Resolving Finances FAQs

What is a financial settlement?

What are you entitled to on divorce?

How quickly can you reach a divorce settlement?

What’s the best way to prepare for a divorce?

How does the court decide what is a fair divorce settlement?

What about DIY divorce?

How can I cut the cost of divorce?

 

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What is a financial settlement?

It’s an agreement you reach with your former partner as to how to separate your money, assets and debts now that you are separating. You can reach such an agreement at any stage, although first you will need to disclose to each other what your financial resources are, so you both understand what is available in formulating what is fair.

Once you have reached an agreement, you will want to ensure it is legally binding on you both. If you are divorcing, the best way to do so is by converting the agreement into a consent order. This is a legal document which must be approved by a Family Judge. You can apply for such an approval once the first part of the divorce process (decree nisi) has been pronounced. It’s important to know that this is not a ‘rubber stamp’ exercise, and Family Judges will refuse to approve consent orders, even if you both agree, if they feel the outcome is not legally fair.

Further reading: How Does a Judge Decide Who Gets What In a Divorce?

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What are you entitled to on divorce?

There is no set formula. We all run our lives differently and no two people are the same. So no two divorces will result in the same outcome. Family Judges have a huge amount of discretion to determine what is the fairest outcome for your family. Judges also have wide powers to redistribute assets between you, whether they are legally held in your joint names or not. The assets which are taken into account include:

• Money, including savings and investments
• Property, including the family home and any property you own individually
• Pensions
• Life insurance policies
• Business interests
• Interests under trusts
• Income
• Debts and other liabilities, including tax

The source of the assets will be relevant, and one of the factors Judges need to consider is whether the assets are matrimonial or non-matrimonial in nature. This is a specialist area upon which it is important to take legal advice, so that you do not reach an agreement which could be legally unfair.

Further reading: Spousal Maintenance: How Much & How Long Will It Last?

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How quickly can you reach a divorce settlement?

The speed with which you navigate the process really depends on your ability to work together through divorce. The average divorce in England and Wales takes 14 months, which is a very long time to be living with a divorce. If you end up in Court proceedings, it can take much longer. However, if you are open to working together you can short-circuit this time-frame. Our process can take as little as 6-8 weeks, as we can work with couples at the same time to get their financial disclosure together and advise them, impartially, as to what is fair.

Further reading: How Long Does a Divorce Take?

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What’s the best way to prepare for a divorce?

When it comes to reaching a financial agreement, the first thing you both need to do is ensure you have a full understanding of all the available financial resources.

The best way to do this is to work through the Form E, which is the document a Court would want you to complete. You may need to sit down with a financial advisor to fill this in, particularly with regards to the questions relating to tax. As a brief guide, you need to quantify, net of tax (notional or actual):

• all your property and other assets
• your pensions (the starting point is to obtain the cash equivalent value from your pension provider, but beware this often does not reflect the true value of the pension benefits. This is a specialist area and you may well need advice from a pensions on divorce expert)
• your business interests
• your liabilities
• your income

The second part is to quantify your needs. In the future you will each be running separate households. How much do you each need to re-house? What is your monthly income budget, taking into account the needs of any children when they are in your care.

Once you have put together that financial information, you can start to form a view as to (a) what there is to go around and (b) what you both might need to run your separate homes.

Further reading: Getting Divorced? Don’t Know Where To Start?

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How does the court decide what is a fair divorce settlement?

Family Judges have a huge amount of discretion in deciding what they consider to be fair. There are a number of factors they will consider, which include:

• The needs of your children, which will be the first consideration
• Your financial circumstances
• Whether assets are matrimonial or non-matrimonial
• The contributions you have each made to the marriage or civil partnership, both financially and emotionally
• You incomes and earning capacity
• Your pensions and the extent to which these can be shared
• Your ages
• Your standard of living during the relationship
• The length of the marriage
• Your ages
• Any specific health needs or disabilities

It is extremely important to seek some legal advice as to what a Family Judge may view as fair. For most couples this is the biggest financial decision they make in their lifetime. You don’t necessarily need legal advice throughout the process, but at some stage it is worth getting some expertise to ensure that the deal you reach does not unduly prejudice either of you, and is likely to be approved by a Judge (which is essential for it to be converted into a legally binding consent order).

Further reading: Resolving Your Finances

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What about DIY divorce?

There are aspects of the divorce process which you may feel entirely comfortable navigating without professional help. The divorce petition is now an online process on the gov.uk website, and many couples can now navigate this themselves, provided they can agree on the grounds of divorce and there are no jurisdictional or other issues which make the divorce more complex.

Many couples also agree the arrangements for their children without legal input, although some benefit from an overview of what the law says, which a shared family lawyer can provide, and some input from a co-parenting expert, to help them put together and agree a parenting plan.

When it comes to reaching a financial settlement, the initial stages of getting financial information together is a process many couples can navigate without help. However, when it comes to discovering what a Family Judge would view as fair in your situation, and drawing up a consent order, you should take some legal advice from a regulated provider. We have designed our process to ensure that you only pay for legal expertise when you need it, which is how we can offer a fixed fee service.

Further reading: The ‘DIY Divorce’ Trend

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How can I cut the cost of divorce?

The best way to keep costs down is to work together. The average cost of a divorce in the UK, excluding property costs, runs to almost £15,000, according to the Money Advice Service. If you end up in contested Court proceedings, the costs can be much, much higher than that.

Set a budget from day one on what you think your combined legal fees should be. Ensure it is proportionate to the assets available to you, and that you can afford it. Where you can, share one lawyer between you, and opt for fixed fee services over open-ended hourly rates.

Further reading: All You Need to Know About the Financial Cost of Getting Divorced

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If you have more questions about this topic or any other legal issues arising on divorce or separation, please do get in touch as we are always happy to help. You can call us on 0203 488 4475 or email contact@thedivorcesurgery.co.uk