We understand that for many couples the most daunting aspect of their separation will be how to sort out the money.
It is important to take legal advice as soon as possible after separation so that you can be prepared and informed about what you will need to do.
The quickest way to ease anxiety over financial matters is to understand the process and know where to go for practical support.
The most important focus will be to reach an agreement between you and your spouse about how your financial matters should be resolved and on the basis that you both feel that the agreement you have reached is a fair and reasonable one as it will enable both of you to look to life after separation.
The financial issues that arise will of course be different for each family. The first thing to focus on will be your immediate financial considerations after your decision to separate. Once you have resolved these initial concerns then you will be able to look to the more long term considerations.
The main issues which will need to be considered are;
- Your family home, will this need to be sold or should it be maintained by one of you and if so how will the interest of the other be realised
- Maintenance, should this be paid, how much and for how long
- How you should divide the savings and pensions that you each have after divorce
Before you can start to consider any of these issues you must have a full and frank picture of your financial situation and that of your spouse. The first step will inevitably be to provide each other with full and frank financial disclosure which will establish for you both what the assets, liabilities and income is in your situation. Once you are each satisfied that you have a complete picture of your financial situation you can begin to think about how your finances should be divided to achieve a fair outcome.
Whilst the law in this area is discretionary there are criteria set out in legislation to guide couples who are separating their assets. These are commonly known as the Section 25 criteria as they appear in Section 25 of Matrimonial Causes Act 1973. They are;
- The welfare of any children of the family;
- The income earning capacity property and resources which each person now and in the foreseeable future;
- Financial needs obligations and responsibilities of each person now and in the foreseeable future;
- Standard of living enjoyed by the family before the breakdown of the marriage or partnership;
- Age of each person and duration of the marriage or partnership;
- Contribution made by each person to the welfare of the family including looking after the home and bringing up children;
- Conduct of each person but only if it is so bad it would be unfair to ignore it;
- Physical or mental disability.
If you are unable to reach an agreement with your spouse or partner either by agreement between yourselves or by using either mediation or collaborative law then you can ask the Court to assist you in reaching a conclusion.
You can make an application for a financial order to settle your finances on divorce or dissolution of the civil partnership.
Before making your application to the Court you will usually have to demonstrate that you have attended a session of mediation to explore whether an alternative dispute resolution process may help you to avoid issuing Court proceedings.
Once you have applied to the Court you will receive a timetable which will require you to complete a financial statement known as a Form E which is a document setting out all your financial details. You will also be required to produce copies of documents such as bank or building society statements, pay slips, valuations and pension information to attach to your financial statement.
The timetable you receive from the Court will set a date for your first hearing at Court which is known as a First Directions Appointment before a District Judge. The District Judge at that hearing will identify the issues between you and make any Orders that may be required to put you and your spouse or partner in a position where you are able to negotiate a settlement. This hearing will usually be 12 weeks after the date on which your application is issued by the Court.
After the First Directions Appointment the next stage is the Financial Dispute Resolution Appointment. Again this is a Court Hearing before a District Judge where both you and your spouse or partner attend. With the assistance of your lawyers, the District Judge will try to help you reach an agreement about your finances. The Judge will usually provide you with an indication as to how he or she considers that your financial arrangements should be settled.
If you do not reach an agreement then the Court will list a Final Hearing at a later date which will be heard by a different District Judge. This will usually take place several months after the Financial Dispute Resolution Appointment and it is rare for the Final Hearing to take place within a year of your Financial Application being issued. At the Final Hearing the District Judge will consider the evidence and both you and your spouse or partner will give evidence verbally and be cross-examined by each other’s legal representation. At the conclusion of the Hearing the Judge will make a decision about the division of your assets and other issues to be resolved which will be binding upon both of you.