Finances and divorce
When a couple gets divorced, a financial consent order is almost always required to confirm the division of assets. This is usually drafted by a family law solicitor and then approved by the family law Court, to make it legally binding.
The Court sees marriage as a partnership, so when the partnership is split up, its aim is to divide its associated finances equally and fairly through a financial settlement. The types of things that are included in a financial settlement include:
This can include:
- The family home
- Any rental properties and associated income
- Shares in commercial properties
- Business assets
- Cars or other vehicles
- Valuable possessions
Especially relevant if one of you has built up a much larger pension than the other and won’t be able to have the same or equal standard of living by themselves without part of the other person’s pension.
This can include:
This will almost always include maintenance for any children, if you have children together before you are divorced. It may also include maintenance for your spouse if they are in a financially weaker position than you are.
Endowment or life insurance policies
Often these are ‘cashed in’ or surrendered to split whatever can be clawed back from a policy that you have been paying into for a while. However, these can also be sold or auctioned to gain more value, especially if the endowment or policy is over 10 years old.
Just as any assets are split up, responsibility for debts that were built up during the marriage are also shared. During a divorce however, it is possible to prevent one person from frittering away assets and money rather than sharing it with their ex-spouse before a financial settlement is agreed. If you suspect that your ex-spouse is doing this or planning on doing this, speak to a family lawyer about a freezing order.
How the Court decides to split finances
The family law Court will take the following 3 principles into account when splitting finances in divorce:
- The sharing principle – first and foremost, to equally divide assets
- The needs principle – to decide what each person needs to manage in the future (in terms of income and accommodation)
- The compensation principle – whilst this is not always relevant, it can be taken into account in instances such as where one person has given up their career to look after children, whilst the other has gone on to develop their career and earning potential
Where to start with finances and divorce
Whether you are working out your finances by yourselves, through family mediation or by having family lawyers negotiate on your behalves, the first thing that you will need to do is to pull together a full financial disclosure containing all of your financial information as the starting point for deciding who gets what now and in the future.
For advice about what needs to go into your financial disclosure or how you can protect your interests as much as possible, speak to our specialist family law solicitors today.
Contact a divorce lawyer
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