Financial Arrangements and Divorce

_MG_5168Sorting Out Financial Arrangements

Final Orders can only be made after Decree Nisi

Following the pronouncement of Decree Nisi it is possible for the Court to make an Order, either by consent or following a contested hearing, in regard to any financial issues there may be between you.  The Order would not take effect until Decree Absolute.

Separation Agreements

Sometimes a couple will separate, but decide not to get Divorced until the basis of 2 years separation with consent becomes available. They may want to deal with financial issues before, the Divorce, and this can be done by way of a Separation Agreement. These are evidence of intention of the parties only and not binding on a Court.  A Court could therefore set aside a Separation Agreement on the request of either party at a later date.

The Courts will try to respect agreements reached between people, especially where there has been financial disclosure and each have received Legal Advice. However the ultimate decision is with the Court, which will need to be satisfied that the Agreement is fair.

Getting financial arrangements sorted out

Generally it is better to sort out the Divorce and achieve a financial settlement soon after it is accepted that the marriage is over. Delay often makes thing more complicated. Delay can be confusing for children and it can make it more difficult for everyone to adjust. Once finality and certainty have been achieved, it is generally easier for everyone to move forward.

Needless to say, it is a less costly process to settle matters by agreement rather than to attend a final hearing.  There may be some circumstances however where it will be necessary to ask a Court to decide the issues between yourself and the other party. We will look at how to achieve a settlement below, but it is better to understand first how the Court makes decisions.

The sections that follow discuss the factors which are taken into account by the Court, if the Court is asked to make decisions. These factors are also highly relevant to the making of informed choices during any negotiation.

There are sometimes cases where it is better to wait, so getting legal advice specific to you is important.

How the Court makes decisions

We will look at in the next section, the factors taken considered by the Court when making decisions about financial issues and later on, when deciding disputes about children.

Just as the quality of the advice any Solicitor can give depends upon quality of information the Solicitor has; so the Courts decision will be profoundly affected by the quality of evidence before it.

Gathering evidence so decisions can be made

It is in the procedural stage of the case that the evidence is gathered.

The Family Procedure Rules 2010 set out how the Courts should deal with family cases during this procedural and evidence gathering stage.

These Rules contain the Overriding Objective which is that cases should be dealt with justly, expeditiously and fairly.

The Court also has to be mindful of saving expense and should not allow cases to take up more than their fair share of Court time.

In other words, there is an expectation that those involved should get on with cases in a focused way.

The parties are required to help the court to further the overriding objective.

The Court is expected to actively manage cases.

The Court expects parties’ legal teams to co-operate in a focused way to get cases resolved.

This underlines the importance for the Solicitors of analysing the issues and gathering the correct evidence as soon as possible.

The Court is also expected to encourage the parties to use an alternative dispute resolution in appropriate cases.

This is a good thing.

Effective negotiation

Effective negotiation requires different skills and considerations to succeeding in Court.

In Court Proceedings you need to persuade a Judge of the merits of your case over that of the other party. In negotiations, you need to persuade the other party to agree to things which are to your advantage. But, you will also need to assist the other party gain things that they want. We will look below at the benefits of mediation and other forms of negotiation below. But what is essential to negotiation and litigation is understanding the issues, gathering evidence presentation and persuasion.

Principles when deciding Financial Cases

The Matrimonial Causes Act 1973 (which is the Law which deals with Divorce and Finance) sets out a number of Principles.

The Court is required to have regard to all the circumstances of the case

First consideration is given to the welfare while a minor to any child of the family who is under 18 years.

The Court is then required to have particular regard to the following matters (set out in section 25 of the Act)

Section 25 (2) Checklist

(a)        The income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future (but see Section 25 B) including in the case of earning capacity, any increase in that capacity which it would be in the opinion of the Court be reasonable to expect a party to the marriage to take steps to acquire.

(b)        The financial needs, obligations and responsibilities which each of the parties to the marriage has, or is likely to have in the foreseeable future.

(c)        The standard of living enjoyed by the family before the breakdown of the marriage.

(d)        The age of each party to the marriage and the duration of the marriage.

(e)        Any physical or mental disability of either of the parties to the marriage.

(f)        The contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family including any contribution by looking after the home or caring for the family.

(g)        The conduct of each of the parties, if that conduct is such that it would be in the opinion of the Court inequitable to disregard it.

(h)        In the case of proceedings for divorce or nullity of marriage, any benefits (e.g. Pensions) which by reason of the dissolution or annulment of the marriage the party will lose the chance of acquiring.

Section 25 (3) Checklist (Children)

Where the Court is exercising its powers in respect of any child of the family, the Court shall in particular have regard to the following matters;

(a)        The financial needs of the child;

(b)        The income, earning capacity (if any), property and other financial resources of the child;

(c)        Any physical or mental disability of the child;

(d)        The manner in which he was being and in which the parties to the marriage expected him to be educated or trained;

(e)        The considerations mentioned in relation to the parties to the marriage in paragraphs (a), (b), (c) and (e) of subsection (2) above.

Section 25 (4) Checklist (Step-children)

Where the Court exercises of the powers against a party to a marriage in favour of a child of the family who is not the child of that party, the court shall also have regard—

(a)        To whether that party assumed any responsibility for the child’s maintenance, and, if so, to the extent to which, and the basis upon which, that party assumed such responsibility and to the length of time for which that party discharged such responsibility;

(b)        To whether in assuming and discharging such responsibility that party did so knowing that the child was not his or her own;

(c)        To the liability of any other person to maintain the child.

The Clean Break

The Matrimonial Causes Act also puts the Court under a duty to consider;

“Whether it would be appropriate so to exercise [it’s] powers that the financial obligations of each party towards the other will be terminated as soon after the grant of the decree as the court considers just and reasonable.”

and

Where the court decides in such a case to make a periodical payments or secured periodical payments order in favour of a party to the marriage, the court shall in particular consider whether it would be appropriate to require those payments to be made or secured only for such term as would in the opinion of the court be sufficient to enable the party in whose favour the order is made to adjust without undue hardship to the termination of his or her financial dependence on the other party.

In other words the Court must consider whether there can be a “Clean Break” (No maintenance) or a gradual termination of maintenance, but there is no presumption that there should be a clean break.

Which item(s) from the checklist will be most/more important will vary depending upon the specific facts of the case.

But its not even that simple

These principles are set out in the Matrimonial Causes Act and are fundamental to how cases are dealt with.

Over the years the Higher Courts have given guidance to the lower Courts and practitioners about how these principles should be applied generally and to specific cases.

Every case is different which is why you should obtain legal advice specific to your own situation.