Divorce Financial Settlements

While it is technically possible to finalise your divorce without reaching a financial settlement, it is not recommended. A divorce does not provide you with a financial “clean break” from each other. Your ex-partner could therefore pursue a financial claim against you in the future so it is important you achieve certainty in respect of your finances at the time same as the divorce.

This means that even if you are already divorced, it is not too late to reach a financial settlement if you do not have a financial order.

Achieving a financial settlement during the divorce process is reaching an agreement in relation to the division of assets and how you will separate your finances in the future. A financial settlement will include details as to what should happen to your respective income and pensions as well as more obvious assets such as properties and savings. Often, divorce financial settlements can be agreed upon but if an agreement cannot be reached, the court will intervene and make a binding final decision.

There is no formula for working out how finances should be divided. In all instances, the court will aim to divide assets fairly. However, this does not necessarily mean an equal half-and-half split. The law considers a number of factors including the length of the marriage, housing, income, contributions and most importantly, the needs of dependent children.

We will always try our best to reach an agreement in respect of your finances. But, if you are going through a divorce or civil partnership dissolution and cannot agree on a financial settlement, you can ask the court to make a final financial order. This process is known as applying to the court for a financial remedy. In this process, a judge will help you reach an agreement by offering guidance as to what a court would do if it were determining the matter at a final hearing. If an agreement still cannot be reached then the court will make the decision on how to divide your assets.

A financial remedy is the order you end up with once there is a final agreement, or a court-determined outcome, with respect to how to divide your finances. You do not have to go to court to obtain a financial remedy order. If a couple reaches an agreement in respect of their finances, which may be achieved by them discussing matters directly, through solicitors or mediation, then a financial remedy order can be prepared and sent to the court for the judge to approve. This is often known as a “consent order”. It is still a financial remedy order and it is still final and legally binding.

If an agreement cannot be reached and the court has to be invited to intervene, the court will determine what the content of the financial remedy order should be.

At a final hearing, the judge will consider all of the assets available for distribution (including earnings, savings, debts, pensions, and property) and all of the relevant circumstances of the case, e.g. dependent children, earning potential, contributions, and age of parties. The judge will then decide what they believe to be a fair outcome and make a decision as to how the marital pot will be divided.

Even if financial remedy proceedings are started, we always work with our clients to try and achieve an agreement along the way and avoid a court imposing its view on the couple.

To apply for a financial remedy, you must fill in a notice of application (Form A). You can find this form online at HMRC. You must send the application to the family court where your divorce or dissolution took place, or is taking place. Alternatively, if a lawyer is representing you they can start the process online.

Once the court has received and reviewed your application, they will give you a date by which time you have to provide full financial disclosure (Form E). The court will also provide a date for the first court hearing,

The First Appointment (FDA) is one of three court hearings scheduled to resolve financial disputes or financial matters in a divorce. Typically, a First Appointment is scheduled between 12 and 16 weeks after submitting a divorce application to the court. This hearing is largely an administrative hearing, to ensure that the parties have submitted their respective financial disclosure, and consider what further information or documentation may be required. For example, it may be that further valuations or expert reports need to be obtained.

The second court hearing is a Financial Dispute Resolution Hearing (FDR). This is a private court hearing and is aimed at trying to assist parties in settling any dispute over finances. At the hearing, the Judge will provide an “indication” of what they think your final financial settlement should look like. This Judge will not be your Judge at any listed Final Hearing, but the indication is provided to help narrow the issues and advance negotiations.

If no financial resolution is agreed upon at this stage, then your case will be listed for a Final Hearing in front of a different judge. The discussions that occurred at the FDR will not be disclosed to the new judge. The Judge at the Final Hearing will make a final order which will be binding on you.

At the beginning of the process, you and your spouse must provide full disclosure to the court. This is essential to reach an appropriate and fair financial settlement. If your spouse does not cooperate and hides assets, our financial solicitors will seek the assistance of the court in obtaining more information about those hidden assets.

Hiding assets is a guaranteed way to delay proceedings and complicate the process. The court has the power to punish those who try to do so.

We have significant experience in unravelling complex asset structures and discovering hidden assets.

If you suspect your spouse is hiding assets or financial information from the court, you need urgent legal advice from experienced and trusted separation and divorce solicitors.

There is no such thing as a typical divorce financial settlement in the UK. Unfortunately, there is no online calculator to give you all the answers. In the UK, the court must try to achieve a clean break between the parties and divide the assets in a fair way. In most cases, a 50:50 split is the starting point when dividing assets once the marriage has ended. However, it is just the starting point.

In some instances, in order for the separation of assets to be fair and meet everyone’s needs, finances and possessions will need to be divided in a different ratio. There are many factors that are likely to impact the divorce settlement. To name a few; the needs of dependent children, length of marriage, age, living expenses, standard of living, and earning capacity will all be considered when determining the divorce financial settlement.

In a divorce settlement, pensions are considered along with other financial assets of the marriage. Workplace and private pensions are included in divorce settlements whether built up before or during the marriage.

If you or your partner have applied for a divorce, we recommend that you consult with an experienced family solicitor before proceeding. To further understand what is involved during divorce proceedings, take a look at our divorce FAQs.