When parties divorce, unless they also dismiss their financial claims against one another they remain open indefinitely until death or remarriage and therefore it is important that financial matters are dealt with at the same time as the divorce. This article looks to answer your questions about finances in divorce and how they are treated.
No. Parties should try to reach an agreement between themselves, through mediation or through their solicitors. However, such agreements are not binding and enforceable unless formalised in a financial consent order. A solicitor can review and comment on your agreement and can draft a financial consent order for you.
This process is often less stressful, less time-consuming and less expensive than applying for a financial remedy order through the court. Before approving the order, the judge does have to be sure that the agreement is fair. The financial consent order is therefore accompanied by a statement of information (Form D81) which sets out the facts of your case including details about how the agreement has been reached, details of any children and details of financial means of each party.
Once a divorce petition has been filed at court, either party can apply for financial orders. The application for a financial order is made by using a Form A. This then triggers the court to make a timetable for proceedings. Three copies of the Form A must be filed along with the appropriate fee. The court then fixes a First Appointment for 12-16 weeks after the Form A is filed. The court sends a copy of the Form A and notice of First Appointment (Form C) to the other party (or their solicitor). The Form C contains details of dates by which the parties must serve relevant documents.
Where possible, the court tries to give the parties a clean break on divorce, so that they are no longer financially dependent on one another.
The starting point is that assets accrued during a marriage (known as matrimonial assets) are divided equally. In a few cases, where there is a short marriage, no children and separate finances, an equal division of matrimonial assets might not be appropriate. If equal division of matrimonial assets is sufficient to meet the capital and income needs of the party and any children, then this will be the appropriate financial outcome.
Where the needs of the parties and any children cannot be met by an equal division, an unequal division may be suitable instead. In these cases, needs are likely to decide how the assets are divided. The fact that assets are inherited or acquired by one party before or after the marriage (known as non-matrimonial assets) will not be so important. In some cases, sharing of an asset may be deferred to some point in the future, for example, one party does not receive their interest in the matrimonial home until children finish their education.
The matrimonial home is normally considered a matrimonial asset, so is divided equally between the parties after payment of liabilities and fees. This applies even if it was owned by one just one party before the marriage, however, the needs and welfare of any children are paramount as discussed above.
Pensions are considered an asset and the same principles of fairness, sharing and needs apply as discussed above. How and whether pensions should be shared or offset are complicated issues and vary on a case to case basis. It is often necessary to instruct an expert called a pension actuary to look at these matters.
The principle of sharing property does not generally apply to property obtained before marriage or property that has been inherited (non-matrimonial assets). There are however exceptions to this for example where the needs of the party cannot otherwise be met. Nevertheless, where possible, the court tries to ensure that a party who inherited or acquired a particular asset retains it as part of the resources to meet their own needs, even if this means allocating a larger share of the matrimonial assets to the other party.
It is also possible that such non-matrimonial property has since become part of matrimonial assets for example by being put into joint names, being used by the family or converted into a different type of property enjoyed by the family (such as an inherited property sold and used to buy a holiday home for the family).
If your marriage is not yet over but you are worried about your financial security, you may wish to consider entering into a post-nuptial agreement. A post-nuptial agreement can detail how finances will be dealt with during marriage and how assets should be divided on divorce.
Note however that nuptial agreements are not binding so cannot override the court’s discretion. The court must, however, give appropriate weight to a nuptial agreement as a relevant circumstance of the case and it is likely to be upheld if it meets the fairness test established by case law.