A divorce is a difficult time for all those involved, and issues relating to shared assets and ongoing financial arrangements are probably one of the most complex aspects of any relationship breakdown.
When a marriage ends, it is sensible for the couple to formally resolve, once and for all, the outstanding financial matters between them. In England and Wales, even after a divorce is concluded, a party can still bring a financial claim against their former spouse, potentially many years after the divorce has been finalised. Our financial settlement solicitors can help you reach an agreement in relation to finances with your ex-spouse and ensure it is enshrined in an Order of the Court.
Where matters are agreed, this will usually be dealt with as a paper (or online) process, and no one will need to attend Court. A binding financial settlement will give each party the security and certainty of knowing that any financial agreement reached will be enforceable after the divorce and can be relied upon going forward.
At THP Solicitors, we have an experienced team of financial settlement solicitors in Reading and Henley-on-Thames that you can rely on. We can help you if you decide to commence divorce proceedings or advise you if your spouse has filed a Divorce Application. We can guide you at every stage of the process through service of the relevant documents, agreeing how the costs will be dealt with and applying for your Conditional and Final Orders.
For a confidential discussion about the divorce procedure, please contact Richard Rodway in our Henley-on-Thames office or Julia Drury in our Reading office.
Whilst the online divorce portal has made the commencement of divorce proceedings easier, financial matters are entirely separate from the divorce proceedings and can be dealt with in a number of ways. The most common are as follows:
Save for when Court proceedings are issued (when the result is a Financial Order from the Court), the intention is that an agreement will be reached between the parties that will then be drawn up into a Consent Order, which is drafted by a solicitor. The Consent Order is then submitted to the Court and once approved, becomes legally binding.
If there is not a Consent Order in place, both parties leave themselves open to financial claims from the other party in relation to income, capital and pensions, both now and in the future, even after one party has died. It is therefore recommended to sort out financial affairs at the time of the divorce. Even if there may be no finances to speak of at the time of divorce, one party could bring a claim against the other party in the future against assets acquired post-divorce.
Financial Settlements in Divorce
There are many issues to consider when separating finances on divorce. When reaching a financial settlement, complexities that can make matters more complicated include:
The factors which the Court will consider in financial settlements upon divorce are set out at section 25 of the Matrimonial Causes Act 1975. The factors, save for the welfare of any relevant children, are in no particular order, and some will be given greater weight than others, depending on the detailed circumstances of the case. They are as follows:
Should there be concerns about the other party disposing of assets before a judgment can be obtained, we are experienced in emergency arrangements to protect assets, such as obtaining a freezing injunction.
Financial Remedy Orders and Consent Orders in Divorce
If a divorcing couple can reach an agreement on the division of assets and financial provision, they can invite the Court to make a Consent Order, enshrining that agreement. If an agreement cannot be reached, then either party can apply to the Court to have the Court decide upon the terms of and impose a settlement on the parties. This application for a financial remedy usually takes around 18 months to conclude, and there are usually at least 2 Court hearings, although it is open to the parties to settle and agree to the terms of a Consent Order at any point. Trying to resolve a case, even within Court proceedings, is encouraged at every stage.
Where the parties can agree, they can sometimes be more creative as to the terms of the settlement. The Court will, however, not approve and make an Order on the agreed terms if it does not consider that the Order is fair, nor can it make an order that it does not have the power to make (the orders that the Court is permitted to make can be quite limited). Orders can cover:
If a couple cannot agree on financial matters when getting a ‘No-Fault’ divorce, one of them can apply to the Court for a legally binding financial Order; this is called Financial Remedy proceedings. It is important that both parties are honest so that a fair financial settlement can be reached that doesn’t disadvantage either party.
As part of this process, both parties must provide the Court with full details of their financial situation. This includes details of their income, any property or land they own, bank and savings accounts, investments, life insurance policies, business assets, pensions, state benefits, cash sums and individual belongings worth over £500. They will also have to outline any debts and their income needs for themselves and any children being provided for by them.
It must be noted that before any application to Court can be made, there is an expectation that the parties will have attempted some form of Non-Court Dispute Resolution (NCDR), the most common of which is mediation. We will always encourage parties to engage in NCDR and can discuss alternative routes if mediation is not preferable for whatever reason. Making an application to Court will always be a last resort, and we will do all we can to try and resolve matters amicably before advising our clients that making an application is the right step to take.
On occasion, when trying to reach an agreement on a financial settlement during a divorce, one or both sides may try to ‘hide’ cash or assets during the divorce process, thereby breaking the legal requirement of ‘full and frank disclosure’. This is often the case where there is an imbalance in the management or generation of wealth in a relationship, and one party is considered to be the ‘main breadwinner’.
Common methods to try and hide assets in a divorce include transferring money to other accounts or family members, creating non-existent debts or invoices, undervaluing assets or business interests, putting money in trusts or offshore accounts, not declaring digital assets such as cryptocurrency and/or withdrawing cash. This list is, of course, not exhaustive.
Those who try and hide the truth about their financial situation during the divorce process should be aware that even if the other party doesn’t see the signs of deception, experienced solicitors can often spot the red flags that the other person isn’t being completely honest. They can also call on the assistance of forensic accountants to investigate, who are experts in analysing complex financial structures.
If one party can demonstrate a reasonable belief that the other person is about to dispose of assets, one of our financial settlement solicitors can apply to the Court for an Order to prevent a person from concluding the financial transaction, have money or assets moved back if they have already been transferred or for bank accounts to be frozen. Orders can also be used if there is evidence that a party plans to destroy documents to hide their assets.
Solicitors can also ask the Court to grant a non-party disclosure Order if the documents in question are likely to support the case and disclosure is considered important to reaching a fair, equitable financial settlement. These Orders can enable them to obtain information directly from banks, employers, HMRC, business associates, trustees and the Land Registry regardless of whether the party in question agrees.
There are serious consequences for deliberately trying to hide money or assets during a divorce. If caught, the deceiving party may be made to pay the legal bill for both sides or may receive a less favourable financial settlement than they would have been awarded otherwise. If the fraud is extreme, it could be classed as perjury or contempt of Court, which is a criminal offence and can be punished by a fine and/or imprisonment.
It is important to note that there is no time limitation, so if one party suddenly seems to be enjoying wealth that was not disclosed at the time of the divorce, the Court can reopen the case and change a financial Order providing that there is clear evidence that there was non-disclosure at the time the Order was made.
If you go through the process of ‘divorce’, and nothing more, then whilst you will be divorced, you could be left exposed for the future. If you do not resolve financial matters during the divorce process, by way of a legally binding Court order, then your claims against each other remain open for income, capital and pensions, and either of you may apply to the Court in the future for a financial order.
Our financial settlement solicitors in Reading and Henley-on-Thames can help you formally tie up financial matters between you following your divorce, and have an agreement enshrined in a Consent Order, as if either of you has a change in circumstances, you may find that the other feels differently about how the finances have been divided at the time of the divorce.
In the absence of an Order, save for some circumstances when a person remarries, their financial claims against their ex-spouse arising from the marriage remain live, and they could bring a claim for financial relief and claim some of your wealth in future, even many years after you were divorced.
It is important to note that it is likely that your Will may be invalid after divorce, so divorcing couples should review their Wills or make one if they do not have one. If your spouse is named as a beneficiary in your Will, the Will is no longer valid upon divorce, unless you decide to make a new Will specifically naming them as a beneficiary.
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