Financial Disputes

Disagreements over financial arrangements can sour even an amicable split. People often make false assumptions, such as the "guilty" party receiving nothing, or assets automatically being divided 50-50.

The legal system for the financial aspects of divorce, called "ancillary relief", is a very complex, discretionary system, with the interests of any children at it's heart.

We can give you realistic advice from the outset as to your entitlements. We will always endeavour to negotiate an amicable settlement, while taking a firm line where necessary, to ensure our client's legal rights are respected.

We understand that any financial settlement may have to last you and your family for life. We have the background and experience to expertly negotiate regarding maintenance, property (including the former matrimonial home), investment assets and pensions. We can advise upon emergency "maintenance pending suit" where necessary after separation. 

We have the skills to maximise the possibility of a "clean break" settlement so you can re-build your life with financial security.

Here are some important features regarding the financial implications of your divorce / separation proceedings.

During the course of the proceedings, it will be necessary to consider how best to arrange and distribute the matrimonial assets, such as any house you may own, savings, investments and household contents. There are options available Under the Matrimonial Causes Act 1973 and are as follows:

1. Lump Sum Order - This is when one party pays to the other a sum of money either in one chunk, or by instalments. It is sometimes connected to a transfer of assets as payment for that person's share of its value.

2. Property Adjustment Order - This is where one party transfers it ownership or rights to a particular asset, such as the house, to the other party. Alternatively, there could be declarations of the value of each party's share in the asset which may not necessarily be equal. In brief, the ownership and where appropriate the occupation of the former home, would be decided by this type of Order.

3. Order for Sale - This is where an asset will be sold and the net proceeds after payment of any liabilities will be divided between the parties in the most appropriate way, bearing in mind the facts of the case. The Order for Sale will often be deferred to protect the interest of any children of the family.

4. Periodical Payments - These are regular payments of maintenance made from one party to the other, or on behalf of the children.

5. Pensions – pension sharing orders, “ear marking” orders

The Court’s main consideration is the interest of any child of the family and this is usually reflected in who has priority to occupy the former matrimonial home. The Court can order an outright transfer, or sometimes make what is known as a ”Mesher“ Order whereby the parent with care of the children has the right to stay in the property (unless they remarry, cohabit etc.) until the children are no longer dependent and thereafter the equity is divided in percentage terms that are usually more favourable to the parent with care of the children.

It is important to understand that there are no specific rules which dictate these issues, because each case will be decided on its own facts and circumstances. It is always better to agree a settlement by negotiation otherwise the Court will be forced to decide any outstanding issues and the outcome may not be as good as you would have hoped.

In deciding such a case, the Court will consider the “Section 25” criteria i.e. -the age of the parties, length of marriage, needs and resources of both parties, as well as any children, earning capacity, any disability, financial contributions made or the conduct of the parties etc. The paramount consideration will be the welfare of any relevant children.

However you should bear in mind that the recent trend in court decisions has, providing needs are met, been more towards an equal 50-50 division of assets.

Please note that simply because an asset in the joint names does not necessarily mean that the Court will preserve the 50/50 ownership. If there are any assets in the name of your spouse only that could be disposed of before the case is concluded, it can be possible to prevent this by lodging your statutory right of occupation at the Land Registry in relation to your matrimonial home or an injunction to stop the assets being dissipated. If you have a joint bank account then most banks will freeze it upon demand until the settlement is concluded and you also need to make enquiries regarding overdraft, credit card etc liabilities to make sure that your partner could not incur them without your consent.

Also, there are two ways of property can be owned jointly. If it is owned as "joint tenants "then it will pass to the survivor if one party dies, regardless of what is in any will, and it is usually shared 50-50. If the property is owned as "tenants in common "then it can be controlled more by a will and can be different than 50-50 percentages. If you wish to ensure a property does not pass automatically to your spouse or partner we can serve a notice on them called a severance of joint tenancy which converts it to tenants in common, and it can be registered at the Land Registry.

It is now possible to make claims against pensions, although most Courts prefer to set the pension claim off against another asset if possible. Otherwise the court can order a pension sharing order, where one spouse's pension is effectively split to partly belong to the other spouse, either remaining in the same pension scheme or being put in a different pension scheme. There is also a possibility of an earmarking order whereby a share is only received of the pension upon retirement. Pension sharing orders only tend to happen in longer marriages where there is a substantial disparity in the party's pension provision, its value is usually assessed by the CETV (cash equivalent transfer value). Sometimes Decree Absolute can be delayed if it will affect your entitlement under your spouse’s pension while the case proceeds.

The procedure "out-of-court "

Prior to meaningful negotiations taking place, it is essential that both parties, and more importantly their legal advisers, have “Disclosure” from the other party. Obviously it is impossible for any lawyer to give advice upon a financial settlement when they do not have full details regarding the finances of the other party. It will be necessary to go through this process even if you believe that your spouse knows all about your financial assets, as there needs to be a record of the basis upon which the settlement is made, for it to be final and binding.

DISCLOSURE usually consists of providing the following information :-

1. Your estimate of the value of the former matrimonial home and any other properties

2. information about the amount outstanding on any mortgage (the redemption figure)

3. your current net income with wage slips and most recent P60

4. details of any other assets such as endowment policies, their surrender value

5. other capital assets such as savings, shares etc

6. details of any bank accounts that you own

7. details of any business interests you have

8. the cash equivalent transfer value of any pension

This list is not exhaustive and will obviously vary from case to case.

Please note that just because you have been asked to provide information regarding a particular asset, does not necessarily mean that we think the other party has a claim against it.

Sometimes there is informal disclosure whereby the information is just given by letter to the other party, however the family Law protocol recommends that disclosure is given via something called a “form E” which is a sworn legal document.

Whichever method is adopted, it is imperative that you give full and frank disclosure. Leaving anything out or giving misleading information could at best lead to any settlement being overturned, or at worst could mean you are accused of perjury.

If a settlement is agreed it needs to be approved by the court to be binding.

If negotiations, including mediation, are unsuccessful than one or the other party will have to issue court proceedings to break the deadlock.

The Court procedure , if needed, is as follows –

1. A party has to file a court a form A to commence proceedings

2. the court will give a date by which both parties have to file a form E giving full Disclosure of their financial situation with documentary evidence - it is important that both parties give full and frank disclosure of their financial situation so the solicitors and court can judge what is a fair settlement. An agreement may only be valid with such disclosure.

3. each party is allowed to table questions and requests for documentary proof concerning the other sides form E.

4. there is a FDA (first directions appointment) at which the court will decide what questions have to be answered and what further directions have to be given to progress the case.

5. there is an FDR ( financial dispute resolution hearing,) at which the court will spend considerable time and pressure attempting to achieve a settlement in the case. The judge conducting that hearing will not conduct any final hearing.

6. Final hearing - if the case can still not be settled then there will be a trial with both parties giving evidence, being cross-examined etc and the court will impose a solution on the parties, fortunately these days this is relatively rare.

If you feel that your spouse has not declared an asset then a Court Order can be made forcing them to do so. If they conceal an asset it may be possible to get an Order or agreement set aside afterwards. If a spouse deliberately misleads the Court then they can face criminal charges.

Negotiations may successfully resolve the matter, thus, saving time and costs once we are in possession of all the relevant information we can advise you to make certain proposals or consider any proposals made by your opponent.

If any agreement is reached, then the terms can be embodied in an agreed Court Order, which will be binding upon both parties. The purpose of such a Court Order would be to make it 100% certain that the parties cannot claim against you in the future.

When maintenance is sought, this will be based upon both parties income and outgoings/commitments. The Court do have power to decide issues and maintenance between spouses, but not children, except in certain cases. It is possible to make an application for interim maintenance if no financial support is being provided. Applications for maintenance in respect of children would have to be made to the Child Support Agency and usually the absent parent will have to pay maintenance for the children as assessed by the Agency. There is a right to appeal if either party is dissatisfied with the assessment. Please note that if you are intending to remarry then it is essential that the financial settlement is properly concluded by a Consent Order, or that you have applied to the Court for a ruling upon the matter, before you remarry or your right to ask the Court to get involved will be lost. The usual child support agency figures are 15% of net income of absent parent for one child, 20% for two children and 25% for three children or more.

Mediation

If there are any financial or other issues to be resolved, then we shall endeavour to come to an amicable settlement with your spouse, providing it is also in your interest and you consent. However, it is important to understand that various mediation and counselling agencies may be able to assist with your negotiations, although the Court will retain an overall jurisdiction to decide outstanding issues. It is obviously preferable that settlement can be achieved through negotiation, rather than a Court Order, from the point of view of stress, delay and costs. The Mediation Service is offered privately through Family Mediation Services who are very experienced in dealing with these matters. They are patient, sympathetic and give advice which is positive and constructive. If you wish to consider using these agencies, then we can make the necessary referral. Mediation usually takes place at the offices of the agency concerned and is informal by nature. It will involve meetings with the advisor and your opponent, when all your concerns will be fully discussed. Hopefully, a settlement will be achieved and we can advise and assist you in relation to any legal implications. You may have to discuss the case face to face with your spouse in the presence of a conciliator and any agreement is only binding if it is later approved by the Court.

Maidments offers specialist advice on all aspects of family law to private clients throughout the Northwest of England. We have particular expertise in divorce, separation, financial, children issues and domestic violence. Please note we only offer legal aid in serious child protection cases.