Financial & Property
For any couple faced with separation, finances can often be a difficult area of discussion.
Barnes Clark Family Law will help to mediate and advise in the areas of Financial & Property with the aim of arriving at a satisfactory conclusion for our clients, with the minimum of emotional distress for both parties and any children involved.
Resolving financial matters within a divorce can often be more complex than the divorce itself. For this reason, financial matters are always dealt with separately and especially so from issues relating to children to help avoid any disagreements over finances spilling over and impacting effective discussions regarding child arrangements. It is therefore good practice to deal with these issues in separate letters and to open a separate file to deal with financial matters.
What is the Legislation?
The resolution of financial matters is governed by the Matrimonial Causes Act 1973. This Act sets out the factors that are to be taken into account when considering what is fair and reasonable. These factors are always taken into account whether financial issues are resolved by agreement, with the assistance of family mediation or ultimately decided by the Court.
How to reach a settlement of Divorce Finances?
There are different routes available to you, when trying to resolve financial matters:
- Agreement. Parties can have discussions between themselves and come to an agreement as to how assets are to be divided.
- Negotiation through solicitors. An agreement is reached between parties, with this assistance of solicitors. Negotiations usually begin after full and frank financial disclosure has been exchanged between parties, allowing for us to provide specific and informed advice.
- Mediation. We offer a mediation service. This a process whereby a mediator will work with both parties to help them come to an agreement as to how assets can be divided. If we are acting for you as your solicitor, our mediation service is not available, however, you can still attend mediation and we can assist (where necessary) in negotiations and advise you on the implications of any potential agreement. Once an agreement is reached in this way we will then convert the agreement into an order that is recognised and enforceable by the Court. For more information on mediation and how we can assist, please click here.
- Court proceedings. This course should only be taken when all other efforts to resolve matters have been exhausted. Court proceedings can be lengthy, time consuming, expensive and often highly emotional. In some cases however this is the only option available if a resolution is to be reached.
What orders can the Court make?
As every case is different, the law in this area is flexible. The Court’s aim is to achieve fairness based on the circumstances of each individual case. Whether being asked to make an Order or to approve an agreement reached between the parties (known as a consent order), the Court’s aim is to achieve fairness, and wherever possible to meet the parties’ respective reasonable needs. The Court’s decision will based on the circumstances of each individual case. The Court can make orders under the broad headings of capital, income and pensions.
In some cases it may be appropriate to make an order that there is a clean break, by inserting a clean break clause into the order, this will end any financial obligation either party may have to the other and therefore, preventing your spouse from making claims against your finances (income, pensions, savings etc) in the future and after your divorce has been finalised.
In other cases, some form of maintenance (excluding maintenance for children) may be suitable, which will give an ongoing obligation and therefore a clean break may not be possible. Even if a clean break order is achieved, maintenance will still be payable for any dependent children. If you have any issues regarding the receipt of child maintenance, you should contact the Child Maintenance Service.
The law also now provides for pension sharing on divorce, usually by way of a pension sharing order, but this may not be appropriate in all cases. The law surrounding this area is complex, and in some cases specialist financial advice may be required.
It is important to note that a divorce can be concluded even if financial issues remain unresolved. There may however be tactical reasons to delay concluding the divorce until financial matters are dealt with.
It is important to note that financial claims against your spouse and vice versa do not cease to exist automatically once your divorce has been finalised and therefore an order should be in place to prevent any claims against your finances being made. There are some bars to this, such as remarriage, but advice can be provided if necessary in respect of this.
In most cases the largest asset of the marriage is the home. In some cases the family home can be sold and the proceeds divided (not necessarily equally) between the parties. In other cases one party may be able to “buy out” the other, or the property may be transferred to one spouse with the other receiving a larger portion of other assets.
Wherever there are children the Court’s priority will be to provide them with a “suitable” home, but this does not automatically mean they will stay in the family home. In some cases, one person could stay in the family home with the other keeping an interest in that property until it is sold, perhaps when the youngest child reaches 18. It is important to note that this does not happen very often.
Please be aware that even if your spouse owns the family home in their sole name, you are not barred from making any claim against it.
What else should I consider?
You should consider taking certain steps in respect of the family home at the outset of proceedings.
Often, where both parties jointly own the family home, they do so as ‘joint tenants’. Therefore, the property is held by both parties and if one party were to die, their share would automatically pass to the survivor, irrespective of any Will or proceedings taking place. To stop the automatic passing of the deceased party’s share of the family home to the other, you can sever the tenancy and become what is known as ‘tenants in common’. The property is still owned by both parties, but if one party died, their share of the property would not automatically pass to the survivor, but in accordance with their Will (if they have one) or under the intestacy rules.
If you choose to sever the tenancy you should update or create a Will, as without one, your share would still pass to the survivor under the rules of intestacy.
If the family home is held in the sole name of your spouse, you should consider applying to the Land Registry to place a Matrimonial Home Rights Notice on the property. This is placed on the property title and prevents your spouse from selling/transferring the property without your knowledge and consent.
Can I enter into a separation agreement instead?
Yes. Although if you are going to initiate divorce proceedings we would advise seeking an Order from the Court instead.
A separation agreement is a contract between you and your spouse, setting out the financial terms of your separation and how assets are going to be divided.
However, when determining which step to take, you need to be aware of the following:
Separation agreements are not legally binding and will not automatically become legally binding upon divorce or dissolution. You will need to obtain an Order from the Court in respect of your financial settlement once divorce proceedings are initiated.
When applying to the Court to obtain an Order within divorce proceedings, if you entered into a separation agreement first, the Court still has jurisdiction to overrule it. However, the Court will consider parties needs at the time any application is made; whether both parties had all the information available at the time the agreement was entered into, with legal advice and whether parties’ circumstances have changed since that date, before any decision is made.
Should either party breach any term of the separation agreement, any dispute would have to be resolved in the Civil Courts.
Separation agreements can be a useful document for unmarried couples, when determining how assets should be dealt with upon the breakdown of the relationship. They can also provide some protection if you do not want to initiate divorce proceedings straight away, but the above needs to be considered. For more information, please click here.
For further information, or to arrange an appointment please contact us on 01274 861096 (Liversedge) or 01423 637272 (Harrogate) or email firstname.lastname@example.org. Please note that we offer a free half an hour consultation.
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