Shortlands

Factors Affecting Divorce Settlements: What to Expect

When a marriage or civil partnership breaks down, one important aspect that will need resolving is how to divide monetary and other assets. This allows children and other dependents to be adequately provided for financially. It also enables the separating couple to agree on what each person takes away with them from the divorce. Significant assets such as property and business interests are also formally assigned ownership as part of the financial settlement process.

This is the agreement you and your former spouse or partner come to together around how to separate your money, property and other assets once your marriage or civil partnership has come to an end. It can be drawn up at any point during the divorce process. Your solicitor will provide the legal wording and will confirm the agreement of both parties. At the decree nisi stage of the divorce process, the financial settlement will be approved by a judge and the document made legally binding.

What divorce settlement factors help us decide what each party is entitled to?

There are no hard and fast rules about what each party is legally entitled to in a financial settlement. There are a number of divorce settlement factors that depend on various scenarios and future plans. The court will treat each case on its own merits. However, some common things that are included in such an agreement include savings and investments, property owned together and separately. In addition, there could be life insurance policies and pensions, businesses, vehicles and valuables to consider.

Finally, financial settlements will take monetary commitments such as child maintenance and spousal maintenance payments into account. If the couple is unable to come to an arrangement for these payment by themselves, the court will step in to confirm final decisions. Consideration will be made around how much each party earns and owns, as well as the amount of time the chid(ren) spend with each parent. Another aspect of this is whether or not there are any education or medical expenses that must be covered and who is responsible for those.

Assets acquired before the marriage or partnership are called non-matrimonial assets and must be dealt with separately, if they are not already protected by a pre-nuptial agreement. You will also have to think about how to divide the responsibility for repaying any loans, debts or outstanding shared credit cards.

How can we prepare for a financial settlement discussion?

The most important thing to do when you are separating from a spouse or partner is work out how you are going to meet your day-to-day living expenses, now that you are no longer part of a partnership or marriage or partnership. If you have got joint bank accounts, savings or credit cards, make arrangements as soon as possible to close these and open new, separate ones. Arrange for any salary, wages or benefits to be paid into the new accounts at the same time.

Draw up a picture of your financial situation, including incomings and outgoings, savings and debts. This will help you agree on what each party should receive and be responsible for in your financial settlement. A key thing to agree upon is how outstanding mortgage repayments will be made, and if one party can continue them on their own or not.

As well as income, outgoings and financial responsibilities already discussed, decisions will need to be made around pensions. There are different options for this, including receiving a lump sum from a partner’s pension pot now or when they retire. Alternatively, the value of a partner’s pension pot could be offset against another asset or your own savings for retirement. The court can help you come to a decision over this if required.

How does the court decide who gets what in the financial settlement?

Each case is unique and will have different divorce settlement factors to consider. The court will look at both parties’ income, assets and savings, as well as their contributions to the marriage, financially and otherwise. Other factors could include time away from the workplace and future earning potential, standards of living in the marriage, length of the union and the age of both parties.

Couples must also show that they have tried mediation before applying to the court with a financial settlement, except in certain cases, such as domestic violence. You must also have already started official divorce proceedings before asking the court to approve a financial settlement.

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