Family Law Solicitors In Essex
Family Financial Settlement Lawyers
What is a financial settlement?
Once the divorce proceedings have commenced, the next thing you need to deal with is the finances. A financial settlement is a legally binding document that outlines what the couple have agreed on such as, child maintenance, spousal maintenance and division of property.
What orders can the court make?
It can be a little confusing and misleading when people talk about a Financial Order. The truth is, there are in fact, lots of different types of Financial Orders available.
What order you should apply for all depends on your individual circumstances.
Financial orders include:
- Consent order – details what your assets and debts are and how they should be divided. Many divorcing couples can reach these decisions amicably between themselves and therefore, there is no need to negotiate through a mediator, family solicitor or the court. Once the parties have reached an agreement, one of the parties may need to instruct a solicitor who will need to prepare the consent order and lodge it at court.
However, where a couple is not able to reach a decision, an application will need to be made to the court and the Judge will decide on your behalf. Before the court grants a consent order, the Judge must be satisfied that the consent order is fair and reasonable to both parties and include a “clean break” clause. Without the “clean break” clauses your ex-spouse can return at any point in the future and demand further money.
- Maintenance pending suit – this order will place an obligation on one spouse to make periodical payments to the other until the divorce is finalised or a further order is made. In some cases, it can also include legal costs to enable a spouse to pay their legal costs.
- Periodical payments (maintenance order) – this order will require one party to make a regular payment (usually monthly or weekly) to the other spouse.
- Secured periodical payments – an order requiring one party to make regular payments which are secured against property or assets to ensure payment. This order is rarely used but will be considered in exceptional circumstances.
- Lump sum order – an order for payment of a single sum. The court has the power to make an order for the payment of a capital sum or the transfer of property. The court can also order this sum to be paid in instalments.
- Property orders – several orders redistributing interests in property (usually the marital home). These include an order to transfer the property from one party to the other and the sale of the property which, if ordered, would detail how the sale proceeds are to be divided.
- Pension sharing orders – the court can order a pension sharing, which allows for one party to get a percentage of the other party’s pension.
- Variation of settlement order – gives the court the power to vary settlements or trusts that have been set up in favour of one party however, this order is rare.
How does the court decide on a financial settlement?
There is no hard or fast rule. However, the court will consider the children needs first so as to ensure secure accommodation.
Please see below specific factors that that the court must by law consider:
- The income, earning capacity, property and other financial resources of each party including what each person is expected to have in the future e.g. inheritance and pensions.
- The financial needs and responsibilities of each party.
- The standard of living enjoyed by the family before the relationship broke down.
- The age of each party and the length of the marriage/civil partnership.
- Any disabilities that each party may have.
- Contributions made by each party to the well-being of the family including contributions to be made in the future.
- The conduct of each party however, only if that conduct is extreme.
- The value of any benefit to each party that they will lose as a result of divorce e.g. pension rights.
How will the court consider division of the home?
The matrimonial property is given special consideration.
If there are children, the court will need to consider whether or not it is reasonable and financially possible for one of the parties with the children to remain in the matrimonial home. A Mesher Order allows the parties to defer the sale of the family home for a certain length of time or until a specific event takes place such as when the kids leave school or the party remaining in the home remarries.
If there are no children, and one party wants to postpone the sale of the property and continue living in the family home, they would need to apply for Martin Order.
When can I apply for orders?
Financial order – you can apply for a financial order any time after filing the Divorce Petition however, the court cannot make financial orders until the Decree Nisi has been pronounced.
Maintenance pending suit – a spouse can make an application for interim financial maintenance known as a “maintenance pending suit”. This is interim financial support between separation and the divorce being finalised.
Periodical payments – this is an order requiring either the husband/wife to make regular payments to the other spouse and are only payable after the marriage is finally dissolved.
Can I re-apply for orders?
If there has been a change of circumstances, either party can re-apply to the court to vary maintenance payments at any time before the order ends. Capital orders such as lump sum or property orders however, are usually final, meaning that neither party can re-apply to the court to vary the capital division at any time.
What if I remarry?
If you were to remarry, this will prohibit you from making a claim against your ex-spouse if you have not already initiated a claim before remarriage. Your remarriage will also end any entitlement to maintenance payments from your former spouse that was previously ordered.
What is the court procedure?
If an agreement can be reached between the two parties, a consent order will be drafted and lodged with the court to turn your financial settlement order into a legally binding document.
If an agreement cannot be reached outside of the court arena, one party will have to make an application to the court.
How to apply to the court for a financial settlement order
Step 1 – Application
We will prepare an application to be lodged with the court which will begin the process for you.
After submission, the court will list a hearing date for twelve to sixteen weeks ahead known as the First Directions Appointment (FDA).
At least 35 days before the FDA, both parties will need to prepare a financial statement, otherwise known as Form E and exchange their forms. Each party must disclose all finances. Following exchange of Form Es, each party will get the chance to question information that the other party has disclosed.
14 days before the FDA, both parties must prepare a brief and concise statement of issues, a chronology and a questionnaire which details any further questions they wish to ask or any further documentation required of the other party.
For each hearing both parties must also prepare an estimate of their legal costs to that stage.
Step 2 – The First Directions Appointment (FDA)
The court will give directions as to what questions need to be answered and whether any documentary evidence needs to be filed.
The court will also list the next hearing date for Financial Dispute Resolution Appointment (FDR)
Step 3 – Financial Dispute Resolution Appointment (FDR)
This hearing is intended to define each parties’ issues and encourage both parties to reach an agreement. If an agreement is reached then the court can make an order, thus concluding matters.
However, if an agreement cannot be reached then the Judge will give further directions and the matter fixed for a Final Hearing normally a few months ahead.
Step 4 – The Final Hearing
If an agreement has not been reached by this point then both parties must attend court to give evidence and be cross-examined by the other party’s legal representative.
Legal costs involved
Most often, each party is held responsible for their own costs. However, the Judge has the jurisdiction to order one party to pay the other party’s legal costs. The Judge will only make such order if it proved that one party has behaved unreasonably.
Parties can agree between themselves as to how much child maintenance, the parent with the children should receive. However, if this is not possible to reach an agreement, the Child Maintenance Service can calculate and collect child maintenance.
Get in touch – we are here to help
With a wealth of experience in dealing with financial settlements, our team is able to deal with all financial disputes, no matter how complex.
We offer all our clients a free 30-minute consultation with no obligation. So, let us help you understand what your options are and give us a call on 0203 876 7136.
Please note that you do not have to attend our offices and we can take your instructions by email, phone or Zoom video call conferencing.