What to think about when trying to agree a financial settlement
One of the trickiest parts of getting a divorce, once the initial decision has been made to separate, is what will happen to the assets that you’ve built up during the marriage. It’s not always a simple as splitting everything equally; what is fair in a financial settlement? And what needs to be considered?
Here’s Gillbanks Family Law’s helpful guide to dividing up the family assets in a financial settlement.
First, ask yourself what the family assets actually are.
It might seem obvious, but you probably have more to take into consideration than you think. Think about all of the things you’ve bought, acquired or preserved during the time you have been married. Don’t just consider obvious property like the family home, car or tangible assets. Think about other things like your bank accounts, any shares you both own, savings, investments and pensions. On another note, while considering the assets, don’t forget debts and liabilities either.
How can you be sure what the assets are?
It’s very important that you make sure you know exactly what there is, asset-wise, before you make any decisions about the financial settlement. Are you the type of person who keeps track of everything or are you the partner who prefers to keep your head in the sand? If you’re the latter, now is the time to get out of the habit and start making notes.
You might have a pretty good idea what there is jointly and who owns what individually, or you might not know much about your spouses’ finances. There can often be nasty surprises or things that you may have forgotten about.
Making ‘disclosure’ to each other.
Disclosure is a legal term that means exchanging documents with your spouse which confirm your income, property, capital and pensions. It’s also important that you both find out what mortgage capacity you have and what it might cost to purchase or rent an alternative property in the area that you want to live in.
“But I bought the house before we were married!”
The family home is considered to be a family asset, no matter who the legal owner is. If you’re in a situation where you or your spouse bought the property before the marriage, there may be an argument for one of you having made a greater contribution, but this could also be countered by other factors such as the needs of your spouse or other family members.
We know what the assets are
Once you know what you have, what else do you need to think about and how do you divide it all up? The starting point for the family court is ‘equal division’, but a court may still decide on a different ratio depending on factors such as:
- The length of the marriage.
- Any health issues the parties have.
- The parties’ age.
- Any income or likely income.
- The parties’ individual needs and ability to meet those needs.
- Any contributions they’ve made.
- Ages of the children.
- A difference in income and pensions.
- What one party might lose due to divorce (specific attention to loss of pension benefits and income).
- Any other relevant circumstances.
Division of marital assets can be a delicate balancing act. Even if there are other factors (like those listed above) the assets might still have to be divided equally. It all depends on the circumstances of the parties. One factor can often counter another and sometimes more weight and consideration will be given to one specific factor compared to another. Needs and contributions often compete against each other.
Assets that were owned before marriage or obtained after the end of the marriage won’t immediately be considered as family assets but may still be relevant to meeting needs in the future.
What can the court order?
- Periodical payments
- Secured periodical payments
- Lump sum order
- Property adjustment order
- Pension sharing order
- Pension attachment orders
- Dismissal of claims
We have agreed a financial settlement – what next?
Even if you have reached an agreement about your finances, it’s still best to get legal advice about what you have agreed, so that you can make sure that you have covered everything. It’s also important to make sure that whatever you’ve agreed is possible for the court to order!
It’s advisable to convert any informal agreement into a formal financial remedy order approved by the court, however amicable you think your divorce is, because you won’t be able to enforce an informal agreement between you if one of you then changes your mind.
If you have agreed on a settlement based on a clean break, there is no dismissal of the claims unless they are included within a financial remedy order and you have obtained a decree absolute or final divorce order.
If you have agreed to share pensions this also can’t implemented without a court order, pension annex and a decree absolute or final divorce order. Make sure you have an order that covers everything you have agreed and that all the right steps are completed.
Need help sorting a financial settlement? Contact Vanessa Gillbanks at Gillbanks Family Law
Vanessa Gillbanks firstname.lastname@example.org
Telephone 01206 299282 or 01473 937888
Gillbanks Family Law www.gillbanksfamilylaw.com