Divorce is never easy, but unfortunately sometimes the breakdown of a marriage is inevitable. Whether it’s due to spouses falling out of love or growing apart, deciding to part ways may be unavoidable. When this happens, there’s lots to figure out. Who gets the antique ottoman and more importantly, who gets the house?
Understandably, navigating financial settlements in divorce proceedings can be highly stressful, and many people are unaware of where they stand. Being uninformed can make the situation a whole lot trickier, so it’s essential that spouses who want a fair financial settlement figure out their legal footing.
Never fear, keep reading and soon you’ll know all of the essential information around financial settlements.
This article will explore:
A financial settlement refers to the financial proceedings involved in a divorce, which sorts out the division of assets and finances.
Prior to signing the settlement document which is legally binding, typically both parties will partake in negotiations, and mediation in order to come to an agreement. When parties are unable to come to an agreement, it’s likely that both parties will take their case to court.
Matrimonial assets refer to the financial assets accumulated by a couple during the period of their marriage. These assets include:
Contrastingly, non-matrimonial assets refer to the assets that are acquired before or after the marriage period. These kinds of assets can still be included within a financial settlement.
A number of different factors will determine how a couple’s assets are split up. These factors are outlined in Section 25 of the Matrimonial Causes Act 1973 and include:
The duty to pay spousal maintenance is outlined in Section 7 of the Divorce Act, 70 of 1979. It is typically paid by one spouse to another, when one spouse is unable to sufficiently support themselves financially after their marriage has ended.
How much a spouse must pay their former partner will depend on a number of different factors. This includes:
Once spousal maintenance is calculated, it can be paid in a number of ways. If a couple have young children, they may agree to a lifetime order which is open-ended. However, if a spouse is forced to rearrange their life at the end of a marriage, a fixed term order may be chosen to tide them over until they find more financial security. Finally, a nominal maintenance order may be chosen if a spouse requires a financial safety net, again this is often chosen if one spouse is the main caregiver to children.
That being said, those involved may instead opt for what is called a “clean break” consent order. Choosing this option means that instead of having the burden of continual payments, a spouse can instead make a lump sum payment. This option also prevents a spouse from asking for money in the future. A consent order can be filed after the Decree Nisi is pronounced by the court.
If, after agreeing to the spousal maintenance arrangement, a spouse either fails to deliver financially, or straight out refuses to pay what they owe, there are consequences. Typically, the court will issue an enforcement payment.
It’s always best to try and resolve financial settlements without getting the courts involved. However, unfortunately, that’s not always possible. In cases where couples want to take their case to court, they must first meet with a mediator, in a Mediation and Information Assessment Meeting (MAIM), to consider other avenues.
However, these meetings don’t always end with the desired outcome, and a couple may choose to apply to the court to agree to a financial settlement. Here, one spouse must complete and send off Form A (Notice of an application for a financial order). This gets the ball rolling.
Following this, the court will then set a date for the First Directions Appointment (FDA), this will typically be between 12 to 16 weeks of the application being issued.
Within no more than five weeks before the FDA, Form E (Financial Statement) must be filed. Two weeks before the FDA, a number of documents must be filed. This includes:
After this, both parties will be required to send off a completed Form H. This form outlines all of the costs incurred throughout the filing process.
Both parties will then have their FDA meeting at court, whereby the judge will decide what each party must do to prepare for the next hearing. During this meeting, the judge will also set a date for the Financial Dispute Resolution (FDR) hearing. Couples can expect this to come within three to four months of the FDA meeting.
The file proposal stage will not only see both parties prepare any evidence they are required to present, and answer questionnaires, but, essentially, they will also be required to submit their proposal.
Once this stage is completed, both parties will attend their FDR hearing. This hearing can result in a number of outcomes. If both parties come to an agreement, a consent order will be formulated and sealed by the court. Alternatively, the judge may adjourn the hearing. The worst case scenario will result in the case proceeding to a final hearing.
At the final hearing the judge will come to a final decision on the financial settlement, making a binding order.
The length of time that a financial settlement will take will depend on the dynamics of the spousal relationship. If spouses are amicable, and able to discuss their financial situation and expectations in an open and honest manner, the process shouldn’t take too long.
Of course a couple’s financial situation will also impact how long the process will take. If there is little to divide between a couple, it’s likely the process will be speedy. However, if a couple has accumulated land, property and a large number of assets, the process will be more drawn out, because the situation will be more complex.
The process can coincide with the rest of the couples’ divorce proceedings, and will usually be rounded off in a number of months.
While it’s completely understandable that you may feel a surge of stress when dealing with finance and divorce, now you know the nitty gritty details of the process and can start off on the right foot.
It’s never fun to have to break all of this down and divide possessions and assets, but now, if you need to, you can now proceed with a clear head.
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