Financial Settlements

Settling the finances between yourself and your partner is separate to the divorce proceedings, although it is sensible for this to happen at the same time. If an agreement cannot be made then an application can be made for the Family Law Court to deal with a financial settlement. If an agreement can be reached your divorce Solicitor can draft a Consent Order for you.

When signed by both parties this document can be lodged with the Court for approval at any time after the Decree Nisi is pronounced. When approved by the court, this agreement will become legally binding on both parties.

When deciding upon financial arrangements, the court will aim to reach a fair outcome based upon the reasonable needs of the husband and wife.

The court will consider all circumstances including:

• The welfare of any children under the age of 18
• The reasonable earning capacity, property and financial resources of the husband and wife for the foreseeable future
• The financial needs of husband and wife for the foreseeable future
• The family’s standard of living before the breakdown of the marriage
• Any physical or mental disability of the husband or wife
• The duration of the marriage and the ages of husband and wife
• Any contributions from husband and wife, including looking after the home and caring for the family, for the foreseeable future
• The conduct of husband and wife if applicable to the court
• Any value of husband and wife which would benefit the other, if the divorce would stop this benefit (such as pensions)

If you are considering a financial settlement it is very important that you seek advice before agreeing anything (especially concerning mortgages or endowment policies).

If one of the husband and wife earn substantially less than the other, they may be able to apply for maintenance. The amount of maintenance will depend on the amount of income and each party’s reasonable needs. A 'clean break' settlement capitalises maintenance payments so that the lower earning party receives a greater share of the capital assets.

The court can intervene if they suspect that a party has (or is about to) dispose of assets in an attempt to frustrate the other party's financial claims. The courts’ powers in these circumstances can be put into action during the financial application, or sometimes after an order has been made.

They include:

• Stopping transactions being made or assets from being transferred out of the country. The court can also set aside transactions that have already been made if they were intended to frustrate the other partner.
• If an asset was sold to a third party in good faith, the court cannot set the transaction aside.
• The court will assume that a transaction was intended to frustrate your partner if it was completed less than 3 years before the claim, unless there is strong evidence otherwise.
• If the intention to frustrate a financial claim cannot be proved, the court has inherent powers to stop someone from trying to defeat a financial claim.

Contact us as soon as possible if you believe your partner has acted, or will act, in this way and we can take steps to protect you.

One of the most complex and important financial tasks in the break-down of a marriage is dividing assets accumulated in pension schemes.

It is therefore essential to obtain legal advice before considering any financial settlement. Who gets what is based upon a range of criteria and also the provisions of the particular scheme. A final settlement involving a division or other dealing in respect of a pension will need to be confirmed by a court order. It is important to note that upon divorce, beneficiary designations, if applicable, should be changed on pension schemes. In addition, consideration should be given to changing your will as your circumstances change.

The Court can:

• 'offset' if other capital is available they are used to pay the partner without a pension
• a sharing order which divides the pension to then be invested separately
• 'earmark' where a share of the pension is paid to the partner as it is received. Death in service benefit is also included. If one of the couple changes job it may affect death in service benefit, and if the partner receiving the order remarries the order no longer takes effect.

Property issues in financial settlements are resolved depending on the needs and resources of each partner. This can include:

• Sale of the property and the proceeds being split
• Ownership being transferred to one party; either for a lump sum or protected future interest
• The property is sold at a later date and the parties interests are adjusted accordingly.