Financial Settlements on Divorce and Relationship Breakdown

There are no hard and fast rules regarding your financial rights in the breakdown of a relationship.

It is often the negotiations around a ‘divorce settlement’, as they tend to be called, which can cause most upset, anger and confusion.

Agreeing a financial settlement
If you still have an amicable relationship with your partner it may be possible to agree a financial settlement without appealing to the court for a decision. Having reached an agreement with your partner with regards to any property and finances your lawyer can draw up a Consent Order which details the agreement you have made. Both parties sign this agreement and then it is sent to the Court to be signed by a judge. Provided the judge believes that both parties have understood what they have signed and that the agreement is a reasonable one, this is normally just a paper exercise. The judge can however insist that either party appear in court to discuss the terms of the agreement made, if the judge is unhappy with any aspect of the Consent Order.

Once the Consent Order has been signed by the judge it forms a legally binding document and means that no further financial claims can be bought by either party. Your lawyer can advise on the terms of such an agreement and would need to draft the Consent Order for you. Woolley & Co, solicitors can arrange a Consent Order for a fixed fee. Contact a lawyer to discuss your particular circumstances.

What if we can’t agree a financial settlement?
Despite the best intentions of both parties, sometimes it is not possible to reach an amicable agreement over who gets what. There could simply be one issue that is a sticking point, you could be coming at things from different directions, or you could be disputing a basic issue, like who owned a specific item at the start of the relationship.

This is not unusual but does mean you will need a court hearing to help decide the issue. This will inevitably lead to a significant rise in how much the process will cost you both, so you should make every effort to agree a settlement before this stage. Your divorce lawyer will advise you on your rights and what is reasonable. If you need to go to Court they will also prepare all the documentation for your case.

This type of case is known as an ancillary case. If it goes all the way to the third stage, detailed below, you should budget around £10,000 to cover the costs involved.

With an ancillary case, you will have to attend court on two or three occasions and normally will appoint a lawyer to handle the case for you.

First Step
A formal application (Form A) is filed with the court. This tells the court that you want a district judge to decide how to divide the matrimonial assets. A fee of £210 must be paid to the court.

The court will then issue a timetable to both parties requiring them to prepare and file certain documents. The most important of these is Form E. This is a 26-page financial and assets statement, which must be sworn. It includes full details of all personal assets anywhere in the world. In addition, both parties must obtain and file numerous other documents, such as a year’s worth of bank statements, building society statements, tax documents, savings and investment documents, and credit card and loan statements.

Your lawyer can complete this for you, but you will have to provide all the necessary records.

The First Court Hearing
This is a fairly short hearing where the judge will want brief details from both sides as to what the case is about. They will then issue an Order for Directions, which tells the parties what they must do next and by what dates.

The judge will, for instance, direct that properties must be valued and that the valuer’s report must be filed at court, or that further bank statements must be obtained and filed.

Eight to ten weeks later is the Financial Dispute Resolution (FDR) hearing.

The FDR Hearing
You must attend this informal hearing, and can be in court normally for a couple of hours.

No actual evidence is given, and you will not be cross-examined by anyone. The judge will hear legal submissions from both party’s lawyers. The judge will then, effectively, hint as to what sort of order they would make if the case went to a full, final hearing. For instance: “I hope the parties can agree something today, as I would think at a final hearing everything would be split on a 50/50 basis,” or, “I would probably order the house to be sold”.

Everyone will then be sent out of the courtroom to try and negotiate a settlement.

If agreement is reached, the lawyers will inform the judge and provide them with full details of the terms of settlement. The judge will then draw up and issue an agreed final order. This is known as a Consent Order. It is an official court order and can be enforced if either party defaults.

If no agreement can be reached at the FDR hearing, the judge will order that the case must be listed for a full final hearing.

The Final Hearing
This hearing usually takes a whole day (sometimes two) and is formal. Both parties have to give evidence on oath, and are cross-examined by the other party’s barrister. You will be asked at length about your personal and domestic circumstances, your financial affairs, your earning capacity, why you are not working (if you are not), what qualifications/work experience you have and your household bills. You can also be asked questions about any new partner and their finances.

At the end of the hearing, the judge will make a final order, and this is usually NOT the order that either party would ideally have liked.

The judge will make an order they thinks is fair based on what they have heard. Effectively, they will be imposing a compromise settlement on both of you, and will rarely give either party what they actually want. It is for this reason that we do everything we can to avoid it, and urge clients to try and agree some sort of compromise settlement before, or at, the FDR hearing.

For advice on financial settlements in divorce call 0800 321 3832 or email your enquiry here.