Why do I need a financial settlement on divorce or dissolution?

Following the breakdown of a marriage or civil partnership there are a number of considerations, including whether the relationship has irretrievably broken down. If so, it may be that the couple, or one of them, decide that the separation should be formalised by divorce or dissolution.

However, it is essential that it is understood that the process of divorce or dissolution does not automatically resolve the division of the finances between the couple. If a financial settlement is not approved by the Court (which the court can only do following a conditional order in the divorce), any division of the finances cannot be considered full, final and binding. Claims against each other both in life and on death can continue after a divorce, and it can be a considerable shock to find that an ex-spouse can make a financial claim often years after the divorce has been finalised.

Financial security post divorce or dissolution

To guarantee financial security after the divorce or dissolution and to prevent either of the couple from bringing a future claim against the other, either in life or on death, it is essential that the financial settlement is finalised by the Court making an order either by agreement, or as a result of proceedings. Most financial settlements are capable of being reached by agreement without the Court imposing a decision on a divorcing couple.

If the couple do not reach an agreement, or reach a consensus but do not have it approved by the Court, it is still open to either of them to make an application in the future.

Settle the claim sooner rather than later

It is often much better to seek to reach a financial settlement which is approved by the Court shortly after separation.

If claims remain open, circumstances could change significantly which can result in additional arguments or animosity about how the assets should be divided. For example:-

  • Either of the couple could have a new partner which can raise issues about whether/the extent to which their assets and income should be taken into consideration
  • Either of the couple could have received an inheritance and again, this can raise arguments about whether that inheritance should be utilised to enable the couple to meet their needs
  • The value of the assets, such as a business may have increased substantially since separation potentially giving rise to whether the value of the business at the time of separation or subsequently should be taken into account
  • One of the couple may take responsibility solely for the payment of the mortgage and therefore may feel aggrieved if the additional equity in the property is shared with their ex-spouse
  • The value of pensions can increase in particular if one spouse continues to contribute to their pension. Arguments can then arise as to whether the additional value should be shared equally at the point the finances are resolved.

How we can help with the resolution of financial matters

It is very often possible for us to assist in an agreement being reached without the need for court proceedings. If this is the case, it is essential for the settlement to be incorporated into a consent order which is submitted to the Court on paper for approval.

It is only where an agreement cannot be reached, or one spouse is not co-operating, that court proceedings may be necessary, and we can also discuss with you alternative ways of resolving disputes. If court proceedings are needed, most often a financial settlement can be reached during the course of the proceedings which can be approved by the Court and the proceedings would come to an end. Very few matrimonial financial disputes result in a final hearing where a Court imposes a decision on the parties.

We often also attempt alternative methods of resolving financial disputes such as:-

  • Mediation
  • Negotiations between solicitors
  • Round table meetings
  • Private court hearings (which can be less stressful than Court hearings, and can be arranged around availability of the parties and representatives)
  • Arbitration