What Assets Are Split In Divorce Financial Settlement?
The adjustment of assets/finances covered by the financial court order may include the following:
- children/spousal maintenance
Does Spousal Behaviour Affect The Divorce Financial Settlement?
Normally, the behaviour of your spouse including adultery or unreasonable behaviour does not affect the divorce financial settlement. The grounds for divorce you use to obtain a divorce have no bearing on your financial settlement. Extreme behaviour may be taken into account by the court, for example, if one partner's violence has had a lasting effect on the other. If one partner recklessly or deliberately sabotages the financial position, for example, by spending recklessly or destroying assets, this could also be taken into account.
What is a ‘clean break’ divorce financial settlement?
A clean break divorce financial settlement is where no ongoing financial commitments remain between you and your spouse. The phrase ‘a clean break’ is particularly used as the opposite of an order where there is ongoing spousal maintenance payable, usually monthly, from one spouse to the other.
A clean break is only possible in relation to the financial claims between spouses. It is not possible to have a clean break in relation to financial obligations towards your children.
What if I don’t have any assets to split?
In case you and your ex-partner have no assets to divide, you should also apply for a financial settlement. It’s important to do so, even if you don’t have any assets to divide at the time of the divorce. There’s no guarantee you won’t come into some money in the future and if you haven’t obtained a financial settlement, your ex is still within their legal rights to make a financial claim.
Once a 'clean break' agreement of this kind has been ratified by court order, neither of you will be able to go back to court in the future to ask for maintenance or further transfer of assets. This gives both partners a much greater degree of certainty and allows them to completely disentangle their individual financial affairs.
Will any payments I make to my spouse while we are separated affect the final divorce settlement?
Not usually. It may be unwise to make excessively large payments to your spouse, because it might be argued that this shows both their need for such payments (or an equivalent transfer of assets) and your ability to pay.
Even so, any financial settlement should take into account the longer-term history of the marriage and future financial prospects.
On the other hand, if your spouse needs maintenance while you are separated, it would normally be sensible to provide it. Failure to do so is likely to make your spouse more hostile towards you.
Your spouse might apply to the court for an interim financial order requiring you to pay an appropriate level of maintenance. Both of these are likely to increase the overall level of ill feeling - and costs - in reaching a final agreement.
What effect will it have if I move out of the family home before we are divorced?
You will still have the same rights to occupy the home as you had before and can move back in if you choose.
There may be practical problems if, for example, your spouse changes the locks. While you will be entitled to get back in, it makes sense to ensure that you take anything you may need - such as important documents - with you in the first place.
There may also be other considerations so it is advisable to take advice before moving out.
Are there any precautions I should take during a divorce, for example, to stop my spouse taking cash from our joint account?
If your spouse can make withdrawals from a joint account without your agreement, you run the risk that some or all of the money will be taken. You will also be jointly liable for any debts run up on the account.
If you need access to the money or if you suspect that your spouse may misuse it, you may want to close the account. The same applies to any other form of joint borrowing or spending facility, such as a joint credit card.
However, if you suddenly freeze accounts that your spouse needs for living expenses, this will create problems. Your spouse will want you to make appropriate maintenance payments and may apply to the court for an interim financial order.
If your spouse is the sole owner of the family home, you should apply to the Land Registry to register an interest in the property. This will prevent the house being sold without your consent.
Is our divorce settlement affected if one of us remarries or starts cohabiting with a new partner?
If you remarry without having reached a financial settlement with your former spouse, you may lose the right to make any financial claim against your former spouse. He or she will still have the same right to make a financial claim against you as before.
If you have previously reached a clean break settlement, the remarriage (or cohabitation) will normally have no effect - you have already made a once and for all agreement.
If you are paying your former spouse maintenance (this does not include child maintenance), maintenance ceases if the recipient remarries (but not if the recipient merely starts to cohabit).
In any case, if your former spouse's financial position improves, you can apply to the court to stop paying maintenance or to pay a reduced amount.
If you are receiving maintenance from your former spouse, you should normally continue to do so after he or she remarries.
How long will it take to sort out our divorce and financial settlement?
Obtaining a divorce typically takes about six months. The process can take longer if anyone fails to deal with the various pieces of paperwork promptly.
How long financial settlement takes depends very much on your relationship with your spouse and the complexity of your financial affairs. Often, the financial settlement can be negotiated over the same period as the divorce proceedings, and is then confirmed by a consent order.
Where there is an agreed financial outcome, it is possible to obtain a court order embodying the agreement (consent order) and your decree absolute within 6 months from start to finish.
Where an agreement is not reached, it could take between 12 – 18 months to conclude form the date an application for financial settlement is made to the court.
Who pays the legal fees for a divorce financial settlement?
In most cases, both parties will have their own solicitor and will be responsible for their own legal fees. Only in unusual circumstances will the court consider conduct in the proceedings or the process of disclosure as a justification for an order for costs being made against the other party.
While negotiating a financial settlement you each use - and are responsible for paying - your own lawyer. As part of the settlement, however, one of you might negotiate that the other should pay part or all of their legal fees.
You can keep your legal fees down by agreeing as much as possible among yourselves. Fees can mount up if hostile spouses insist on conducting all negotiations through lawyers while arguing over trivial details.
What orders can the court make in divorce financial settlement?
The court has power to make orders for a spouse including:-
- Periodical payments (maintenance or alimony)
- Secured provision (maintenance that is charged against an asset)
- Lump sum (a cash payment)
- Transfer of property (where one legal ownership of an asset is taken away from one spouse and transferred to the other)
- (except upon decree of judicial separation) a pension attachment and a pension sharing order
- Agreed child maintenance orders, school fees orders and/or top up orders where there is a maximum Child Maintenance Service assessment.
Can money one of us expects to inherit be taken into account when we divorce?
Usually not unless you are about to receive the inheritance.
Will a prenuptial agreement protect my assets if we divorce?
Pre Nuptial Agreements are not legally binding in the UK but are considered to be pursuasive for the judge to exercise discretion in deciding the financial settlement by giving weight to the pre nupital agreement. Pre-Nups, Post Nups and Pre-civil registration agreements cannot exclude the authority of the Court when dealing with financial issues when a marriage or civil partnership irretrievably breaks down. When divorce arises, the court has discretionary powers to distribute assets as the Judge sees is in the best interest of the parties/children/individual circumstances. The prenuptial agreement which has been entered into fairly and after taking appropriate legal advice may have persuasive authority for the judge to exercise discretion and give weight to the same in distribution of assets.
The caveat is that while UK courts will recognise prenuptial agreements, they also still have the ultimate discretion to ignore any agreement reached if the agreement is deemed to be unfair to any children of the marriage.
What can I do if I find out my spouse has assets or income not disclosed when we agreed the divorce settlement?
You can go to court to get the financial settlement altered.
What can I do if I cannot afford the maintenance payments to my former spouse?
You can go to court to ask them to change the maintenance order to reflect your circumstances. For example, you might do this if you lose your job and cannot find another one.
Is it possible to reopen a divorce financial settlement?
It is possible to reopen a divorce financial settlement, but extremely rare. In most circumstances, once a financial settlement has been officially recorded in the form of a consent order, the financial ties between the divorcing couple are broken and neither of them will be entitled to make financial claims in the future.
However, a precedent set during the case of Barder vs Barder (1987) means that a court may allow a financial settlement to be reopened if something later happens that alters the principle on which the original consent order was made.
Before the court will agree to reopen a settlement, four key factors need to be satisfied:
- A new event(s) occurs that invalidates the basis, or fundamental assumption, on which the original consent order was made.
- The new event(s) must have occurred within a relatively short time after the consent order was made.
- The request to re-open the financial settlement is made soon after the new event occurs.
- The appeal does not prejudice any rights to assets acquired by third parties (for example, if a house has been sold to an unconnected third party).
Successful applications to reopen financial settlements are rare but they do happen – for example, in the case of Critchell v Critchell (2015).
Am I entitled to spousal maintenance after a divorce?
This will depend on many factors including:
- How long you were married
- The standard of living you enjoyed before the divorce
- Your respective financial needs and the financial needs of any dependent children
- The current earnings of each party
- The potential earning capacity of each party in the future
- The contribution made to the marriage, either financial or by caring for children and looking after the family home
For example, if a young couple with no children have been married for only a short time and both are working, then it may be fair for them both to leave the marriage with no ongoing financial ties and taking with them what they brought into the marriage.
If a couple have been married for 25 years and by agreement the wife gave up a career to bring up the family at home, while the husband became the sole bread winner, then the wife's future earnings capability may be severely compromised.
In these circumstances the wife should not be penalised for her lack of earnings ability and may be entitled to ongoing spousal maintenance.
How courts deal with pensions in divorce financial settlement?
When a marriage or civil partnership ends, courts deal with the pension arrangements in one of 3 ways.
- You’re given a percentage share of your former partner’s pension pot. This is known as pension sharing. The money that you get from the pension pot of your former spouse or civil partner is then legally treated as your money.
- The value of a pension is offset against other assets. This is known as pension offsetting. For example: you keep your pension and your former spouse or civil partner keeps the home.
- Some of your pension is paid to your former partner. This is known as pension attachment or sometimes pension earmarking. This is like a maintenance payment directly from one person’s pension pot to their former spouse or civil partner. Under this arrangement, money from your tax-free lump sum can also go to your former spouse or civil partner.