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Four steps to a fair financial settlement on divorce

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Four steps to a financial settlement.

Over the years it has become apparent that in order to reach an agreement on financial claims within divorce proceedings people, both lawyers and clients, can approach things in a slightly haphazard manner which can create difficulties and ultimately add time, stress and cost, often unnecessarily. 

Like everything in life, dealing with things in a logical manner will enable the process to move forward smoothly. In my experience as a divorce and family law solicitor I think financial claims within the divorce proceedings can be dealt with in four relatively straightforward steps.

  1. Get all the facts and figures
    The first step is to discover what there is in terms of both parties’ incomes, capital (including property and savings), liabilities, the values of pensions and any other assets they may have. This sounds very straightforward but sometimes people don’t always provide all the information that is necessary and that’s why it is important to provide a clear list of everything that could possibly be required at the very beginning. That way nothing will be missed. 
  2. Establish how much things are worth
    The second step is then to agree values. Again this sounds very straightforward but very often arguments can arise in respect of, for example, the value of the family home. One person may think it has a much higher value than the other person. Often the person who wants to “keep” the house wants to see a lower value and the party who wants it sold often suggests it has a much higher value particularly if a local estate agent has been asked to provide a verbal valuation, this can often prove much higher than a formal valuation carried out by a chartered surveyor. Other issues can arise, for example, in respect of the value of somebody’s shareholding in a business. It can often by the case that one party will think the other party’s share is worth a substantial sum when in reality it simply represents the ability to earn an income and if the shares were disposed of then in turn the income would be lost. There can also be issues surrounding values of pensions and other assets and it is important that proper advice is obtained from an independent third party for each relevant asset. 
  3. Start to negotiate
    The third step, once the first two have been dealt with, is to then negotiate a settlement taking into account the current law as it applies to the facts of the case. This will include, for example, housing provision for any dependant children taking into account the income of the parties, the length of the marriage, the age of the parties, their respective incomes, their abilities to borrow money, the values of their pensions and all the relevant factors in the case. This sounds daunting but actually in most cases it is a relatively straightforward process provided both parties are realistic and are willing to take the advice of their family lawyer. 
  4. Get a formal agreement
    The fourth step and possibly the most important is once an agreement has been reached a Court Order must be obtained. This is crucial. On many occasions I have been approached by people who have reached a financial agreement with their ex wives or husband’s, often years ago, they implemented the agreement, for example, by selling a house or making a lump sum payment to the other party only to find that because no Court Order was obtained, their ex husband or wife is now seeking to claim against their pension fund, the house which was transferred to them or other assets.  

The above represents four relatively simple steps but it is important that they are taken in order. Often one party may wish to try and deal with matters out of order, for example negotiating a settlement before there is a clear picture as to what each party has in terms of assets and before the values of those assets have been agreed. This creates difficulty and often unnecessary stress. However, if the four steps are taken in the correct order and in a timely and efficient manner then this should provide a recipe for a successful financial outcome with the least stress and minimum expenditure in legal costs. 

Richard England
Divorce & family law solicitor, Sutton Coldfield

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