Money matters can be a recurring source of stress in any relationship, but those feelings are only amplified when divorce is on the horizon. While there are many challenging aspects to the separation process – especially when children are involved – determining a fair division of assets is often one of the most difficult hurdles to overcome.
A financial settlement sets out how shared assets are to be divided between both parties. It covers a wide range of financial elements spanning everything from pensions to property.
While no two financial settlements are alike, the most common elements to be divided in the event of a divorce include:
- Cash – including any money in shared accounts, savings and investments.
- Property – such as the marital home.
- Businesses – any commercial enterprises owned.
- Property contents and other possessions– including furniture, artworks, jewellery and so on.
- Vehicles – including cars, motorcycles, and boats.
- Pensions
- Debts – including monies owned on loans and credit cards.
Maintenance payments will also need to be considered. A maintenance payment may be paid to one partner to assist with living expenses moving forward. Separating couples sharing a child or children will also need to agree on how payment for costs related to raising the children will be split.
How long can a financial settlement take?
Agreeing on a fair division of assets doesn’t come with a set timeframe. While some couples may find it fairly easy to agree on how assets should be divided and can move forward relatively quickly, others will find it hard to reach a middle ground with a split that appears reasonable to both parties.
In divorces with a high level of conflict or hostility, making any kind of progress towards an equitable division of assets may well feel like an impossible task.
The amount of time it takes to reach a financial settlement will also be influenced by the complexity and volume of financial assets to be considered. Multiple properties, cars, business investments and pensions for example may increase the amount of time required to achieve a mutually agreeable settlement.
Reaching an agreement without the intervention of the courts is quicker and more straightforward. Even as the fastest option, this will still take at least 26 weeks – that’s the minimum amount of time required[1] to finalise a divorce.
Do I have to go to court for financial settlement?
A financial settlement is a binding legal agreement. It will set out not only the proportion of shared assets that you’ll receive but will also outline other financial arrangements such as any ongoing financial support that should be given.
Despite being legally binding, you don’t necessarily have to go to court to reach a financial settlement with your former partner. If both parties can reach a joint agreement on how financial assets should be split, a consent order is drafted and submitted to the court for approval. This can be submitted alongside the divorce application but can’t be approved by the court until after the conditional order or decree nisi is issued. Once approved by the court, the consent order becomes legally binding.
If you can’t reach an agreement, you can ask the court to decide how the assets should be split.
The court will consider a range of factors including the needs of any children, the current and future assets of each party, their earning potential, present and future financial obligations such as the cost of any new property where the children will live, and the duration of the marriage.
A short hearing will be held initially, so the judge can hear details of the application. This will be followed by one or more financial dispute resolution appointments and then if an agreement still can’t be reached, a final hearing where the judge will decide on how assets should be split. This is more expensive and takes longer than reaching an agreement without court intervention.
How can legal guidance help you secure your financial well-being during divorce?
Ensuring your financial well-being in the event of a divorce can feel overwhelming. With so many things changing, knowing that you’re receiving a fair and equitable division of assets is an important step towards financial security and your next chapter as an individual. That can be easier said than done when it comes to untangling assets and determining who should get what.
Legal guidance can help you to navigate this complex situation with clarity and ensure that you understand what you’re entitled to. A family solicitor can also act as a mediator where there is some degree of conflict, to help you reach a solution that’s acceptable and fair to both parties.
If you’re going through a divorce and would like to speak to us about legal support to reach a financial settlement, you can talk to us in confidence.
[1] Source: https://www.gov.uk/divorce/finalise-your-divorce
