Financial Matters Upon Divorce

From the outset, we provide clear and realistic advice on the financial implications of divorce, no matter how complex your circumstances are. We explain the options available, outline likely outcomes, and work with you to secure a settlement that is tailored to your needs.

Resolving financial matters is a core area of our expertise. We adopt a constructive and forward-looking approach, encouraging cooperation wherever possible and helping to preserve respectful relationships between former spouses, particularly where children are involved. The majority of cases are settled without recourse to the courts, but where litigation is unavoidable, we have the knowledge and experience to represent you with confidence.

We are committed to making the process as straightforward as possible by removing unnecessary jargon and providing a clear, accurate understanding of your financial position.

In addition, we work collaboratively with a range of trusted professionals, including accountants, psychologists, pension specialists, immigration advisers, and other experts so that every aspect of your circumstances is carefully considered. This allows us to provide well-rounded advice and a strategic way forward that reflects the full complexity of your case.

Court’s approach to financial settlement upon divorce

When deciding how assets should be divided on divorce, the court’s first consideration is always the welfare of any minor children, in particular how their housing needs should be met. In addition to that, the judge will weigh up a number of factors to achieve a fair outcome, including:

•  Duration of the marriage (including the cohabitation period)
•  Age of the parties and how close they are to their pension age
•  Ability to earn (earning capacity) including the current and potential future income
•  Available assets including properties, investments, cryptocurrency etc. In certain cases, the court will consider whether the assets are non-matrimonial or pre-matrimonial
•  Contributions to the marriage: both financial contributions (such as earnings) and non-financial contributions (such as caring for children or managing the household)
•  Any unequal contributions (although this is relatively rare)
•  Living expenses and the parties’ respective income needs (e.g. housing, utility bills, childcare)
•  Standard of living as well as your and your spouse’s role within the marriage
•  Any disabilities of the parties and the children
•  Conduct: in rare cases, if one spouse’s conduct is deemed very serious and inequitable to ignore, it may be taken into account

 COURT PROCESS

If you haven’t been able to reach an agreement with regard to the financial settlement with your ex-spouse (whether via direct negotiation, mediation, correspondence between solicitors or another non-court dispute resolution method), it may be necessary to issue a court application.

Pre-Court Procedure

The first step is to lodge a document known as Form A with the court in order to issue a financial remedy application. Once the application is filed with the court, one needs to serve any relevant mortgage providers or pension companies where appropriate. Once the application is issued (which normally takes a few weeks to a few months), the court will send the court documents with an issued application, detailing the court timetable, including when you and your former spouse will have to exchange the financial statements by.

Both parties are obliged to provide full and frank financial disclosure. This is usually done via the Form E, known as a financial statement. This obligation is ongoing throughout the process and extends to a duty to disclose any material changes to either party’s finances after initial disclosure has been given.

As part of this exercise, the parties would need to provide documents detailing their financial circumstances. This includes bank statements, pension statements, property valuations, and proof of debts and liabilities. The aim is to give the court a clear picture of the parties’ financial situation.

The key documents which usually have to be included with the Form E are as follows:

• Bank Statements: 12 months’ worth of statements for all banks accounts, including saving accounts.
• Pension Statements: information about all pension schemes, with current valuations. These can take a long time so it is advisable to request CET (Cash Equivalent Transfer) values as early as possible.
• Property Documents: mortgage statements, property valuations.
• Income: three most recent payslips if employed, latest P60, P11D and details of any additional income e.g. rental income or benefits.
• Business Accounts: if self-employed or involved in a business, provide relevant accounts and valuations.
• Investment Portfolios: details of investments, including stocks, shares, and other investment vehicles.
• Proof of Debts: Mortgage agreements, loan documents, credit card statements, and any other evidence of liabilities.
• Personal Belongings: Details and valuations of valuable personal possessions, such as jewellery, art, or antiques.
• Other Financial Information: Details of any other relevant financial information, such as insurance policies or business interests.

Following the exchange, the parties would need to review the other side’s Form E and raise Questionnaires, i.e. questions you may wish to ask the other side in regard to some aspects of their Form E.

 First Court Hearing: the First Directions Appointment (FDA)

Ahead of the FDA, the parties would need to prepare, exchange with the other side and file with the court a number of documents following the exchange of the Forms E:

• Form G stating whether the party is ready to proceed to an FDR (see below)
• Form FM5 stating what non-court dispute resolution methods the party attempted
• Chronology with key dates in the relationship which has to be agreed with the other side
• Statement of Issues with a list of the main issues the court needs to decide, which also has to be agreed with the other side
• Questionnaire on the other party’s Form E with all of the questions the party would like the other party to reply to
• Form H detailing costs to date and estimating future costs
• Index to the court bundle which has to be agreed with the other side 
• Court bundle which has to be usually prepared by the applicant

This hearing is fairly technical and it is advisable to seek legal assistance.

The main objective of the FDA is for the judge to discern if further information is required from either party and if experts e.g. business valuation or pension experts, need to be appointed. If so, the judge will decide whether any other directions need to be made, including the valuation of assets and the obtainment of expert information.

The judge will also consider the draft questionnaires and whether full disclosure has been made.

The judge will set a date for the Financial Dispute Resolution Hearing (FDR).

 Second Court Hearing: Financial Dispute Resolution Hearing (FDR)

After the required further information has been served upon each of the parties, they are each obliged to make proposals for the satisfactory settlement of their case. These should be filed with the court before the FDR Hearing.

It is possible for a settlement to be reached before your FDR Hearing, but if it is not then you will try to reach one at the FDR appointment. It is worth keeping in mind that parties can attempt to reach settlement at any stage in the proceedings.

At the FDR hearing, the judge will likely indicate what they believe to be a reasonable conclusion to your case (provide an “indication”), but they will not impose a financial order at this time. Instead, negotiations are encouraged and, if an agreement is reached, the judge can approve it and the agreement would be turned into a consent order. If an agreement is not reached, further directions will be made in order to prepare the case for a Final Hearing (see below).

There may be additional hearings that are necessary before the final hearing if the case is more complex, but this will depend on specific circumstances of the parties.

 Final Hearing

If an agreement is reached prior to the Final Hearing date, a consent order can be drawn up to formally outline the terms and be filed with the court for approval.

If an agreement cannot be reached, further documents will need to be prepared. You and your former spouse will likely give evidence to the judge and the judge will then decide how your assets should be split between the two of you, and decide if any one party has an ongoing responsibility to financially support the other.

•  The judge has the power to make several orders which can include:
•  The sale of any property
•  The transfer of property ownership
•  A lump sum order
•  An order for spousal maintenance
•  A pension sharing or a pension attachment order

The judge will also consider if a clean break can be made, which would mean you and your former spouse would have no financial claim against the other. We will discuss possible orders and the likely outcome with you throughout your case.