In the final part of our Guide to Divorce, we look at the issues around reaching a financial settlement.
Do remember that a Final Order granting you a divorce does not divorce you financially and without a legally binding financial Consent Order or Financial Remedy Order, you are both open to future claims made against your finances, property, investments, savings and pensions.
During the divorce process you will need to decide how to divide your financial assets in a fair and just manner. This will include the value of any savings, investments, property, debts, pensions and valuable assets such as antiques, art and jewellery. The collective term for the value of these financial assets is known as the ‘matrimonial pot.’
There are different ways to reach a financial settlement including between yourselves, through mediation, using a family solicitor or through the courts. While many couples may try to resolve financial matters between themselves, without the benefit of profession advice, this can often result in an unfair settlement. For example, women will often trade pension provision to be able to stay in the family home, but this doesn’t consider income requirements over a whole lifetime.
Given the importance of ensuring that both of you are provided for into retirement, we would always recommend using a family lawyer to ensure that any settlement reached is fair in both the short and the long term. Taking early legal advice can save you both time, money and stress.
If the case is going to be decided in court, both parties will have to complete what is known as a Form E. However, we would always recommend completion of Form E on a voluntary basis, as it provides a comprehensive picture of a couple’s financial situation.
Sometimes known as a Financial Statement, Form E is used to detail each party’s income, assets and liabilities, along with earning potential, personal income requirements and those of any children from the marriage.
All declarations must be supported by documentary evidence including for example bank account, mortgage and investment statements, pension statements and valuations, property valuations, life assurance, any business assets and accounts, pay slips and self-employment accounts. Form E is also used to document earning potential and income needs.
Both parties need to ensure the information is a full and frank disclosure of their financial position and recognise that their duty to provide this information is ongoing in the event of any change of circumstances.
Once each party has completed a Form E, a Questionnaire is used to seek and provide further clarification of any issues it has raised. Only when these have been satisfactorily resolved can the true value of the matrimonial pot be decided, along with ways in which it can be split fairly to provide for both parties and their offspring.
If an agreement is then reached, the financial settlement needs to be turned into a Consent Order and submitted to the court for approval. This makes anything agreed between the two of you legally binding. Without such an order, both parties are left without legal protection for any future financial claims made by an ex-spouse.
Ideally, the Consent Order will be applied for once a Conditional Order for the divorce has been received from the court and before the Final Order is obtained.
When an agreement cannot be reached, traditionally couples would take the issue to a court hearing, known as a Financial Dispute Resolution (FDR) hearing. This involves a judge considering all the evidence and arguments, before ruling on how a couple’s previously shared money and assets should be split. This decision is legally binding and puts all control of the outcome in the hands of the judge. In this scenario, the legally binding order issued by the judge is known as a Financial Remedy Order.
To avoid this loss of control over the outcome, many couples try to find a resolution through a private FDR hearing. The couple pay a private FDR judge to evaluate the case and advise on the likely outcome of financial matters should the case be heard in court. In this scenario, the judge’s evaluation is not legally binding but serves as guidance to help a couple reach a financial settlement agreement.
The benefits of a private FDR include saving the time, money, and stress of going to court and more importantly, it allows a couple to retain an element of control over the outcome. What’s more, the proceedings are confidential, which cannot always be guaranteed in a public courtroom.
As a specialist family law firm, we have extensive experience in helping couples to reach a fair financial settlement. If you are struggling with the impact of divorce and separation, we offer a no obligation initial consultation for a fixed fee of £100 (incl. VAT), for up to one hour. At this meeting, we can advise you on all the issues relating to your personal circumstances, allowing you to make informed decisions moving forward.
To book an appointment please call 01444 472700, email us at [email protected] or complete the form below.
We know how difficult divorce and separation can be, so we offer an initial one hour fixed fee consultation with a fully qualified lawyer, to help you make an informed decision about how to proceed.
To book, please call 01444 472700 or complete the quick contact form.