Finances on separation or divorce

With regard to financial matters, our aim is always to try to negotiate a mutually satisfactory settlement between the parties. This should ideally take place after there has been a full and frank financial disclosure of both parties’ up to date financial positions and, on this basis, proposals can then be made for settlement.
If proposals are agreed then these can be incorporated into a Separation Agreement or a Consent Order approved by the court on a petition for divorce or judicial separation. This is a formal court order made by consent which sets out the agreement between both parties and protects both parties from further claims from the other in the future. Once it has been drafted by your solicitors and the terms are approved, it is signed by both parties and then submitted to the court for approval. Then, once it is approved by a judge, it is sealed by the court and becomes a binding court order. A consent order application cannot be submitted to court until decree nisi has been pronounced on your divorce or judicial separation proceedings.
The court will only become more involved in the financial process if an agreement cannot be reached. In these circumstances, either party can apply for Financial Remedy Orders which could ultimately result in a court hearing to decide the issues of financial settlement and can result in the court enforcing an order upon you. At any stage of the court proceedings it is possible to reach a settlement and part of the court procedure is to try to encourage the parties to negotiate and hopefully reach a suitable settlement. If the parties are able to reach settlement together during the court process then this would again result in a consent order.
The court has a number of powers in terms of what orders can be made. These include orders for the sale or transfer of property between the parties, an order for a lump sum payment from one party to the other, or orders for maintenance.
Pensions often play a large part in financial proceedings and there are various ways in which these can be dealt with. Firstly, an offsetting order can be made by the party without the pension is allowed more of the capital assets of the marriage to recompense them for the loss of the pension fund.
Alternatively, the most popular way of dealing with pensions now is a pension sharing order. This means that a percentage of the pension fund is transferred from the fund of one party to the other party – either to their own private pension fund or kept within the remit of the original company pension depending on the rules of the pension trustees of that fund. That party can then contribute to the fund if they wish. However, you cannot have a pension sharing order in a consent order reached after a petition for judicial separation has been issued.
Family lawyers are often reluctant to fine-tune their advice on financial matters in the very early stages of your case as it is difficult, without a full and frank disclosure of all financial matters having taken place, to fine-tune advice as to a suitable settlement in your particular case. We would need to see documentation relating to both your and the other party’s income and assets including details of any pension funds. However, section 25 of the Matrimonial Causes Act 1973 sets out the factors to be considered by the court when considering financial matters. These are as follows:
a) 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, including in the case of earning capacity any increase in that capacity which it would in the opinion of the court be reasonable to expect a party to the marriage to take steps to acquire;
(b) the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;
(c) the standard of living enjoyed by the family before the breakdown of the marriage;
(d) the age of each party to the marriage and the duration of the marriage;
(e) any physical or mental disability of either of the parties to the marriage;
(f) the contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family;
(g) the conduct of each of the parties, if that conduct is such that it would in the opinion of the court be inequitable to disregard it;
(h) in the case of proceedings for divorce or nullity of marriage, the value to each of the parties to the marriage of any benefit which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.
In addition, the court must also give first consideration to the welfare of any children of the family when making any order.