Finances on Divorce or Dissolution
Finances on Divorce or Dissolution
When a marriage or civil partnership ends in England and Wales, sorting out finances is inevitably one of the most complex and emotionally charged aspects of the process. The law aims to achieve fairness, but there is no fixed formula, and ultimately each case is assessed individually based on its facts and circumstances.
Legal Framework
Whilst there’s no fixed framework, financial arrangements are governed by:
The court’s primary concern will be the welfare of any children under 18. In addition to that, it considers factors such as income, earning capacity, property, financial needs, contributions, age, health, and standard of living – these are the s25 MCA factors.
Types of Financial Orders
The court can make several types of financial orders:
Mediation
Couples should try to agree their financial arrangements together or with the help of a mediator. If agreement can be reached, this must be formalised via a consent order (and approved by a judge), so that it is legally binding on both parties.
Financial Disclosure
Both parties must provide full financial disclosure, including details of income, assets, debts, and pensions. This is to ensure there is transparency for the parties, and also helps the mediator, and ultimately the court if needed, to assess what is fair.
Court Proceedings
If no agreement is reached, either party can apply for a financial order. The process will involve up to three hearings:
How the Court decides
There is no automatic 50/50 split, but that is a starting point. The court considers:
Pensions and Business Interests
Pensions should not be overlooked as they can be significant. Business assets may also be considered matrimonial property, depending on how they were used during the relationship.
Spousal Maintenance
This may be awarded if one party cannot meet their needs. It can be:
Clean Break
Where possible, courts favour a clean break, which ends all financial obligations between parties. This provides certainty and finality.
Tax and Costs
Transfers of assets may have tax implications. Legal costs can be substantial, so early resolution is encouraged.
Conclusion
Financial arrangements on divorce or dissolution require careful planning, transparency, and legal advice. Whether through agreement or court order, the aim is a fair outcome that meets the needs of all parties, and especially the children.