In this article Deborah Prance, a Partner in our Family Law team, looks at some of the most commonly asked questions regarding financial settlement in divorce in the UK.
Do I need to use a solicitor for my divorce or dissolution?
While it is not technically required to use a solicitor for divorce or dissolution due to the introduction of “no fault” divorce, it is still advisable to seek legal counsel regarding the impact of the divorce on one’s life. This includes property investments, debts, maintenance payments, and pensions. A solicitor is needed to draw up the relevant documentation for a final binding settlement to prevent further financial orders in the future. Without a legally binding financial order you remain exposed to claims long into the future.
Is everything in a divorce divided equally?
In determining a fair settlement after a long marriage or civil partnership, a court considers various factors, including the parties’ actual needs and those of their children. Despite an equal division of marital assets being the usual starting point, the final court-approved settlement may well result in an unequal settlement to reflect differing needs and resources.
If we have reached an agreement that we are both happy with, will the court automatically approve it?
The court will only approve a settlement if it is fair. It determines this from the supporting Statement of Information which sets out the parties’ financial and other circumstances, which includes a comparison of the proposed arrangements prior to the agreement versus the outcome if those proposed arrangements come into effect.
I have contributed more financially during the marriage- shouldn’t this be reflected in the settlement?
Since the landmark case of White v White, the family courts have generally regarded non-financial contributions e.g, by the person who has taken on the greater role of looking after the children and running the home as equivalent, but special consideration will be given to matters such as nuptial agreements, family money and additional contributions – as well as the differing needs of the parties and children involved.
I brought more into the marriage. Will this be taken into account?
Often – yes. However, this is not always a straightforward issue, and the court is not obliged to ring-fence such contributions in whole or in part.
Various considerations apply, such as the length of the marriage and whether the initial contributions were mingled or treated as marital assets. Where the marital assets, i.e. those which have accrued during the marriage, are sufficient to meet both parties’ needs and those of any children, pre-marital assets will usually be excluded these days, if they have been kept separately.
If the marital assets are insufficient to meet reasonable needs, they will not be ring-fenced and can be required to be brought into account in whole or in part. This can even apply to pensions accrued before the marriage, although the law relating to pensions on divorce is very complex. Extra protections apply to marital homes.
What about inheritances?
As above, inheritances, as well as gifts from family which have not been mingled with marital assets, will generally be excluded from financial settlement on divorce unless the marital assets are insufficient to meet the parties’ needs.
Can pension assets be shared on divorce?
Since 2000, courts have been able to make pension sharing orders in divorce cases, which can be achieved in different ways depending on the type of pension. Public sector pensions can be shared by the other party receiving their own pension in that scheme with the original pension holder’s pension being reduced. Many other defined benefits schemes will transfer an amount into the recipient’s pension scheme to represent the percentage amount of the pension share ordered to be paid. Defined contribution pensions will be shared by the other party receiving a share of the fund to invest in their own pension. Legal and technical advice from experts is required in every case involving substantial pension assets.
If we cannot reach agreement, do we need to issue expensive and lengthy court proceedings?
In family law, excellent alternative dispute resolution (ADR) options such as mediation, early neutral evaluation, private financial dispute resolution appointments, and arbitration have gained prominence since the pandemic. These options are cost-effective and more comfortable than going through the courts, which are experiencing delays. Morr & Co aims to minimise the costs, delays, and stresses of family breakdowns by employing the best-suited ADR approaches to support clients through the difficult journey.