For most people when they split up, sorting out the family finances is a major concern, not least because the family “pot” is only so big. It is also the case that two households cannot live as cheaply as one. Financial disputes following divorce can be full of traps for the unwary. It is usually vital for you each to obtain independent legal advice. It is also important that you each seek legal advice on finances following divorce before you remarry as otherwise you may lose your rights.
How much am I entitled to?
It is important to decide what is fair in each case and also to see what reasons there are to depart from equality. A major reason is where there are minor and dependent children whose needs are always paramount. If you can agree a split, all well and good but if you cannot, then the Divorce Courts have a complete discretion to do whatever the Judge believes is fair and reasonable in each individual case. If you go to Court, the Judge will take into account all relevant factors including :-
- The ages of the parties and any minor children
- The length of the marriage
- The contributions of each to the marriage and this does not necessarily need to be financial
- The standard of living of the family
- The values of any pensions
- Whether either spouse is likely to receive any money in the near future
- The earning capacity of each spouse
- In extreme cases, the conduct of the spouses
In advising you, your lawyer will look at the needs of each of you and any children and the resources available to meet those needs. First consideration is given to ensuring where at all possible that any minor children have secure accommodation. It is only possible for your lawyer to advise you when he or she has all financial details of you both. There is an ongoing duty of full and frank disclosure of all assets and every case is different. It is the experience of your specialist lawyer which allows him or her to advise you on the range of possible outcomes.
Why do I need a Court Order?
It means certainty. If you cannot agree on the financial settlement, the Court will impose a settlement which might not please either of you. If you do reach agreement, it is still wise to ask the Court to make an Order in the terms of the agreement to avoid any change of mind in the future. The Judge will still need to be satisfied the agreement is fair to you both. To enable him/her to do this you will need to complete a form setting out basic information about your circumstances including your savings and income.
What types of Orders are there?
This is known as Periodical Payments and is usually only available for the adults. Maintenance for children is normally dealt with by the Child Maintenance Service which still has the power to order maintenance for stepchildren, those with a disability or where the paying party lives abroad. The Court also deals with school fees.
Maintenance for a spouse (usually but not always the wife) is available where needed and when the other spouse can afford to pay. Maintenance ceases when the spouse in receipt remarries or either spouse dies. It is possible where necessary to ask the Court to make a “stop-gap” Order for maintenance called Maintenance Pending Suit or Interim Periodical Payments. This can include an allowance for legal costs when one spouse has a much greater income than the other.
The Court only has the power to order the payment of one lump sum, although this can be by instalments. Maintenance can also be paid in advance as part of the lump sum. This is called capitalised maintenance and can be used to obtain a clean-break. A Clean Break Order is a once and for all Order and cannot be changed later. The Courts are required to consider in each case whether to impose a Clean Break Order.
Property Adjustment Orders
Property Adjustment Orders involve all family property, including the family home, any other houses and the contents. It does not matter in whose name the asset is held.
The Court can order one spouse to transfer property to the other, whether or not it is jointly owned, possibly on payment by the other spouse of a sum of money. Any endowment policies securing the mortgage can be transferred likewise. If there is a mortgage, it is desirable the Mortgage Company agrees to release the transferring spouse from his or her mortgage covenants.
The Court can also order the sale of the property and the division of the net proceeds of sale in any percentage it thinks fair.
Any other type of Order can only be made if both parties agree.
The Judge has the power to divide pension funds between the spouses in any fair proportion. A pension is often the most valuable asset the family has. It depends on all the circumstances as to whether pensions are split equally. The longer the marriage and the older the couple, the more this is likely. It is not the case that there will always be an equal division of pensions.
What will it cost?
It can cost anything from £2,500 upwards depending upon your circumstances. It may be possible to ask the Court to rule that your spouse should pay your costs but in most cases each spouse will pay his or her own costs.
Costs can escalate quickly and it is important you are fully aware of the level of your costs at all times. Sometimes it is too great a risk or not cost-effective to go to a final Court hearing. Your lawyer should always be looking to help you negotiate a financial settlement if at all possible.
If we cannot agree what will actually happen?
- In most cases you will be expected to attend a Mediation Intake Session to see whether mediation can help you reach an agreement without going to Court.
- If not, the first step is to file a Form A. This is the basic application form. The Court fee is £275.
- The Court will fix a date for the First Directions Appointment, this will be for an allocated time estimate of 45 minutes or 60 minutes in some circumstances and should take place not less than 12 and not more than 16 weeks from the date the Form A is issued.
- Having issued the Form A the Court will supply a timetable for the progression of the application in Form C. Amongst other things, Form C will give the date and time of the First Directions Appointment.
At least 35 days before the First Appointment both you and your spouse have to exchange and file with the Court details of your financial means, that is to say it is necessary for you to both supply information and documents about your income, outgoings, capital assets and liabilities as well as details of other matters such as your future income, capital needs and pensions. These details are supplied by completing a Form E.At least 14 days before the First Appointment, once you and your spouse have had an opportunity of looking at each other’s Form E’s you must file with the Court and exchange with your spouse’s solicitors the following documents:-
- i In respect of each property used as a family home (except rented property) a jointly obtained market appraisal. If it is not possible to obtain a joint market appraisal, each party should file their own market appraisal for each property and the Court will require an explanation for the provision of single market appraisals rather than joint ones.
ii Provide no more than three sets of property particulars showing what your case is likely to be in terms of housing needs for yourself and the other party.
iii Brief material as to your respective borrowing capacity.
iv A Questionnaire which is a document detailing the information and documents you require from your spouse. The request must be reasonable and relevant to the financial proceedings.
The day before the First Appointment the applicant must file with the Court
i A composite case summary (there is a standard template for this)
ii A composite schedule of assets based on the figures in the Form Es (there is a standard template for this).
The above process means that at the First Directions Appointment which you and your spouse and legal representatives are required to attend, the Court will be in possession of a lot of information and documents about the financial issues and this will help the District Judge to set an agenda for moving your case forward. At the First Directions Appointment the District Judge will consider whether it is necessary to have any assets, such as a matrimonial home valued.
A decision will also be taken about which questions (if any) as detailed in the Questionnaires must be answered. The District Judge will make an Order (known as a Directions Order) which will ensure all of the evidence required that is reasonable and relevant to the financial proceedings is to hand. At the First Directions Appointment the District Judge will, in most cases, also order your case to be listed for a Financial Dispute Resolution Hearing.
The Financial Dispute Resolution Hearing will often take place 8 to 12 weeks after the First Directions Appointment and has to be attended by you and your spouse as well as legal representatives, on occasions parties are represented by Barristers at such hearings. This hearing will last for between 60 to 90 minutes but parties should ensure that they are available for the whole of the day.
7 days prior to this hearing the following documents will need to be filed with the Court:-
i. An updated composite case summary
ii. An updated composite schedule of assets
iii. A composite chronology recording in neutral terms the key dates of the parties relationship and of the court proceedings
At a hearing of this type the District Judge will have before them the details of all attempts made to settle your case, whether they take the form of open or “secret” offers together with all evidence that has come to hand before and after the First Directions Hearing. The idea is to ask the District Judge to help negotiate a settlement by seeking an indication as to what they would consider to be fair and reasonable. A hearing of this type is often a good way of breaking the deadlock.
If no agreement is achieved at the Financial Dispute Resolution Hearing the District Judge must have no further involvement in your case in so far as it relates to financial matters, this is because they know the open and secret positions of the parties. In such circumstances your case will be listed for a Final Hearing before another District Judge who will not be aware of these offers. Parties can agree to pay for Private Financial Dispute Resolution Hearings.
7 days before the Final Hearing the following documents must be filed
i. An updated composite case summary
ii. An updated composite schedule of assets
iii. An updated composite chronology recording in neutral terms the key dates of the parties relationship and of the court proceedings
At the Final Hearing the parties are often represented by Barristers and required to give oral evidence to the Court which will be considered alongside other relevant documents. After a contested hearing the District Judge will impose an order upon you. Thereafter it may be possible to secure a Costs Order, much depends upon the order made and the secret settlement offers exchanged earlier in the proceedings. Costs Orders are made at the discretion of the Court.
Once an order has been made it is necessary to take steps to implement its terms.
Duty To Negotiate
At all hearings the court will require to be informed of the parties’ compliance with the duty to negotiate openly and reasonably. To enable the court to examine the attempts at achieving a negotiated settlement, position statements for each hearing must contain short details of what efforts the parties have made to negotiate openly, reasonably and responsibly. The parties will be warned that, whatever the size of the case, a failure to make reasonable attempts to compromise cases in open negotiation will be met by costs penalties. The bundle for each hearing must contain the parties’ costs incurred to date.