Financial Considerations for Divorcing Couples

The first thing divorcing couples need to be aware of is that the divorce, ‘decree absolute’, is not the same as the financial settlement. The divorce simply ends the marriage, the financial settlement does what it says on the tin but is dealt with separately.

Financial settlements may be agreed informally between the parties or formally through the courts. Informally agreed settlements are usually made legally binding by requesting a ‘consent order’ from the court. Where there is disagreement, the parties will need to have the court decide the terms of the settlement with a ‘financial order’.

It is important to understand that each circumstance is different and, where the court is asked to make a financial order, different considerations will apply in each case.

Key Considerations

There are a number of considerations that courts take into account when deciding upon financial settlements which couples coming to an informal agreement may also wish to think about. A detailed list of the matters to which courts must have regard is set out in s25 of the Matrimonial Causes Act 1973. Broadly these include:

· Financial Resources – income and earning capacity will be considered. All assets will normally need to be declared in order to reach a settlement including the family home, pensions and other personal assets. How the assets were acquired and whether they are matrimonial assets or not will also be considered.

· Children – the parties must consider who will look after any children, where the children will live and the costs of looking after them.

· Financial Needs – the needs of the parties should be budgeted and declared in a statement.

· Standard of Living - the standard of living before the marriage broke down.

· Length of marriage – the length of time that the parties have been married may be considered short, medium or long. This can be affected by periods of cohabitation before marriage and the age of the parties is also relevant.

· New Relationships – cohabitation or re-marrying another partner may affect maintenance payments in particular.

The underlying principle in divorce is that there is a clean break as soon as possible after the divorce but maintenance payments are often used if a lump sum is not available to satisfy the parties’ needs.

Comment

It should be noted that contentious issues such as the reason for the divorce are not usually relevant to financial settlements. Practical issues such as living arrangements, the use of joint bank accounts and payments made to a spouse before a settlement is made can be used as evidence in contentious cases so should be dealt with carefully.

If you would like to discuss consent orders, financial orders or other family law issues, Rollingsons has experienced solicitors who can advise you. Please contact Jeetesh Patel today via e- mail JPatel@rollingsons.co.uk or by telephone on 0207 611 4848.