Content

  • Overview
  • How to settle disputes
  • Factors taken into account
  • Unmarried couples
  • Pre and post-nuptial agreements

Overview

We understand that the breakdown of a relationship, marriage or civil partnership can be stressful and emotional for both parties. We appreciate the importance of listening to a client to understand their needs, before putting forward a strategy to achieve the best possible outcome for them and any children.

Whether you are married, in a civil partnership or in a long term relationship there can often be financial issues which need to be resolved to secure your future financial stability and that of any children. Some individuals are able to reach an agreement between themselves which they just wish to be formalised. Others are able to reach an agreement with assistance from solicitors or by attending mediation.

Unfortunately, there are some circumstances when individuals are unable to reach an agreement on how to divide their assets, or decide on what financial support they should give each other in the future. In these circumstances it may be necessary to issue Court proceedings so that a Court can decide on what it believes is a fair financial settlement.

Whether you want to have a discussion about the legal ramifications of a financial settlement, want to try and negotiate a financial settlement, or start Court proceedings, we are able to help you.

How to settle disputes

There are several ways that disputes relating to financial matters can be resolved by agreement.

1. Discussion

It is not always necessary to attend Court, mediation or arbitration to resolve financial matters. When parties have remained amicable following the breakdown of their marriage or relationship, they are sometimes able to reach an agreement regarding many issues directly between themselves. We are able to assist you with those discussions by advising you on the types of orders that the Court can make and what factors the Court considers when making those orders. We can also assist by converting the agreement you reach into Court Order by consent. This will make the order binding upon both of you.

2. Negotiations

Prior to the issue of Court proceedings both parties can agree to provide full disclosure of their income, assets, debts and outgoings on a voluntary basis. This is to ensure that you both have a complete breakdown of each other’s financial circumstances before entering into any financial settlement. It is a requirement that, for there to be a valid agreement or order following a divorce or dissolution, both parties make full and frank disclosure of their respective income, capital assets and debts.

Once full financial disclosure has been provided, we can advise our client on proposals for settlement. Any agreement reached can then be incorporated into a Court Order by consent making it binding upon the parties.

3. Mediation

Save for certain exceptions, it is now compulsory for parties to attend a Mediation Information Assessment Meeting, also known as a MIAM, to consider resolving the dispute through mediation before making an application to Court. For many this is a more amicable, less contentious, and more cost effective way of resolving disputes.

If appropriate, a referral can be made for both parties to see a mediator who will assist the parties in trying to find a solution to the issues which are in dispute. Solicitors are not usually present during mediation, but we will provide advice as and when needed.

If an agreement is reached in mediation the total costs may be cheaper than if court proceedings were issued. Any agreement reached in mediation can be incorporated into a Court Order by consent making it binding upon the parties.

4. Collaborative Process

Both parties will meet with their lawyers to try and settle their case in a series of meetings. The aim of the process is for it to be open and transparent. If an agreement is not reached during the collaborative process, then both parties will have to instruct new lawyers to start their case again. Other experts such as financial advisers can be involved in the collaborative meetings.

5. Arbitration

Arbitration is another alternative to the Court process in that the parties are able to elect an arbitrator who will make the final decision regarding the outcome of the issues in dispute. At the outset the parties will have to agree to be bound by the arbitrator’s decision, which once made, will be incorporated into a court order. Solicitors are generally fully involved in the process and will attend the arbitration and represent their clients there.

6. Consent Order

If you reach a financial settlement in relation to a divorce or dissolution of a civil partnership, then that agreement can be formalised in a document called a consent order. This is a legal document that sets out the terms of your settlement.

We can prepare a consent order for you or advise you on a consent order that has been proposed to you.

7. Litigation

If an agreement is not reached, either party can invoke the court’s jurisdiction. This involves issuing an application for a financial remedy, formerly known as ancillary relief.

The procedure can be complicated, but the benefit of issuing proceedings for a Financial Remedy is that the Court will provide a timetable and will set out directions which both parties must comply with, in relation to the disclosure of evidence. Generally, there will be three hearings prior to a final order being made. The initial hearing, A First Appointment, is a procedural step after which directions will be made for the parties to file further evidence if required. At the second hearing, known as the FDR (Financial Dispute Resolution Hearing), the Judge can give an indication of the likely outcome of the case. Many cases settle after an indication has been provided by the Judge, but if they do not, then the case will proceed to a third and Final Hearing.

Factors taken into account

The law surrounding financial settlements in a divorce or dissolution of a civil partnership can be complex and there are many factors to be taken into account. Whether you are a high net worth individual or a middle income individual with a few capital assets, we can guide you through the process, provide you with tailored legal advice, prepare the necessary documents and negotiate a settlement.

The starting point is an equal division of the capital assets. The aim is to achieve fairness. The court then applies factors set out under statute to determine whether it is right to depart from equality. The court will have regard to all the circumstances of the case, with first consideration being given to the welfare of any child of the family who has not attained the age of 18 year. The factors are not set out in any particular order, though the court will want to try and ensure that the needs of both parties are met.

Section 25 of the Matrimonial Causes Act sets out the factors that the Court must take into account when considering a suitable financial settlement. These include:

  • the parties respective income, earning capacity, property and financial resources
  • the parties financial needs, obligations and responsibilities which each party of the marriage has, or is likely to have in the foreseeable future;
  • standard of living during the marriage;
  • age;
  • any disability;
  • their respective contributions to the marriage; or
  • any conduct which it would be inequitable to disregard.

We can advise you on how these factors apply to your situation and the extent that they should impact upon your financial settlement.

1. Orders

There are a number of different orders which can be made and the types of order made will vary in each case because each party’s needs are different. We have outlined below the different orders that can be made upon divorce or dissolution:

  1. Property Adjustment
  2. Lump sum
  3. Periodical Payments
  4. Orders relating to the parties’ pension.

An order for sale can be made, or an order transferring one party’s interest in property to the other in consideration of a lump sum payment. The timing for the payment of the lump sum will vary according to the circumstances of the case.

In appropriate cases an order can be made for one party to pay to the other maintenance until such time that the recipient’s financial circumstances are expected to improve. Sometimes an order for maintenance can be made on a lifetime basis.

To determine what order should be made, in addition to considering the factors set out under statute and the starting point of equality, the court will look at a number of other issues which include whether any of the assets are non-matrimonial assets, inherited or pre-marital assets. These assets can be treated differently to assets which are acquired during the marriage.

Generally inherited wealth will be shared only to the extent necessary to meet the claimant spouse’s needs. However, that principle will vary depending on when and how the inherited assets were received and how they were used during the marriage.

Financial proceedings involve consideration of a number of issues including in some cases how the financial disclosure was obtained.

2. Pensions

A number of different orders can be made in respect of a party’s pension, which can be a valuable asset that a party has been building up for the whole of their working life. Most commonly a Pension Sharing Order or an Offsetting Order is made. A Pension Sharing Order will involve a percentage of one party’s pension being transferred to the other party. In the alternative an Offsetting Order could be made whereby a claim is not made on the pension, but instead the recipient is given a greater share of the other assets.

Unmarried Couples

Our Private Law department can offer advice and assistance to unmarried couples. The law relating to the division of capital assets for unmarried couples is completely different to the type of orders that can be made upon the dissolution of a marriage or a civil partnership. There is a misconception about the ‘common law marriage’. The principal issues which can be addressed by unmarried couples are an individual’s interest in a property or financial provision for children.

Where two individuals either own a property together, or if one individual made a relevant contribution to a property on the understanding that they would acquire an interest in it, then a party may be able to make an application under the Trusts of Land and Appointment of Trustees Act.

If you own a property as ‘joint tenants’ the law assumes that you intended to own the property in equal shares.

This can be altered by you both signing a deed declaring otherwise or, in very limited circumstances as a result of assurances provided to the extent that they create a trust. The Courts have made it clear that it should only be in an exceptional case that a trust is created over a joint tenancy in the absence of a deed.

When a couple reside together and one of them owns that property in their sole name it can be very difficult for the other individual to establish an interest in that property. If that individual has made a significant contribution to that property on the assurance that they would acquire an equitable interest in it, then a trust may have been created granting them a share in that property. The law relating to trusts is complex and involves civil procedure rules unlike most areas of family law. We have extensive expertise in dealing with such issues and can advise you whether you are trying to establish an interest or to protect your property.

If there are children of the family, and their main care provider has a lower income or fewer capital assets, then it may be possible to make an application under Schedule 1 of the Children Act 1989. Such an application is to ensure that there is support for the children for their minority and could take the form of providing a lump sum or property to live in.

Pre and Post-Nuptial Agreements

Pre-nuptial agreements can be entered into before the parties marry. A pre-civil partnership agreement can be drawn up before a civil partnership. Some couples choose to enter into a post-nuptial agreement which is drawn up during the course of the marriage. The purpose of the agreement is to record in writing how the parties financial wealth should be divided in the event of a relationship break down. The law governing pre-nuptial and pre-civil agreements has evolved considerably in recent years with the case of Radmacher v Granatino 2010, setting out a number of factors that the court will consider in the event that there was a dispute about the agreement. Pre-nuptial and pre-civil agreements can be highly influential in particular where there has not been a significant change in the parties’ circumstances. If the agreement was entered into fairly, with both parties providing full disclosure of their assets, property and income and both parties receiving independent legal advice in sufficient time before the date of marriage, it is more likely than not that it will be upheld.

If you wish to discuss any of the issues mentioned above then please contact a member of our Family Law Team who will be able to discuss matters further.