Reaching a financial settlement after divorce

In broad terms these answers will be equally applicable for divorce and the dissolution of a civil partnership so words such as divorce and spouse can be interchanged with Dissolution and Partner.

1. Our divorce was based on ‘unreasonable behaviour’ or ‘adultery’; does that have an impact on our finances?

It is very unusual for the reasons stated in the divorce petition to impact on finances – the divorce is usually seen as a separate process to the finances, for the purposes of dissolving the marriage.

2. Will we have to go to Court to reach a financial settlement?

No, many financial cases are resolved amicably whether by direct negotiation, mediation, collaborative law or solicitor based negotiation. At Tees we offer the full range of these services to try and help you to resolve your situation without the need for the necessity to attend at Court.

If an agreement is reached it will still need to be approved by the Court, to ensure it is reasonable and to make it legally binding.

3. What if we can’t agree on how to separate our finances?

If an agreement cannot be reached, possibly due to one or both parties being uncooperative or unreasonable, then it is likely one party (or both) will submit an application to the Court. However it is still possible to reach an agreement within the Court process. The majority of Court applications are resolved amicably, before a Judge needs to make a decision at a Final Hearing.

However, if you and your spouse still cannot agree, ultimately a Judge will make a decision at a Final Hearing.

4. How is a divorce settlement achieved?

We base our advice on legislation, case law and our considerable experience to give you the best possible guidance on how your circumstances might be viewed by a Court. The key factors which will be taken into account in an assessment of how any capital should be divided, as well as whether or not income should be shared, are as follows:-

  • Children – their financial needs as well as other factors that may affect their future wellbeing; 
  • The financial needs of you and your spouse; 
  • The length of the marriage and your respective ages; 
  • The current earnings of each party and the potential earning capacity of each party now and in the future; 
  • Health issues affecting either you, your spouse or any children; 
  • The assets of each party including pensions; 
  • The standard of living you have had during the marriage; 
  • The financial and non-financial contributions (such as caring for children and running the house) that each of you has made to the marriage;
  • It is only in very exceptional circumstances that the conduct of you and/or your spouse is relevant when dealing with financial matters.

5. What is a ‘clean break’ financial settlement?

A clean break is where no ongoing financial commitments remain between you and your spouse. The phrase ‘a clean break’ is particularly used as the opposite of an order where there is ongoing spousal maintenance payable, usually monthly, from one spouse to the other.

A clean break is only possible in relation to the financial claims between spouses. It is not possible to have a clean break in relation to financial obligations towards your children.

6. Who pays the legal fees for a divorce settlement?

In most cases, both parties will have their own solicitor and will be responsible for their own legal fees. Only in unusual circumstances will the court consider conduct in the proceedings or the process of disclosure as a justification for an order for costs being made against the other party.

7. What happens to the family home?

The family home will almost always be an asset of the marriage and will therefore be included in the financial negotiations. Divorce settlement negotiations start from the point of a broad equality in division of assets. If one spouse wishes to retain the family home, they will need to have enough other assets to be able to offset the value of their spouse’s share of the home by transferring assets of that value to their spouse.

If not enough assets are available to achieve this, then the family home may have to be sold so that the equity contained within it can be split.

In some situations, particularly if there are children, it can be possible to be more creative, for example, one spouse could stay in the family home with the children, and the spouse leaving the home could retain a defined financial interest in the property, which they will realise at an agreed future date.

8. One party is living with a new partner – is this relevant? 

It is often an emotive issue; however, because cohabitees (unmarried couples) do not have the same rights at law as married couples, the Court does not automatically treat cohabitation as a reason for a lower financial award. 

It can however be relevant if cohabitation is taking place, as household expenditure in that household is shared – reducing the demands on income.

It is not possible for matrimonial claims between spouses to extend to a new partner. The new partner’s financial position may be relevant, but only to a limited extent and there can be no claim made against the new partner’s personal assets or income.

9. What are the key ‘Dos’ of finances in divorce? 

Communicate - If you don't share information with your spouse or your solicitor, the work it will take to obtain the information is likely to increase your costs. Also, if your solicitor does not have all the material information – they cannot advise you fully or properly.

Be proportionate - Some things are worth focusing on in negotiations and some things are not, we will use our legal experience and knowledge to advise you on where your focus should be.

10. What are the key ‘Dont's’ of finances in divorce? 

Over-focusing on details - A fair split is not necessarily an exactly equal split, but even if the intention is to split everything exactly equally, in practice this is difficult to achieve as values of assets can change overnight. Trying to be too precise might increase the time and cost it takes to resolve and implement your agreement and may be counterproductive. 

Unrealistic expectations – Inevitably, divorce will have financial repercussions. One household is about to be split into two. Unfortunately, there will always be a financial impact. We will ensure you are given realistic advice from the outset, to help your understanding and expectations.

11. My Wife is English, I am European and we are talking about divorce. I have assets and believe the English Court will be more generous if we divorce in England. What can I do?

You should take advice from an English Lawyer and from a lawyer in the Country where you wish to initiated proceedings and establish the likely financial outcomes in those jurisdictions. 

If, based on that advice, you issue proceedings in the "foreign Court" and provided that Brussels II (the convention that covers disputes on jurisdiction) and you issue the proceedings first those proceedings will take precedence and any proceedings issued subsequently by your wife in the Court of England and Wales will be stayed

12. Can I use the English Courts to enforce a foreign Maintenance Order? 

The EU Maintenance Regukation (EC Council Regulation 4/2009) came into force on the 18th June 2011 and so, apart from Denmark, and foreign maintenance order can now be directly enforced in the UK with very limited grounds for refusal. 

13. Can I apply to the English Courts for relief from a financial order made abroad?

The English Courts can make orders for financial remedy following an overseas divorce. There is a jurisdiction test involving domicile, habitual residence and ownership of property in England and Wales which, if satisfied, means you can apply for the leave of the court, which is usually granted, to make an application for the financial remedy you seek. This is allowed under Part iii of the Matrimonial and Family Proceedings Act 1984.

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