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Divorce and Finances.

 

In our last article, we looked at misconceptions surrounding divorce.  The biggest misconception, generally, is about the financial settlement between parties.

A divorce on its own does not dismiss the financial claims which have arisen as a result of a marriage.  These claims must be separately dismissed as part of the divorce process.  The Decree Absolute does not dismiss these claims, it merely dissolves the marriage.

To dismiss the claims that have arisen, a court order must be entered into.  This is usually by consent following negotiations between the parties. Occasionally if an agreement cannot be reached a Judge will make an order on the basis of the available evidence.

The first step in negotiating a settlement is for both parties to provide full and frank disclosure. This means that both parties provide documentary evidence of their capital assets, their liabilities, their income and their pensions.  This is then exchanged so that both parties have a complete picture of the finances and what is in the “pot”.

The parties can decide what process they want to use to negotiate the settlement.  They can discuss matters between themselves, attend mediation, they can elect for a collaborative law process or they can negotiate through solicitors and each process has its own pros and cons. For example, in the collaborative process both parties must use specially trained collaborative lawyers and all negotiations will take place via a series of meetings (with all parties and lawyers present) with a view to reaching an agreeable and suitable settlement for all involved.

Once everyone knows what is in the pot, a suitable division of the assets and liabilities needs to take place.  It is not as straightforward as simply dividing everything equally.  This is because the parties might have different needs or requirements. The most important factor to consider is the welfare of any children of the family.  Their needs take priority but there are a number of other factors that are taken into account (known as the Section 25 factors) and they include:

  • The length of the marriage;
  • Age;
  • The reasonable needs of each party;
  • The resources available;
  • Contributions made by either of you to the marriage;
  • Any health issues;
  • Any pre/post nuptial agreement entered into;
  • Benefits which either party could lose as a result of the divorce (such as widow(er)’s pension benefits).

Not all of these factors are relevant in every case, and usually only one or two factors will apply.

Many other issues also need to be considered at this time. For example, home ownership, whether a Will needs making or updating and/or arrangements for any children.

 

Disclaimer: This article is not intended to constitute legal advice.  For legal advice in connection with the above, please contact us directly.

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