The breakdown of any relationship is stressful and at times traumatic; none more so than when financial issues need to be resolved. Dealing with finances at such times can be tough and make the divorce process even more challenging. The key is to negotiate and ensure there is a fair and equal division between the parties. The law in relation to such matters is set out in Matrimonial Causes Act 1973 (as amended).
Before any application can be made, the court requires the parties to consider mediation. The Applicant in a matter must first attend a Family Mediation Information & Assessment Meeting to assess if a case is suitable for mediation. If the case is suitable then an application cannot be brought to court until mediation has concluded. If the case is not suitable the Mediator will provide written confirmation of this, for a charge.
The court has wide and flexible powers to make orders for:
- Maintenance from the wealthier spouse to the less wealthy spouse;
- Lump sum payment;
- Property Adjustment Order, either for the sale of the property or transfer of name from both parties to one party;
- Pension Sharing Order, which gives one spouse a claim on the other’s pension.
Clearly it is better if the parties can come to an arrangement themselves, especially as it can take between 10 and 12 months between making an application and a final hearing. However if this is not possible then either party can bring an application to court to deal with the division of financial assets.
Each case is unique and the court does not use any particular formula to decide on financial matters. The overriding objective of the court is to achieve fairness and therefore the starting point for the court is to divide the assets equally.
The court takes into account the following factors:
- Each spouse’s income, earning capacity, property and financial resources they may have (or will have in the near future);
- Each spouse’s benefits such as pension entitlements;
- Each spouse’s needs and financial responsibilities they may have (or will have in the near future);
- Each spouse’s age, length of the marriage and any physical or mental disabilities either spouse may have;
- Each spouse’s contribution to the marriage (this does not just include financial contribution. The courts view raising children to be an important contribution);
- Standard of living prior to the breakdown of the marriage (this tends to only be important if there are substantial assets available).
If there are children involved the court will always prioritise their welfare and financial needs. Children in the eyes of the court are those under 16 and anyone above the age of 16 in full time education or with special needs.
Usually a child will remain living in the family home with one parent and the other parent will be the one who pays child maintenance. Child maintenance can either be agreed between the parties or can be dealt with by the Child Maintenance Service, which can be accessed through this website: https://www.gov.uk/making-child-maintenance-arrangement. If there is a limit on the assets available then the home may have to be sold and any financial arrangements made must ensure the child has a suitable home.
If you require any advice in relation to divorce and finances, please contact a family law solicitor here.
Alternatively, family solicitors will be available our free weekly clinic which is on Thursday afternoons between 4pm and 6pm at our Blackburn and Burnley offices.