Anyone involved in a divorce or a relationship breakdown is likely to have unanswered questions about how they will be affected financially. Our experienced financial settlement solicitors will be able to give you advice as to where you stand on key issues including property, shares, pensions and child arrangements.
At Child Law Partnership, we regularly assist clients with financial settlement matters during the divorce process and always work to ensure our clients gain a favourable settlement. If you would like further advice, please contact our expert financial settlement solicitors today on 01256 630080.
What is a clean break financial settlement?
This is used to describe a settlement where all finances are settled at the point that the agreement is made, with no ongoing financial obligations, such as paying maintenance to a spouse.
It is usually achieved where assets can be split accordingly to settle the financial agreement in full.
Even if an amount of spousal maintenance had been agreed during negotiations, a clean break may still be achievable where enough assets exist to pay off the spousal maintenance in full in one go, for example by transfer of an asset which is equal to the value of the ongoing maintenance agreed. You cannot get a clean break agreement in relation to your financial obligations to your children, only to your spouse.
How is a divorce financial settlement arrived at?
The negotiation of a financial settlement should take into account a number of factors, including:
- Length of the marriage
- The current earnings of each party
- The potential future earning capacity of each party
- The financial assets of each party (including pensions)
- Children – their financial needs as well as other factors that may affect their future wellbeing
- The standard of living the couple have enjoyed during the marriage
- The financial contribution that each party has made to the marriage
- Other non-financial contributions that each party has made to the marriage, such as caring for the children and running the house
Need Expert Advice? Contact Our Family Lawyers
Will I have to go to Court to reach a financial settlement?
Not always. A financial settlement can be negotiated between the parties involved in the divorce, with the assistance of their solicitors, without the need to go to Court. This can help to minimise the legal fees incurred by both sides.
If an agreement is reached outside of Court it can then be checked by the Court to ensure that it is reasonable, and endorsed by the court made into a legally binding order. The majority of divorce cases are agreed in this way.
If an agreement cannot be reached on finances, then it will be necessary to go to Court to achieve a settlement. The risk of going to Court for a decision to be made is that a large degree of control is lost by both parties as to the eventual terms of the settlement.
Who pays the legal fees for a divorce financial settlement?
In the majority of cases, both parties will have their own solicitor and will be responsible for their own legal fees.
In some circumstances it may be possible to include the payment of legal fees as part of the financial settlement if this is included in the negotiations.
If court proceedings are involved it is possible that the court may order one party to pay all or part of the other parties legal fees.
Am I entitled to maintenance from my ex-partner?
Entitlement to spousal maintenance depends on a number of factors, including:
- The length of the marriage
- The current earnings of each person
- The potential future earning capacity of each person
- The standard of living you enjoyed before the divorce
- Your respective financial needs and the financial needs of any dependent children
- The contribution made to the marriage, either financial or by caring for children and looking after the family home
As an example, a young couple with no children who have been married for a short time and are both working. In this case it may be fair for them both to leave the marriage with no ongoing financial ties and take with them what they brought into the marriage.
On the other hand, if there is a couple who have been married for 25 years and by mutual agreement the wife gave up her career to bring up the family at home. The husband therefore became the sole breadwinner. The wife’s future earnings capability may have been severely compromised because of their agreement.
In these circumstances the wife should not be penalised for her lack of earnings ability and may be entitled to ongoing spousal maintenance.
Financial settlement solicitors - Further information
All assets of the marriage are considered as part of the financial settlement, including business assets. This still applies even if one party has built the business with no direct involvement from their spouse.
As part of a negotiated settlement a business can be protected if enough assets are available to achieve a fair split. For example, one spouse may hold on to the business by giving up their entitlement to their share in other assets, such as the family home. This is called ‘off-setting’.
If capital assets do not exist to facilitate ‘off-setting’, but the business is generating enough income, it may also be possible to pay out the other spouse over a period of time with income from the business.
The pensions of both spouses are assets of the marriage and therefore will be taken into account during the divorce settlement. This is particularly relevant where one spouse has a large pension pot and the other has little or none, for example a stay at home mum.
If this is the case then the financial settlement may be achieved in a number of ways:
- The spouse with the pension pot could give up entitlement to other assets of the marriage to offset the pension entitlement
- Payment of a lump sum to the other spouse
- A pension sharing order – part of the pension pot can be taken out and put into a pension in the spouse’s name
The family home will normally be an asset of the marriage and will therefore be included in the financial negotiations.
Divorce settlement negotiations always start from the point of an equal division of assets between the spouses. If one spouse wants to retain the family home they will need to have enough other financial assets to be able to offset the value of their partners share of the home by transferring assets of that value to their former partner.
In cases involving children this can sometimes mean that one party can stay in the family home with the children. The Courts always place a high degree of importance on the needs of the children. The Courts will not, however, allow an unfair settlement to either party, so this form of arrangement will depend on the other spouse’s financial circumstances and their ability to afford a second home to live in. The spouse leaving the family home can still maintain a financial share of the home, which they will receive on the eventual sale of the property.
Contact our financial settlement solicitors
If your relationship breaks down, you need clear direction at the outset, especially where assets are involved. This is where our expert financial settlement solicitors can provide you with invaluable advice and legal representation.
At Child Law Partnership, we have a strong regional presence with seven offices located around Surrey, Berkshire, Hampshire & Wiltshire. To understand how we can help with your situation, please contact our specialist financial settlement solicitors today by calling 01256 630080.
