Finances in Divorce & Dissolutions

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Finances in Divorce & Dissolutions


Access Law deal with family cases following the approach recommended by Resolution and encourage parties to try and reach agreement about financial matters by negotiation.

Types of application and timescales:

Negotiation

The first approach is to try and resolve the issue through negotiation. This can be through Solicitors or through attending Mediation.

Mediation is not counselling or therapy but an opportunity for the parties to determine matters between them. We have a list of recommended Mediators we can supply. Mediation is free of charge if you qualify for “legal help” or there may be a fee payable.

The first mediation appointment is usually within 14 days and thereafter can take place over at least 4 to 6 sessions, over a matter of weeks.

If an agreement is reached in mediation this can be made into a Court Order or Separation Agreement.

An agreement reached at Mediation is not binding unless a Court order in Divorce proceedings is obtained. A separation agreement can be upheld by the Court at a later stage provided there has been full financial disclosure and both parties have had legal advice or the opportunity to seek advice.

Court Application

This is necessary if you have not been able to reach an agreement and you would then ask a Judge to determine the issues. At first if you need legal aid a full certificate would need to be applied for and it can take some weeks for the Legal Services Commission to assess the financial aspect of the application, often at least 4 to 6 weeks. Then once the application is issued the first appointment is fixed for a date three months in advance.

Form E

The Court require parties to complete a Financial Circumstances Form (Form E) which will sets out full details of both respective parties. You both have an obligation to make full and frank disclosure of all material facts, documents and other relevant information.

The Court process

The purpose of the First Appointment is to define issues and to save costs. The District Judge will see if any further documentation should be provided and whether any expert evidence (such as valuations) needs to be obtained. If the case is not likely to be resolved at the First Appointment then it is adjourned for a hearing known as a ‘Financial Dispute Resolution Appointment (FDR)’ at a later date.

The purpose of this hearing is to ensure that all parties use their best endeavours to reach agreement. The District Judge will actively try to help you and your spouse settle the case by offering suggestions and solutions wherever possible. You do not have to accept the advice of the District Judge but the aim is to try to bring about an amicable settlement and reduce the costs incurred.

If all the financial information is available at the First Appointment then the District Judge can treat that appointment as an FDR.

If no agreement is reached at the FDR the case will be adjourned for a Final Hearing. At this hearing the District Judge will hear full evidence from both parties and any relevant witnesses. Ultimately the District Judge will make an Order as to the disposal of the assets which will be binding on both parties.

At every stage the Court will wish to see evidence that all parties are trying to negotiate a settlement.

The process can take up to 9 to 12 months to complete, especially if not all the information is available at the first hearing.

Types of Orders and the relevant factors

In Divorce proceedings the Court has power to make a number of different types of Order in relation to the family and the assets. These orders can include maintenance, lump sum orders, property adjustment orders, orders for sale and orders relating to pensions.

The intention of the Courts will always be to ensure that the interests of the children of the family are considered and to ensure that the parties are as self sufficient as possible. If appropriate a “clean break” order should be made to terminate the respective obligations of each party to the other as soon as possible. The Courts have a wide discretion in deciding how to allocate the finances and in the decision making process use statutory and judicial guidelines as described below.

Under the statutory guidelines in Section 25 Matrimonial Causes Act 1973 (MCA) the Court is told that it firstly has to consider the welfare of any child of the family who is not 18 and then take into account a number of factors which include:

  • the income, earning capacity, property and other financial resources each party has including potential earning capacity;
  • the financial needs, obligations and responsibilities of the parties;
  • the standard of living;
  • the age of each party and the duration of the marriage;
  • any physical or mental incapacity;
  • contributions each party has made including looking after the home and family;
  • any pension provision
  • 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;
  • in the case of proceedings for divorce or nullity of marriage, the value to each of the parties to the marriage of any benefit which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring
  • inheritance issues; and
  • the needs of the child(ren) including how (s)he is educated and any disability.

The Judicial guidelines have developed from past decided cases. There have been some recent cases which have clarified the approach that the Court should take and have emphasised in particular there should be no discrimination between husband and wife in their respective roles and the division of the assets should be decided on using the “yardstick of equality of division”.

The House of Lords decided that the Courts should only not divide the assets equally if there is a good reason to do so. There is a cross check of equality to ensure there is no discrimination. The first duty of the Court is to apply the criteria in Section 25 in search of the “overarching objective of fairness” and that the first priority is to provide a home for the main child carer and the child(ren) whose welfare is the first consideration.

The Family Justice Council have also issued a very helpful Guide:

Family Justice Council Guide on Financial Needs on Divorce

and there is also another Guide which explains the process:

Family Justice Council Guide to Sorting Out Finances

 

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