How Can I Reach a Favourable Divorce Financial Settlement?

Reaching a favourable divorce settlement will ensure that you have the financial resources that you need to start a new life for yourself and your children. While many couples are able to reach an amicable agreement on how their assets should be split, many need the assistance of external mediators and even the family courts in some cases. If you are at the start of the divorce process, it is extremely important to understand your legal rights when it comes to your finances and how you can reach a favourable divorce settlement. In this article, we will explain the process of reaching a divorce financial settlement and what you can do to swing the odds in your favour so that you reach an agreement that considers your immediate and ongoing needs, as well as those of your children.

What is included in a divorce financial settlement?

Divorce financial settlements set out how a divorcing couple will split their marital and, in some cases, non-marital assets based on the needs of both parties. Assets that may be included in the ‘matrimonial pot’ include money/savings, investments, property (including the family home), pensions, overseas assets, business interests, vehicles, works of art, and other possessions of value.

Reaching an amicable agreement between yourselves

If you and your partner can come to an agreement between yourselves regarding how your financial assets will be divided, and you are happy with this, it is important to have this drawn up into a legally binding document. Having a legally binding document setting out your divorce financial settlement will ensure that it can be enforced by the courts if one party later decides not to honour the terms of the agreement. You can do this by applying to a family court for a Consent Order.

The timing of your Consent Order is important. It is recommended to apply for a divorce financial settlement Consent Order once your Conditional Order has been issued but before your divorce is finalised in the form of a Final Order. If your Consent Order is approved by the court, it will come into force once your Final Order is issued.

It is always advisable to instruct a divorce law Solicitor to draft your Consent Order to ensure that it is legally watertight and includes all of the sections needed. This involves applying to HM Courts & Tribunals Service (HMCTS) and paying a fee of £58. On receipt of the application, a judge will review the Consent Order and approve it if they believe it is fair and in the interests of both applicants.

Reaching a divorce financial settlement if you cannot agree between yourselves

Despite best endeavours, many couples need assistance to reach a financial settlement agreement following divorce. The first step in the process of reaching an agreement is to attend a mediation information assessment meeting (MIAM) to help determine if mediation may provide a way of finding a solution. This involves a completely neutral, independent third-party mediator who has the skills and experience necessary to help couples reach an agreement between themselves. Mediation is extremely effective in many cases and helps divorcing parties avoid the need to go to court to reach an agreement. It is not always suitable, however, including in cases of domestic abuse and control or coercion between married parties.

If mediation is successful, a Consent Order can be drawn up and approved by the courts, making the agreement legally binding and, hence, enforceable.

If mediation is not successful, then it is possible to ask the court to decide by applying for a Financial Order, often called the ‘contested’ route or applying for an ‘ancillary relief order’.

Applying to the court for a Financial Order

When deciding on the division of assets following divorce, the courts will look at Section 25 of the Matrimonial Causes Act 1973 (MCA 1973) to ensure that the settlement provided is fair and equitable. The MCA 1973 states that the court should take into account the following when reaching a decision on a financial settlement following divorce:

• The income, earning capacity, property and other financial resources of both parties now and in the future
• The financial needs, obligations and responsibilities of both parties now and in the future
• The living standards enjoyed by the family before the divorce
• The age of both parties
• The length of the marriage
• Any physical or mental disability of either party
• The contribution of both parties 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.

To apply for a Financial Order, you or your divorce Solicitor will need to complete financial order application form (Form A) and send this to your local financial remedy court with an application fee of £303. Upon receipt of your application, the court will check that it is valid and, if so, arrange a first appointment to initially hear your matter. At this stage, they will also ask both parties to complete and return a financial statement for a financial order (Form E). This requires that you individually break down your property and debts in a complete and thorough manner and provide an estimate of your future living costs.

The first appointment is a short hearing whereby a judge will discuss your application with you and your ex-husband or wife. Further meetings and hearings may then be needed to reach a final decision, including a:

• Financial dispute resolution (FDR) appointment – where the judge will help you to reach an agreement, and
• Final hearing – where the judge will decide how the assets should be divided if you cannot agree between yourselves.

Final words

It is always preferable to reach a divorce financial settlement without the need to involve the courts. This is because going through the court system can lead to emotional stress, a long period of uncertainty, and distress for children. However, the reality is that court involvement can sometimes not be avoided. In this scenario, a divorce and civil partner dissolution Solicitor can be invaluable in guiding you through the process. We understand the legal complexities and emotional impact of divorce financial settlement disputes and will do all we can to protect your interests and those of your children.