Going through a divorce can be extremely emotionally draining, especially when you start to determine the division of assets.
When a separating couple is unable to come to an agreement on their finances, it can be difficult; however, there are processes that can be followed to reach an agreement about the divorce financial settlement.
How is a divorce financial settlement determined?
A divorce financial settlement is usually decided by the court and the guidelines they must follow are set out in section 25 of the Matrimonial Causes Act 1973. Under section 25, the court has a general duty to take into account “all the circumstances of the case”.
This means the court will take into account whatever factors they deem relevant, even if they are not specifically referred to in section 25. Some relevant factors which are considered include:
- The welfare of the children
- Financial needs, obligations and responsibilities each party has or is likely to have in the future
- Current incomes, earning capacities, property and other financial resources which he party has now or is likely to have in the future
- The standard of living enjoyed during the marriage
- Any physical or mental disabilities of either party
- The age of each party and the length of the marriage
- The contributions made by each party including financial and non-financial contributions
- The conduct of each party if it is relevant to the finances
- The value of any benefits which will be lost upon divorce, such as pensions
The courts will usually have a starting point of 50/50. From here, the factors above will be considered by the court and discussions between parties can commence, with the aim to establish what you’ll both need post split.
What are matrimonial assets?
The term matrimonial assets refers to any financial assets that have been acquired by either party since the parties commenced cohabitation, provided the cohabitation prior to the marriage was seamless up to the date of the marriage, or alternatively, from the date of the marriage.
Matrimonial assets could include things like:
- Savings
- The family home and other properties
- Investments
- Pensions
- Businesses
- Personal items such as cars, furniture and electronics
What are non-matrimonial assets?
Non-matrimonial assets are assets that were either acquired by a singular party before they got married or after they separated.
Non-matrimonial assets can vary from case to case, but generally speaking they include the likes of:
- Property purchased in your sole name outside of the relationship
- Family businesses
- Investments and savings acquired prior to the marriage or post separation
- Gifts to one party
If these assets are blended together during the marriage, it can be difficult to determine exactly what is considered as a matrimonial asset and a non-matrimonial asset.
What to consider in your divorce financial settlement
As we’ve mentioned, the court will establish how to create a final financial settlement by following section 25. You should consider the same criteria when trying to agree to a financial settlement outside of court proceedings.
The needs of your children
The first consideration must always be the needs of any dependent children. This means that accommodation must be organised for the children as quickly as possible by the primary parent who will be looking after them most of the time. This can either be by remaining in the former matrimonial home or acquiring a new property.
Working out assets
There are a few assets that you may need to establish how to be split. This includes whether you are going to sell assets, share them, allow one party to keep them or come to another arrangement. These assets can include:
- Savings and investments
- pensions
- Properties
- Business interests
- Personal belongings, including motor vehicles
Mediation
Mediation is voluntary for both parties and is a good idea for divorcing couples who are struggling to come to an agreement but wish to do so without the costs of court proceedings.
During a mediation meeting, a trained mediator will encourage the parties to provide full disclosure of their finances, discuss their standpoints on the division of assets and help them to come to an agreement that is suitable for everyone involved.
If an agreement is reached, then a solicitor can draw up a financial order detailing the agreement for the approval of the court so that the agreement is legally binding once approved by the court.
Not wanting to mediate
If you do not wish to mediate but wish to make a court application, then you will first need to attend a mediation information and assessment meeting (MIAM). At this meeting a mediator will explain the benefits of mediation, and if you still do not wish to mediate, then the mediator will issue the certificate you need to enable you to commence financial proceedings.
The purpose of the meeting is to prevent couples from immediately relying on the court and instead finding other ways to resolve things amicably. Solicitors can also help couples to negotiate a financial settlement away from court.
Court orders
If you are unable to come to an agreement by yourself, the court may need to intervene and make decisions on the financial settlement. This typically involves each party completing a form on their finances and gathering any other relevant evidence, such as property valuations, business valuations and actuarial reports on pensions.
Court proceedings usually take approximately 12-24 months, and if agreement cannot be reached during the court case, then the judge at the final court hearing will decide on how the assets are divided.
Working with a solicitor
Working with solicitors involves both parties and their solicitors negotiating an agreement on how to settle assets and divide finances. Divorce solicitors have in-depth knowledge and expertise in family law, including financial settlements. They can provide you with essential legal advice and guidance throughout the whole negotiation process.
At VM Family Law, we have years of experience helping people to navigate through their divorce and reach an outcome that is best for them. If you would like to go down the route of working with solicitors, get in touch with our team today to see how we can help you.