Financial claims in divorce

A financial order is an agreement approved by a judge, or a final order made by a judge at the end of court proceedings. It is legally binding on you both.

Where possible, we will encourage you to reach agreement without starting financial remedy court proceedings. It is always better for you to reach agreement and feel like you have been involved in the process, rather than the court imposing an outcome on you.

You may wish to consider alternatives to court such as mediation, collaborative law, a private settlement hearing or arbitration.

Even if it is necessary to start financial remedy court proceedings, it is possible to reach a settlement through discussions before the judge imposes an outcome.

Financial remedy is the name of the court process to resolve financial matters between you and your spouse on divorce. It’s how the court deals with all aspects of financial settlement, including transfers or sale of property, payment of lump sums by one party to the other, arrangements for maintenance, both spousal and in relation to your children, and how pensions are to be divided. It can also include how shares in a business are to be dealt with, and who is to pay school fees, amongst other things.

The court has the power to make a wide range of orders to settle financial matters between a divorcing couple. We will advise you as to which are appropriate for your family.

The Form A is the form which starts your application for Financial Remedy at court. Sending the Form A to the court sets in motion a number of steps to facilitate the court assisting and determining the financial claims on divorce. The first of these will be to require full financial disclosure from you and your spouse, followed by an initial hearing, the First Appointment.

The form now requires you to confirm whether you have attended a Mediation Information and Assessment Meeting (MIAM). The intention is to encourage couples to consider mediation, and other non-court based ways to resolve the financial issues arising on their divorce. There are certain exemptions to the requirement to attend a MIAM which we can discuss with you if appropriate and we can also recommend suitable MIAM providers.

Form E is the financial statement required to be completed and signed by you and your spouse prior to the first hearing. It is designed to be a comprehensive summary of your financial circumstances and those of your spouse. It requires you to set out all aspects of your financial circumstances including details of all properties held, all bank accounts and investments, any interest in a business or partnership, pensions and your income.

It also asks you to set out your needs for the future, such as how much you would need to rehouse and your likely future expenditure. This will help the court determine your future needs and how they can be met from the family assets.

The form must be supported by documentary evidence, the requirements of which can seem onerous. It is, however, essential that you and the court have full knowledge of the family’s financial circumstances before a final outcome can be put in place.

The starting point on all divorces is that the assets should be shared 50/50. There are a number of factors which must be considered to determine whether a 50/50 outcome would be fair, or whether a departure from equality is required. The most important factor is what each party requires in order to meet their needs after the marriage ends. This is not a ‘one size fits all’ exercise and we will advise you on a bespoke basis.

The exercise for the court will be to determine which assets are ‘matrimonial’ and which are ‘non-matrimonial’. As a rule of thumb, those acquired during the marriage will be ‘matrimonial’, even if they are in your sole name. There are of course exceptions which we can discuss with you. Those brought into the marriage or built up after separation (if you have been separated for a while) may be ‘non-matrimonial’.

The classification of the assets may impact upon the way the court deals with them and whether they form part of the pot to be ‘shared’ between you. Even if an asset is classified ‘non-matrimonial’, the court may still be used to meet need if necessary.

The court will decide, based upon the details of the inheritance such as when it was received and how it has been used, whether it should form part of the pot of assets for division. If the money has been kept entirely separate, then it will be easier to say that it should be kept by you. If it has been used to meet the needs of the family, such as to buy a house or pay down a mortgage, it will be harder to argue that you should retain the benefit of those funds.

Even if inheritance has been kept separate and is therefore treated by the court as a ‘non-matrimonial’ asset, it will still be considered a financial resource available to you and can be used to meet need if necessary.

The key issue with inherited assets is whether there are other assets of the marriage which can meet your spouse’s and the children’s needs. If there are not sufficient assets of the marriage to do so, the court may award a greater share of the matrimonial assets to your spouse as you have the resource of the inherited money.

The family business can be both a capital asset and an income stream. It may be necessary to seek expert advice from an accountant as to the value of the business or the income it can sustainably provide. The approach of the court will be influenced by the size of the business, the involvement of both spouses and the size of their individual shareholdings. We have an experienced team of commercial solicitors who can assist with any issues arising for your company as a result of your divorce.

If it was part of your financial agreement that you were to pay spousal maintenance, and your ex-spouse were to remarry, you will no longer have to pay the spousal maintenance.

You will continue to be liable to pay child maintenance whilst your children are at school.

Child maintenance is dealt with by the Child Maintenance Service (CMS). It is a set calculation based upon your gross income. You can pay more than the CMS rate but you have to pay the CMS minimum. You can calculate the appropriate amount for your children using the calculator here: www.gov.uk/calculate-child-maintenance

You may need to first agree the arrangements for the children with your ex-spouse as the CMS rates offer a discount for the number of nights the children stay with you. Please see our guidance regarding child arrangements.

If you and your ex-spouse agree that the children should spend equal amounts of time and responsibility with you both (such as a week on/week off arrangement), then there may be no child maintenance to pay.

If you and your spouse signed a prenuptial agreement prior to your marriage, or a post nuptial agreement at any stage during your marriage or on separation, then this is a relevant factor which will shape the negotiations to resolve your finances on divorce.

If it is necessary to go to court, then the judge will consider whether the nuptial agreement is fair to both of you, and meets your respective needs and those of any children you have. If you complied with certain formalities prior to entering into the agreement (such as you both taking legal advice and giving disclosure of your financial circumstances to each other), then there is a strong argument that the nuptial agreement should be upheld. The judge does retain a broad discretion, however. Please see nuptial agreements page.

Payment of interim maintenance (maintenance you pay before you reach a full agreement) will depend upon your and your ex-spouse’s financial circumstances. If, for example, you are a high earner and your spouse has stayed at home to look after the children and doesn’t have an income of his or her own, then it is likely that some element of interim maintenance will be needed.

Depending upon your circumstances, and the needs of your children, it may be reasonable to expect your ex-spouse to seek a job or apply for some state support. Payments made towards the mortgage or bills on your family home can be taken into account, but remember that your ex-spouse will need a separate income to look after him or herself and any children you have.

The level of interim maintenance doesn’t necessarily dictate the amount you may have to pay longer term – but we do advise that you discuss the amounts with your lawyer prior to reaching an agreement with your ex-spouse.

The cost of resolving divorce and financial settlement depends on whether you are able to negotiate a compromise with your husband or wife. If you are able to easily negotiate a settlement, your legal fees could be in the region of £5,000. If negotiation is not successful, and court proceedings are necessary, then costs will be higher but the level of these will vary depending upon the individual facts of your case.

There are a number of options for you to choose from if you do not want to use the courts. Please refer to our guide on financial remedy options.

We will discuss this with you at your initial meeting. If you do not have your own resources, then we can provide information to you regarding litigation loans. If court proceedings are required, and your ex-spouse has sufficient resources to assist, then we can also consider an application to the court for an order that your ex-spouse makes financial provision for your legal costs.