to claim child maintenance through the Child Maintenance Service.
Do you need a financial settlement agreement to get divorced?
No, under the no-fault divorce system in England and Wales, your divorce or dissolution of a civil partnership can be finalised without resolving financial matters first. However, this is not recommended.
Without formalising a financial agreement with a legally binding financial order (usually a consent order), either party may still make a financial claim against the other in the future. This is even after the Final Order (previously called the Decree Absolute) has been granted.
Once agreement has been reached, your solicitor will ensure that the consent order is correctly drafted and submit it to the court for approval. This usually takes place after the Conditional Order stage of the no-fault divorce process (previously called the Decree Nisi). It ensures that upon the granting of the Final Order, the agreement is legally binding so as provide long-term financial certainty.
Will we need to go to court?
Not necessarily. Many couples can reach agreement through negotiation, solicitor led discussions or family mediation. Opting for these alternative dispute resolution methods rather than litigation offers several advantages. Fighting an ex-partner in court is stressful for everyone concerned. It can be time-consuming, traumatic and expensive. However, if you are unable to reach agreement by alternative means or in more complex situations, you may need to apply to the court for a financial remedy order (previously referred to as Ancillary Relief). This involves a legal process in which the court makes decisions on matters related to how your assets should be divided and your ongoing financial responsibility or support. Please read our previous guide about making family mediation work.
How long does a financial settlement take?
There is no fixed time frame on how long a financial settlement will take since every case is different and unique to the parties’ circumstances. How long it will take depends on various factors, including:
- the complexity of your financial situation, for example, whether assets such as a business, pensions or multiple properties are involved and
- how amicable the separation is, including how cooperative the parties are.
In straightforward cases where the parties are not in dispute, an agreement can often be reached within a few months. More complex or disputed matters can take much longer, even several years, to resolve.
Are assets always divided equally?
Not always. Whilst splitting matrimonial assets equally (50/50) can be a starting point, the court’s primary focus is fairness. Under Section 25 of the Matrimonial Causes Act 1973 (the Act), the Court considers factors including:
- the financial needs, obligations and responsibilities which each of the parties to the marriage or civil partnership has or is likely to have in the foreseeable future;
- the standard of living enjoyed by the family before the breakdown of the marriage or civil partnership;
- the age of each party to the marriage and the duration of the marriage or civil partnership;
- any physical or mental disability of either of the parties to the marriage or civil partnership;
- the contributions made by each of the parties to the welfare of the family including any contribution made by looking after the home or caring for children;
- in the case of proceedings for divorce or nullity of marriage or civil partnership, the value to either of the parties to the marriage or civil partnership of any benefit (for example, a pension) which, by reason of the dissolution or annulment of the marriage or civil partnership, that party will lose the chance of acquiring.
Where children are involved, the court may also consider:
- whether a party assumed responsibility for the child’s maintenance and, if so, the extent to which and the basis upon which that party assumed such responsibility and the length of time for which that party discharged such responsibility;
- whether, in assuming and discharging such responsibility, that party did so knowing that the child was not his or her own;
- the liability of any other person to maintain the child.
Where there are stepchildren involved, the court will also consider matters such as:
- whether a party assumed responsibility for the child’s maintenance and, if so, the extent to which and the basis upon which that party assumed such responsibility and the length of time for which that party discharged such responsibility;
- whether, in assuming and discharging such responsibility, that party did so knowing that the child was not his or her own;
- the liability of any other person to maintain the child.
What about children, pets and parental responsibilit?
Agreeing on financial arrangements often goes hand in hand with wider family considerations. For example:-
- Child arrangements and the parental responsibility of one or both parents can influence a financial outcome. Please read our parental responsibility FAQs for more information.
- Even family pets can become part of the discussion and be included in the agreement. Read more about this in our guide on what happens to pets during a divorce.
Do I need to use a solicitor?
Whilst it is possible to reach agreement independently, obtaining guidance from an experienced legal professional ensures that:
- your rights are protected
- any agreement is fair and workable and
- the final arrangement is legally binding.
A solicitor can also help avoid costly disputes and delays.
For more information on how legal support can help, see our guide on how a solicitor helps with divorce.
Need our help regarding a Financial Divorce Settlement?
Family Law Solicitors Blackheath
At Beverley Morris & Co., we can advise on all family law matters including divorce, children and financial disputes, helping couples decide on the best way to proceed.
We understand the sensitivity of family law matters and offer a personal and practical approach. Our experienced family law solicitors will ensure that you receive caring, confidential legal advice tailored to your unique circumstances.
Our Head of Family Law is Saba Ansari, a highly experienced Family Law Solicitor who has received many five-star reviews from her clients. She specialises in all types of matrimonial matters including divorce, financial remedies, private law children cases, cohabitation agreements for unmarried couples, pre-nuptial and post-nuptial agreements. She is extremely knowledgeable and robust but at the same time caring and sympathetic, fully understanding the challenges that face her clients upon a relationship breakdown. Saba offers clear advice and total transparency as regards the costs involved in the legal process.
For more information, or to speak to one of the team, call 020 8852 4433 or email enquiries@beverleymorris.co.uk.
Alternatively, click here to arrange a call back.
Our Other Legal Services
When going through a family law issue, we realise there may be other matters you would like to discuss with us. Should you require it, our legal teams can ensure you get all the advice and guidance you need concerning other legal matters including conveyancing, business law matters, and estate planning.