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Financial settlement

When a relationship breaks down and a couple separates, there are various issues that need to be resolved. One of the most important issues is how both parties are going to support themselves now that two households are required. The division of assets and wealth between the parties is a necessary part of dealing with the separation, but if done correctly will mean that the assets are correctly and fairly divided between the parties. Our expert family lawyers can advise and guide you through the whole process to ensure the best outcome for your personal circumstances. Below we look at financial settlements in more detail and highlight the important issues that you need to consider.

Do I need a Financial Settlement if things are amicable?

Even in an amicable break up, you still should record the decisions regarding the separation of your wealth and assets in a court recorded financial settlement order to protect yourself in the future. If you are able to agree between you how everything is to be divided then this can be documented by a solicitor as a consent order and will be processed through the courts usually with your divorce (where applicable). This will be the quickest approach and should be finalised within 3-6 months.

If your separation is less amicable or there are more complicated financial issues, then solicitors can assist you to make these decisions and arrive at a suitable agreement. There are a variety of non-litigious methods that can be used here to help where there is disagreement. This includes mediation, negotiation and arbitration. Where emotions are already running high, these methods can be really helpful to prevent antagonising the situation and damaging family relations any further.

In cases where agreement cannot be reached via these methods then it may be necessary to involve the Courts. The judge here will then be able to decide how the couple’s finances work and what the division of resources should be between the two parties. The Court will make their decision by looking at the individual facts and circumstances surrounding each case – just as no two people are the same, no relationship is the same and any financial settlement needs to suit the requirements of those particular parties. The Court will make its decisions based on the principle of fairness to both parties, taking into account any children, whose interests will be regarded as one of the highest priorities.

What is included in a Financial Settlement Order?

In order for a fair financial settlement order, both parties must make sure that they are giving full and frank disclosure about their wealth, assets and income. Each party must include details of all of these items, including:

  • Any property such as the family home
  • Assets such as cars and valuable items such as artwork
  • Stocks and shares
  • Savings
  • Pensions
  • Assets located abroad
  • Debts are also included such as any mortgage and school fees

How does the Court decide what is fair?

The Courts have a discretionary approach on how resources and wealth should be divided when a couple separates. They will look at a range of issues to determine what is fair, including:

  • Assets belonging to either party
  • The earnings of both parties as well as any potential/future earnings.
  • The age and health of the parties and how this could impact their future earnings potential.
  • The length of the marriage and whether there was any time previous to this that the couple lived together.
  • The needs of the parties including their standard of living and the amount needed for their everyday living expenses.

One of the most important issues that are considered is the children involved. In these cases, the Courts will regard their needs as paramount.

The level of resources and wealth of the two parties will also determine what principle the Court will use to decide how they should be separated. If there are sufficient funds to cover the needs of both parties, then the Courts can use the sharing or equality principle, which states that the wealth and assets should be divided equally. However, in the majority of cases, the joint finances that were sufficient to cover one household will be over-stretched to cover the running of two separate households. In this case, the Courts need to use the needs principle. Generally, the financially weaker party (often the one that gains residence of the children) will be favoured in the split of assets and wealth. There is also the compensation principle that covers that situation where one party gave up their work in order to run the home and raise the family.

What Orders are included in a Financial Settlement?

The orders that can be used are either ongoing, one-off or future payments. The ongoing payments are periodical payments for things such as child maintenance and spousal alimony. The payments will be for a set amount of time on a regular basis paid by one of the parties to the other.

One-off payments are known as capital orders and can be lump-sum payments or a transfer of property rights where the legal ownership of an asset is transferred from one of the parties to the other to compensate one of the parties for their loss of interest in an asset (for example the family home).

Pensions are one of the main assets of most people and so this is an important issue to cover in any financial settlement order. They can be divided between parties in a similar way to any other asset.

It is sometimes possible to have a clean break settlement with a one-off payment that then removes any future financial commitment between the parties. However, you should always take legal advice to ensure that this is the most appropriate route for you to follow to correctly protect your needs.

Contact our Specialist Divorce Lawyers in Bradford

The breakdown of a relationship is a stressful time but ensuring that you and your dependents are financially secure will help to reduce future worries and stress. Our expert team of lawyers can advise and guide you through the whole process using our deep understanding and expertise surrounding these issues. Our specialist lawyers are sensitive to how difficult these matters can be and will provide personal, tailored advice based on your specific circumstances.

Call us on 01274 350 546 or fill out our online enquiry form.

Enquire now

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