Divorce Settlements

Financial and property issues on divorce or when dissolving a civil partnership

Financial Settlements and property disputes on Divorce

When spouses or civil partners divorce or separate they should always try to agree the financial and property arrangements so as to be able to obtain a consent order from the court . Asking a judge to divide up the family assets should always be avoided if possible. It causes bad feeling, stress for all and the cost will reduce what is available for both of you. When reaching an agreement yourself however you must have in mind the legal principles which will be applied should the court be called upon to make an order. These are explained fully in our e-book on Divorce Law and Procedure. This, together with our book on Divorce Without Court are available for download.

The starting point in dividing up the matrimonial assets is an equal split- 50/50. This will, however, be varied depending upon the individual circumstances, the needs of both you and your spouse after the marriage and in particular the requirements of  children. Where there are children, proper provision, and in particular providing a suitable home for them, will be a prime objective. However, unlike cases concerning children brought under the Children Act, the children’s welfare is not the overriding objective in matrimonial financial proceedings. The conduct of the parties will have little place, unless it is gross and extreme.

Applications for financial orders can be made by either the petitioner or by the respondent. In both cases, application is made using Form A

The duty of the court when deciding financial disputes

online legal adviceThere is no defined formula, and therefore there can never be certainty about what a court will order. The courts have a very wide discretion as to the orders which can be made when making financial orders in divorce proceedings. It is usually quite irrelevant whose name matrimonial property is in, and if it is a long marriage it will matter little how property was acquired. It is also quite irrelevant who presented the divorce petition. The court is, however, required to take certain matters into consideration, and these are set out in Section 25 of the Matrimonial Causes Act 1973. This important section requires that:

“It shall be the duty of the court in deciding whether to exercise its powers…. to have regard to all the circumstances of the case, including the following matters:

  • the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future;
  • the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;
  • the standard of living enjoyed by the family before the breakdown of the marriage;
  • the age of each party to the marriage and the duration of the marriage;
  • any physical or mental disability of either of the parties to the marriage;
  • 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 the family;
  • the value to either of the parties to the marriage of any benefit (for example, a pension) which … (by reason of the divorce) ..that party will lose the chance of acquiring.”

How the court decides financial disputes

Once you have issued your Form A application for a financial order and paid the court fee, the court will set a date for a first directions appointment (the FDA), usually some three months after the application. The court will at the same time give directions and set dates for the filing of the Forms E’s, statement of issues, chronologies and questionnaires. The time whilst waiting for the FDA should be spent in gathering and serving information on the other side, and trying to reach agreement on the order to be made.

Disclosure of matrimonial assets

An important principle is that in matrimonial financial proceedings there must always be full disclosure by both parties of their assets. This will be the first step so as to calculate what is in the ‘pot’ for division.

Form E is the 27 page prescribed court form for disclosing the required financial information to enable the court (and the other side) to fully understand each party’s financial position. Disclosure of financial information by both parties is always the first stage in resolving financial disputes. You cannot decide the division of matrimonial assets until you know what is in the ‘pot’ for division.

The First Directions Appointment (FDA)

It is essential that you attend the FDA. It is sometimes referred to as a ‘housekeeping appointment’ but is also a head banging session.  The purpose is to define the issues, decide on any issues that need to be resolved, deal with documentary evidence and give further directions. It is not to hear evidence or make any decisions other than administrative ones over the case. A district judge will also wish to hear what attempts have been made to agree a settlement of the issues. He will encourage this and where it is possible can make a final order to bring the proceedings to an end.

The Financial Dispute Resolution Appointment (FDR)

Where agreement has not been possible the court will fix a FDR. This is intended to lead the parties to a settlement by exploring common ground. At this hearing, a district judge will express an opinion and tell the parties what he would order, if asked to decide. Cold water is likely to be poured upon unrealistic expectations.

Everything said at the FDR is ‘without prejudice’. Anything said, either in front of the judge or in negotiations between the parties, cannot be referred to if the case proceeds to a trial and final hearing. This allows you to make genuine attempts to settle, without fear that concessions will be used against you, and encourages people to move away from their stated positions. It also means that the judge who deals with the FDR can have nothing further to do with the case.

The Final Hearing

This is the hearing where evidence is heard, and if you and your ex can still not reach a settlement between yourselves, the court will make the decision for you and decide how your matrimonial assets are to be divided up.

There is a set structure for conducting a final hearing. The applicant (or their representative) will address the judge first, and take him or her through their skeleton argument and the basic facts and background to the dispute. The respondent will then do the same.

The parties then give their evidence with the applicant going first. The applicant’s evidence will be in confirmation of the contents of their Form E and any other relevant evidence as in their witness statement. It is then for the respondent  to cross-examine the applicant, usually focusing on matters that are in dispute between them. Then the process is reversed, with the respondent giving evidence, cross-examination and sometimes further questions from their representative to stress certain points. During this process, the judge may also ask questions of the parties and will usually do so.

Both parties can expect to be asked about their personal circumstances, financial affairs, earning potential, household expenditure, and about a new partner, if they have one. It is not a pleasant experience but necessary, to assist the judge to get to the truth and make the best decision. It is best to give concise and honest answers. Judges are not impressed by evasive or incomplete answers.

After the court has heard from the parties, if there are expert witnesses, such as accountants or valuers, they will give their evidence and be asked questions. Finally, each side will make their closing arguments, in which they sum up the evidence and put their strongest case to the judge.

The judge then has to decide what order to make. He or she usually needs some time to consider this. In simple cases, a judge may take an hour or so to consider and prepare a judgment. In more complex cases, a judge will need longer and judgment may be given after a few days, and you will need to come back to court to hear the judgment.

It is rare for anyone to get everything they want from a final order, made after a final hearing in financial proceedings on divorce. A final court order is a compromise imposed by a judge, and an expensive exercise to go through for a compromise about which you have no choice.

 

 

 

 

 

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eBooks to download on divorce

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FAQs on financial settlements

We own our house jointly. Is there anything I should be considering doing if our relationship has broken down?

Most married couples will own their matrimonial home in equal shares as joint tenants. This means that on the death of the first joint tenant their share will pass automatically to the other joint tenant, irrespective of any will or other intention. This may well be not what you would wish, if your relationship has broken down. The answer is to sever the joint tenancy, so that you hold the home as beneficial joint tenants. You may then leave your share in the property to whoever you wish by making a will.

Do we have to attend mediation before we divorce as I think it would be a waste of time?

You cannot be made to attend mediation, although in most cases you will be required to attend a MIAM or mediation information and assessment meeting. At the meeting you will be given full information about the possible advantages of mediation and will be able to discuss your doubts and reservations with a trained mediator. You should not close your mind to the possibilities of reaching an agreement over all matters through mediation.

What do I need to think about if our relationship is over and it looks like we are going to split up?

Before deciding finally that your relationship is over, you should discuss this with family and friends and consider very carefully what life will be like as a single person. It may not be as rosy as you’d think, especially as a single parent. If having taken your time and thought things through carefully your decision is final, it will be time to tell your partner and children. How you tell particularly the children is most important. You will need to explain the practical arrangements to the children and whenever possible this should be done together by both parents.

What is collaborative law?

This is an alternative to mediation or applying to the court to decide family issues. You and your partner together with each of your lawyers will meet and try to hammer out an agreement. It is fully explained in our article which you can read here.