Financial Settlement Advice

Financial settlements can be agreed by partners with the help of a divorce law solicitor and without the involvement of the courts. This can be done at any time during proceedings but certain orders such as those requiring husbands and wives to transfer property or pay lump sums to each other, can only be made after the decree nisi has been granted.

A divorce does involve the court making an order confirming the terms of the settlement but this can be done through a divorce lawyer without having to physically go to court. If no agreement can be reached an application must be lodged by the party requiring settlement with the court to resolve the issues.

There are no hard and fast rules about how assets are divided and who pays who what money. The court has the power to make financial orders as it sees fit. However, Parliament has set out a list of considerations that the court must bear in mind before making an order including:

• Present and future needs
• Resources and earning capacity of both parties
• Ages
• Length of their marriage
• Contributions of both to family finances
  
  

The court will always give primary consideration to the welfare of any children.

How does it work?

• Both parties give full financial details to their solicitor, including all assets, income and liabilities. At this stage you must disclose if you have a current intention to remarry or live with a new partner.
• You then try and negotiate a settlement with the help of your solicitor or a court hearing takes place. Depending on the complexity of the finances this can take some time and be expensive.
• If neither party is claiming maintenance or capital from the other then a 'clean break settlement' is agreed.
• Maintenance to one party can be ordered for an indefinite period or for a set period which will then be followed by a clean break. Maintenance orders end if the person receiving maintenance remarries. The finances of any other party are only relevant if it means that your ex-spouse has fewer outgoings as a consequence.
• The agreement or the court specifies the division of joint assets such as the matrimonial home, business assets, and other assets such as cars, holiday homes and life assurance. The court will also consider the position in relation to any trusts and inheritance if necessary.
• Pensions. At decree absolute a wife usually loses her entitlement to a widow's pension or death in service benefits from her husband's employment if death occurs after the divorce. A wife may need to be protected in the agreement with compensation through maintenance, capital or giving a proportion of a lump sum on retirement. Pension sharing orders enable a wife to transfer the investment value out of a husband's pension scheme into her own scheme.

Since your future financial well-being is involved it is important that be...