Divorce rules changed significantly from April 2022, when the long-awaited no-fault divorce became law. We talked about this in a previous blog, so look there for more details.
As part of any divorce process, decisions need to be made about how to separate finances once the marriage is dissolved. As well as maintenance payments to help pay for children or living expenses, couples need to consider:
- Debts, loans and credit cards
- Savings and investments
- Any pensions or life insurance they have in place for the future
- Property and contents
- Businesses
- Vehicles
The agreement is called a ‘financial settlement’. It is made legally binding when the court approves a consent order drawn up by a solicitor.
How long does a financial settlement take?
How long it takes to decide on a settlement typically depends on how good or bad the relationship is between the divorcing couple and how complicated their finances are.
If a solution can’t be decided upon through mutual agreement or with mediation from a solicitor, a judge may need to decide how your financial affairs are split through a financial order. The court will look at several aspects, including earning capacity and how long the couple has been married, but children’s needs are always prioritised. For example, accommodation must be provided for children and therefore for their main carer too.
Going through the courts will be more costly, take longer and increase stress significantly so we advise that couples avoid this if possible. The exception is if the relationship was abusive when communication between the couple is not feasible and Legal Aid may be available to help cover the costs of legal proceedings.
What might you be entitled to?
There is a presumption that the assets will be shared 50/50 and the breadwinner and homemaker are treated equally. It is up to the party who feels they should be entitled to more than 50% to consider if any of the factors laid within the law apply to their specific situation. Other factors such as pre-nuptial agreements and the needs of the children can influence division of assets.
Where do you start?
We advise couples to begin planning their day-to-day finances by considering the following:
- Joint accounts, loans and credit cards. You may need to contact your bank to let them know you’re divorcing and open separate accounts for wages and salaries. Consider freezing cards to prevent any dishonest behaviour
- Assess your circumstances by considering what you have, how much you owe, what you earn, how much you pay out each month and then look at how everything could be split
- Try to discuss and factor in what is going to happen next. For example, is the family home going to be sold for two smaller houses or can one of you afford the family home on your own?
Why do I need a legally binding financial settlement?
Financial insecurity can be one of the most worrying aspects when going through a divorce.
The courts will always aim for the divorcing couple to be financially separated. This is called a ‘clean break’ and means there will be no ongoing financial disputes between parties. If a clean break cannot be achieved on divorce, the court can order maintenance to be paid for a fixed period with a view to arranging a clean break in the future.
In England and Wales any unresolved financial issues, even once the marriage is legally dissolved, mean either of the party can make a claim against the other’s wealth or future earnings. Claims can be made at any time and are only considered compromised after three years have passed since the finalisation of the divorce. This is one of the reasons why we always try to ensure money matters are settled fully as part of the divorce process wherever possible.
How can AGR Law help?
Our professional team work with you to negotiate a secure financial agreement, guiding you and identifying any loopholes along the way. We believe mediation is key to finding an amicable solution and keeping costs down, but we also have the knowledge and expertise to strongly defend your case if it needs to go to court.
Call us on 0116 340 0094 or email hello@agrlaw.co.uk to find out more.