It’s all about priorities – What are your priorities in life? Most of us don’t think actively about this question until we are forced to and once a person starts to think about the answer to this question, the results can be quite surprising.
As a leading family lawyer, I find myself asking my clients this question more and more. I want people to focus on exactly what it is that they want to achieve from matrimonial proceedings and the reasons for their choices.
Most people going through a divorce are usually dealing with a whole host of emotions ranging from sadness and anger to feelings of embitterment, resentment and often an understandable desire for revenge. These feelings are only natural when a relationship comes to an end but it is important that you have someone on your side who will encourage you to concentrate on the important issues and allow you to focus in on your priorities.
What is your priority?
Most people’s first thoughts are about their children: “How often will I see my child? Who will make the important decisions in my child’s life? Where will they live and who will they live with? ” Inevitably linked to this is the question of what will happen to the matrimonial assets?
Matrimonial assets are any assets acquired during the course of the marriage. They include the family home and business, pensions, joint bank accounts as well as any property or assets held in either partner’s sole name. Crucially, this can include property or assets that were acquired before the marriage. A financial settlement or agreement about what to do with these assets must be reached between the parties or else the Court will decide who gets what based on what it deems fair, just and reasonable.
It is often difficult and too emotive for a divorcing couple to reach an agreement on their own as to how the matrimonial assets should be divided. Each partner usually has a different view as to what is in their opinion, a fair settlement.
It is crucial that each partner have sensible and pragmatic advisors whilst negotiating a financial settlement as there are no strict rules governing any financial settlement and it is not always the case that assets will be divided equally between the two of you.
How are Matrimonial Assets divided?
The Courts in England and Wales consider the merits of each party’s entitlement and the surrounding circumstances on a case by case basis. There are number of factors that are taken into account when parties negotiate or when the Courts decide on what is a fair financial settlement.
Some of the factors that the court considers are:-
- The welfare and security of any children in the family.
- Each partner’s financial needs, obligations and responsibilities.
- The length of the marriage.
- The standard of living enjoyed during the marriage.
- The age of each partner and whether there are any health issues.
- The contribution that each partner has made (or is likely to make in the foreseeable future) to the overall welfare of the family, including any contribution by looking after the home or caring for the family.
- The conduct of each partner (but this is rare).
- Whether there are any benefits that one of the parties will lose upon divorce, such as the ‘benefit’ of the other partner’s pension.
The Court will look at both spouses’ current income, current earning capacity, property, future income and earning capacity before it decides upon a fair financial settlement.
If there is a significant difference between the spouses’ earnings/earning capacity, then the courts normally order that the wealthier spouse give a larger share of the matrimonial assets to the financially weaker spouse.
Similarly if there is child of the family, then the courts will be concerned to ensure that there is adequate housing for that child and the parent with whom the child resides with.
In relation to assets that were acquired before the marriage, any financial settlement will depend upon how those assets were held and treated during the marriage and whether there are enough other assets and property acquired during the course of marriage which can deal with each of the needs of both parties.
Types of Financial Settlement Orders a Court will make
The Clean Break
The Court will always consider the option of a clean break. A clean break simply means that once the matrimonial assets have been divided between the parties, then that is the end of the matter and neither of them will be able to claim financial relief in the future.
Lump Sum Payments
This does what it says on the tin. It involves one partner paying money to the other in lump sums. These sums can be paid in exchange for one partner’s share of the matrimonial assets or sometimes even in place of spousal maintenance.
Spousal Maintenance Orders
A spousal maintenance order (aka periodical payments/alimony) is when one partner makes regular payments of maintenance to the other in order to support them financially after the divorce. These payments usually end when one or both of the partners remarries, dies or if the Court varies the payment in some way.
Sometimes when there are not enough assets to be divided in a meaningful way, the Court can also order a nominal payment of maintenance. This is to ensure that if the financial circumstances of the parties change in the future, then one of the partners may apply to vary or change the order.
Transfer or sale of property
In relation to the matrimonial home, the court can make a variety of orders relating to property, including if necessary:
- An order to sell the property and divide the proceeds.
- An order to postpone the sale for a period ( known as a ‘Mesher’ order)
- An order that the property be transferred to one partner.
- An order that property be transferred subject to payment of a lump sum.
Pension Sharing Orders
The Court can order that any pension policies be divided between the partners, normally with half of the pension being transferred into a new pension fund for the benefit of the other partner.
How can you reach a financial settlement?
Direct discussion between parties
Sometimes separating couples are able to reach settlement amicably by negotiating amongst themselves. It is important to remember however that any such agreement is not legally binding unless it has been sanctioned and sealed by an order of the Court. Separating couples should consult with solicitors to ensure that their agreement is reasonable, fair and is capable of being endorsed by the Court.
Mediation is a process whereby a neutral third party (a mediator) assists both parties in reaching a financial settlement. The parties are assessed to see whether the mediation process is suitable and then negotiations can begin. Once an agreement has been hammered out through mediation, the agreement will need to be finalised into a court order and formally sealed by the Court.
Negotiation through solicitors
Often the most cost effective way of reaching a financial settlement is through solicitors. I have found that open honest and frank disclosure of your financial situation early on in the negotiations is often crucial to a quick settlement being reached. Once an agreement is finalised this can then be drafted into a binding and lasting court order.
The Court Process
Unfortunately there may be occasions where parties cannot reach a financial settlement and an application has to be made at court in order to obtain a financial remedy.
Once an application is made, the Court will set out a timetable: There will normally be three Court hearings:
1) First Appointment Hearing
2) Financial Dispute Resolution Hearing and
3) A Final Hearing.
Each side must exchange financial information (by completing a Form E). It is this document that the court uses to reach a financial settlement. At each stage above, parties can attempt to negotiate and reach a financial settlement.
Ultimately seeking advice from a solicitor at an early stage will save you time and money. Financial settlements on divorce are quite complex in nature and can become very expensive if legal proceedings are required. The best option for spouses is to negotiate through their solicitors and reach an amicable agreement as to how the property and assets in divorce should be divided.
In order to do this, it is necessary for both parties to focus in and prioritize their needs. What is most important to each partner? Is it the family home? Is it regular maintenance payments? Is it more important for one partner to have a clean break and no further contact with the other after the divorce?
By focusing on what is needed, you can make sure that you don’t end up with the dog when what you really wanted all along was that 70’s collection of Beatles Records… Remember, sharing is not always caring!