There are two elements to resolve on separation: the dissolution of the marriage or civil partnership, and the division of your finances, otherwise known as the financial settlement.
In summary there are four general routes to reaching a financial settlement:
- By agreement;
- Through mediation;
- Via solicitors; or
- By commencing court proceedings.
This article explains what is involved in each of those four routes.
Financial Settlement by Agreement
This is arguably the most favoured and cost-effective option. It’s where you and your partner are able to sit down and talk matters through, and it may be possible to agree together how your assets should be divided. It is a good idea ahead of this discussion to seek advice from a competent family solicitor, so that you go into these discussions knowing the framework you should try to work to.
What should not be forgotten is that you will still need a solicitor to record any agreement you reach in a consent order (financial agreement document) and have this approved by the Court before it is binding on you both (i.e. legally enforceable). Without a binding agreement, either you or your partner could bring further financial claims against one another in the future.
This option is not always possible and, in some cases where there is an imbalance of power or if one party knows very little about the other’s financial circumstances, it may be inappropriate and unfair.
Financial Settlement through Mediation
Sometimes the involvement of a neutral and unrelated third party can help you and your partner talk through your concerns – in these cases mediation may be suitable.
You may seek assistance with the whole financial settlement, or perhaps there is just one element that you cannot agree on (e.g. maintenance), but the benefit is that you can tailor this process specifically to suit yours and your partner’s circumstances.
It is important to remember that a mediator is not legally trained and cannot advise you on the appropriate outcome, so if neither you nor your partner are willing to negotiate and concede on certain elements then mediation may be unsuitable. As mentioned above, mediation also relies on you and your partner having an understanding of one another’s financial circumstances and, whilst this can be achieved through exchanging financial disclosure, where there is an imbalance of power there is the potential for unfairness – in these cases it is often best to seek legal advice.
Where mediation is successful and an agreement is reached, you should still instruct a solicitor to draw up your financial settlement and file it at Court.
Solicitor Negotiation
This is where a solicitor is instructed by and acts for one party, not both.
Before they can advise, a solicitor is likely to recommend the exchange of financial disclosure – this could be in summary form or in a document called a Form E which, when completed correctly and exchanged, should provide a complete account of yours and your partner’s finances. It is from this disclosure that your solicitor should be able to advise you on possible settlement options.
Once an agreement has been reached the solicitor can draw up the consent order and submit this to the Court on your behalf. The involvement of a solicitor is more likely to satisfy the Court that the agreement is fair in the knowledge that you will have received independent legal advice and been advised of any potential pitfalls.
Commencing Court Proceedings
This is the final option and one that is often only pursued when the above routes have either already been attempted or are considered unsuitable.
Only a small minority of cases reach this stage and, as most settle early in the proceedings, it is an even smaller percentage that actually advance all the way to a Final Hearing.
Court proceedings should not be viewed as an aggressive step and may in fact be helpful for a number of reasons, including:
- To help focus both parties’ minds on settlement;
- To encourage a party to engage where they have been unwilling to;
- To put in place a court ordered timetable, bringing with it potential implications if breached; and
- For a party with potentially unrealistic expectations, they can hear what the Court considers reasonable.
The benefit of this process is that all of the above (reaching agreement, mediating, or negotiating through solicitors) can take place concurrently – the commencement of proceedings need not mean that productive discussions should cease altogether.
It is important to remember that all of these options are focused on you and your partner resolving matters by agreement. Regardless of which route you take, it is often best to seek independent legal advice at the outset to discuss the pros and cons of each. If you have any questions or would like to discuss these options, then please enquire today to speak with one of our specialist Family solicitors.