Financial disputes and divorce settlements. Do you need a court order and how are the finances divided?
Contrary to popular belief, when you get divorced your financial ties to your ex-spouse are not automatically severed. You must obtain a court approved order to sever that financial commitment, either by reaching a financial settlement by agreement with each other or through contested court proceedings.
What is a financial order?
A financial settlement is a court order that stipulates how your home, money, pensions and assets are divided.
This order can be made when the parties reach an amicable agreement between themselves, although it won’t be legally binding until it has been approved by the court. Orders that are made as a result of the parties coming to an agreement (either amongst themselves or through their legal representatives) are known as Consent Orders.
The court will also make an order in situations where parties are unable to reach an agreement between themselves.
Why do I need a financial order?
Unless there is an order setting out how the finances are to be distributed, one party could make a financial claim against the other years after getting divorced. And while it is the case that if someone remarries they will no longer be able to make a financial claim against the other, this does not stop the party that has remarried having a claim made against them.
This demonstrates the importance of resolving financial matters at the same time as the divorce in order to avoid potential problems in the future and to protect both parties.
If a financial order is obtained and one party fails to meet their obligations as ordered, the court has the power to enforce the terms of that order.
Who gets what in a Divorce Settlement?
When establishing who gets what in a divorce settlement the court will generally take a 50/50 split as its starting point, though this is not always the case.
The court will look at the needs of both parties when determining how their assets should be split. This means that the court will try to ensure that both parties are able to have what they need. This includes both parties housing needs as well as their ability to pay for all other essentials. If there are children of the marriage, their needs will take priority over the needs of the parties.
The judge will also consider the following factors when making an order: –
- The duration of the marriage, plus the length of time the parties lived together prior to the marriage;
- The income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future;
- The financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;
- The standard of living enjoyed by the family before the breakdown of the marriage;
- The age of each party to the marriage and the duration of the marriage;
- Any physical or mental disability of either of the parties to the marriage;
- The contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family; and
- The conduct of each of the parties, if that conduct is such that it would in the opinion of the court be inequitable to disregard it.
After considering the above factors the court may decide to deviate from a 50/50 split if it means that one party’s needs will not be met or that one party may be significantly better off in the long term.
Is it important to obtain legal advice?
The above points demonstrate how complex resolving financial matters can be and it is recommended that legal advice on financial disputes and divorce settlements is obtained as soon as possible, in order to explain the different options and orders available and the effects that they have.