Of the many decisions required during the divorce process, questions related to finances and other assets are some of the most perplexing. This is an area where couples often find it difficult to reach an agreement, particularly when emotions run high in the aftermath of a separation.
If a couple can reach an agreement on how finances should be divided without the court’s help, they can apply for a consent order to be granted rather than a financial order. A consent order makes the agreement legally binding and less time-consuming and expensive than obtaining a financial order.
However, if an agreement is not possible, the court will need to decide. It will issue a financial order to document how financial assets will be split between the former spouses.
A financial order can only be initiated after the divorce application has been filed with the courts and a conditional order or decree nisi has been granted. A mediation meeting is also required before a financial order can be requested. This may be skipped in some circumstances – most commonly if there are instances of domestic abuse.
What criteria does the court consider when granting a financial order?
The financial order will set out how matrimonial assets will be split between each party. Those assets will typically include:
- Property
- Pensions
- Investments
- Savings
- Any businesses owned by the family
The issue of maintenance can also be covered by the courts.
There are several factors that will contribute to the court’s decision when granting a financial order; one of the primary considerations is the duration of the marriage.
Other considerations include:
- The age of both parties
- Each person’s typical living expenses (such as rental payments and transport costs)
- The standard of living established during the marriage
- Any financial responsibilities each person has
- Each party’s ability to earn a living independently
- Each person’s income and other financial resources
- Each person’s role within the family unit
- Disabilities or health conditions of either party
- Any benefit that would be lost in the event of the divorce. Typically, this covers access to a pension.
In addition, the court will also consider how any children will be taken care of. This can influence what happens to the family home, for example, and whether maintenance payments will be made.
How can individuals effectively prepare their financial disclosure for the court?
Couples applying for a financial order will be required to complete Form E. This provides a clear picture of your finances and must be provided by both parties.
The form is extensive, as you’ll be required to provide full details of your finances. This includes all incomings and outgoings, as well as any savings and debts you may have. This is known as financial disclosure.
Property: Provide details of any property you own or are renting.
Bank accounts: You’ll need to provide the balance in your accounts, so you may need to request statements from your bank.
Debts: Provide details of any debts you may have. Again, you may need to order statements such as loan statements or credit card statements to provide accurate figures.
Income: If you earn a salary, you’ll need to provide details of how much you earn. Your pay slips, P60 or P45, will provide up-to-date figures to quote. Other income should also be reported. For example, if you earn additional money from a rental property.
Pensions: You’ll need to provide details of any private or workplace pensions. You may need to speak to your pension provider to get an accurate figure.
Expenditures: Gather copies of your bills and other regular expenditures, such as transport costs, school fees, and rent or mortgage payments to calculate your monthly expenditure.
What impact do financial orders have on long-term financial planning after divorce?
The court will always strive to make a clean break when issuing a financial order. It can be an advantage when it comes to planning for your future, as it gives you a clear picture of your financial position so you can move forward. However, it can also have long-term financial implications on your standard of living, so it’s important that you take time to evaluate your position and put new plans in place for your financial security post-divorce.
How do changes in circumstances affect the enforcement or modification of a financial order?
There are very few instances in which a financial order will be changed once it has been issued. Those few instances include clear evidence of fraud or if one party has deliberately hidden their assets. If there are significant changes in circumstances, such as a loss of income, the court may consider adjusting any maintenance payments that are being made to reflect those changes.
If you’re seeking a financial order, it’s advisable to obtain legal advice as the process can be complex. You can arrange a consultation with one of our family solicitors to discuss your circumstances in confidence.
