Finances In Divorce

Financial Relief, Finances In Divorce Questions. These are some of the questions asked at client meetings during our advice sessions at Garner & Hancock Solicitors.

Frequently Asked Questions

This is the name given to the financial proceedings brought between spouses either during or after Divorce.

Your divorce/judicial separation proceedings must have started as the case number used for the financial proceedings is the same. You start with Form A and a Court fee of £255 plus Legal Costs.

Mediation – www.mediation.org.uk
Collaborative Law – www.SFLA.org.uk
To mediate or not to mediate – A mediation guide

They are usually experts in family law, they adhere to a non-confrontational approach which can save you money and will avoid unnecessary acrimonious letters toing and froing between the solicitors, saving you legal costs.

This should be done immediately, as it will take time to deal with the practicalities. But you can only issue financial proceedings (as a final order can only be granted/sealed) after the decree Nisi.

How about dealing with a separation agreement? This is an outline of your intention as to the finances, the divorce and the children. This can be helpful if you want to separate but do not want to go through the court proceedings now.

If you both have agreed on a sensible financial division, you should still both have independent legal advice. You should also disclose to each other your respective finances. You can deal with a final agreement (also called a consent order) without going to court.

At Garner & Hancock, we help you complete the Form E so that you do not prejudice your case. Click here for our full Article

Solicitors cannot act if there is a potential conflict of interest. A solicitor could act but must cease to do so in the following circumstances:

  1. If he/she believes that each has different interests or that one party is at a disadvantage,
  2. If one person’s needs requires more protection  than the other,
  3. If one of you asks a question that could prejudice the other

Therefore, it is better to have separate solicitors so that each can ask the solicitor freely whether the agreement reached is a fair one.

  1. Start proceedings called Maintenance Pending Suit, which deals with maintenance until the final order is dealt with.
  2. Start full-blown financial proceedings so that a decision on the overall finances is also made.
  3. Go to Mediation, or use the collaborative law to assist in the negotiations.

Yes, there is nothing stopping you from doing this; it would not prejudice you in moving on with your life. However, you should be aware of the following:

  1. Your purchase will be scrutinised that it meets your reasonable needs,
  2. You will need to show documents such as your mortgage application, and loans you applied for to show how much money you could raise or where you got the deposit from.

The simple answer is that all the assets are included. You should speak to your solicitor as to any strategic reasons for such a decision.  Timing can be everything on such a purchase.

You should make arrangements that outgoings are all met from either a single or joint account, otherwise, your credit ratings may be affected to make it difficult to get future loans/mortgage. Joint accounts/whether a current account or credit cards can cause problems if the other spouse is not responsible.

If you suspect he/she may take money, not for the benefit of the family then such accounts should be closed and the bank informed of the impending divorce.

No, you discuss this with your spouse. You could both adversely affect your credit rating which in turn could have disastrous consequences on your ability to get another mortgage or credit.

If you are struggling, check your benefits situation or make an application for financial support from your spouse by way of Periodical Payments Order.

  1. The Benefits office as it may affect Tax credits – are you getting the correct money?
  2. Child Benefit Office – payment to the correct parent.
  3. Banks/buildings Societies – to avoid any difficulties with joint accounts.
  4. Credit Card companies if in joint names.
  5. Mortgage company if payment becomes irregular or from two accounts.
  6. Employers, as you will need to take time off to see solicitors and attend hearing dates.
  7. Accountant.
  8. IFA (to find out your mortgageability).
  1. Your accountant, about tax planning and raising money.
  2. IFA, to find out about your mortgageability (how much you raise from banks and building societies).
  3. Pension provider or specialist.
  4. Counselling to make the adjustment easier. Do not underestimate such advice; it makes the whole process so much less painful.
  5. Advice from family and friends. But be careful to avoid relying on anecdotal advice “in my divorce I got…..”

If you do this, then this should be disclosed to your solicitor who will let the other side know. These documents are known as Hildebrand documents. Be careful; the following could be a criminal offence or could lead to civil penalties

  1. You must not open the other spouse’s post.
  2. You cannot bug the telephone.
  3. Opening letters or correspondence from your spouse’s solicitors.
  4. Showing private documents during the financial proceedings to others including the press.

During the court of divorce proceedings, the court will want to consider both parties’ financial resources. The starting point is that a business is considered to be an asset of the marriage. The party’s interest in the property must be disclosed during the divorce process and a value must be put on it. This is even if one party was never involved in the business. The court will want to assess the value of the business.

In some circumstances, a party’s business may be considered a non-matrimonial asset. It may be arguable if the business was established before the parties were married, that the business would be considered non-matrimonial. However, if the business is ongoing throughout the marriage, it is likely that the other party is likely to be entitled to an at least a proportion of the value of the business. Whether an asset is matrimonial or non-matrimonial is considered case by case and depends on the circumstances of each case.

The parties need to have any businesses valued when considering the separation of your finances. The most common approach is for the parties to jointly instruct an in independent accountant. They will consider the business structure to clarify who legally owns the assets of the business and any liabilities.

The accountant will take into account various factors when completing a valuation report. For example, they will want to look at the assets that the business owns as well as how much the business earns and its profit. The account will also consider the options that are available to the parties to liquidate any capital and any tax implications. This is not the only approach of course, and what is relevant will depend on your particular circumstances. In particular, some industries have different standard approaches for valuing businesses.

The court does have the power to make an order that a party’s business is sold. However, it is unlikely that the court would make such an order, especially if it is providing an income or if it would not be possible to separate the value of the business from the value of the party’s work for the business.

Depending on the structure of the business there are other orders that the court can make which are more practical. For example, if both parties have a share in the business, the court may order one party to transfer their share to the other party in exchange. This could either be part of an overall offset of assets or in exchange for a lump sum equal to the parties’ share in the business.

Whilst it is not possible to not disclose your business interest during financial proceedings, it may be possible to try and protect your business by way of agreement. Parties can do this by way of a pre-nuptial agreement before the parties get married or a post-nuptial agreement after the parties are married. This agreement can set out how the business should be dealt with if the marriage breaks down.

Nuptial agreements such as this are not technically legally binding, they are very persuasive to a court upon divorce. This is especially true if the agreement reached is fair to both parties and both parties had the opportunity to receive legal advice. Nuptial agreements like this are complex and both parties should seek legal advice when considering having such a document drafted.

If divorce proceedings have already begun, then the court has previously shown a willingness to try and leave businesses and their structure unaffected. Although this means that the party may not need to sell or transfer shares of their business, it would usually mean that the other party would need to receive a lump sum or a larger share in other assets in lieu of this.

What Happens to Pensions in a Divorce?

Legislation enacted in December 2000 permits courts to issue pension-sharing orders during divorce proceedings. This provision allows for a portion of one spouse’s pension to be allocated to the other. While pension sharing can be advantageous, challenges arise in valuing and dividing the pension. Divorcing couples might pursue a pension-sharing order alongside other distribution methods, like offsetting the pension with other assets.

Case law suggests that, more often than not, non-pension assets will be divided in a way that is not equal.

How the pension is shared will depend on the circumstances of individual cases. The overarching principle that the courts seek to uphold throughout divorce proceedings is fairness, and they can exercise discretion when deciding whether part of the pension should or should not be subject to the sharing order. For example, where one party has acquired a large portion of their pension prior to the marriage and both parties’ finances exceed their needs, the court might consider it necessary to apportion the pension, therefore excluding some or all of the amount from the sharing order.

Alternatively, and more commonly, where the parties’ finances are not excessive, the court seeks to distribute the parties’ finances in order to provide for their reasonable needs. Therefore, in a ‘needs-based’ case the courts will not usually apportion the pension and can draw any assets from the matrimonial pot to satisfy each party’s respective needs. This means that the court is likely to disregard the time at which the pension was acquired and where it came from in a ‘needs-based’ case. It will instead distribute the whole pension if considered necessary based on the facts.

Although we often associate fairness with equality, and therefore an equal division of a pension, the two concepts do not necessarily interlink. The portions awarded to divorcing spouses may not equal a 50/50 split, but the courts must justify departing from this – what is known in legal terms as the ‘yardstick of equality.’ Case law suggests that, more often than not, non-pension assets will be divided in a way that is not equal, owing to various factors such as health, financial needs, and the length of the marriage. There is nothing to suggest that pension assets should be treated any differently and therefore may also be apportioned based on these factors.

If you would like a free assessment of financial matters, please complete the CONFIDENTIAL FINANCIAL QUESTIONNAIRE, and email it to us. One of our Solicitors will phone you with our opinion. Please note this is an initial assessment based on the information you have given us.

How Can We Help?

Happy to help! Feel free to contact us at any time for a consultation on your legal matters.

Our offices will be closed for the holiday season starting on Friday, December 20, 2024. We will resume normal business operations on Thursday, January 2, 2025. Our team will be unavailable to assist with inquiries or processes during this time.