Finances
Whilst the legal process for obtaining a Divorce is relatively straightforward, addressing the financial and property matters arising from a marriage can be both complex and daunting.
In our experience, a financial settlement is frequently overlooked and too often we are asked to negotiate a settlement long after Decree Absolute/Final Order has been granted. Invariably, assets will have changed in value and needs altered. Having to unpick this is never desirable for a client. We cannot emphasise enough, therefore, how important it is to look at and deal with the matrimonial assets within the course of the Divorce, and to secure a legally binding Financial Remedy Order at the same time. Even if there are no real assets to speak of, your case is still very likely to be suitable for a Financial Remedy Consent Order, which may include a clean break, and is the only way to financially sever yourself from your spouse. Accordingly, a formal legally binding financial settlement is vital to provide you with future financial security.
Experienced legal advice is essential, in our view, to give you that legal protection, even if you have undertaken the Divorce proceedings yourself.
The list of what a financial settlement can incorporate is almost endless, but common issues include the following:
The family home;
Investment properties, holiday homes and properties abroad;
Savings;
Shares;
Endowment Policies;
Investments;
Trusts;
Pensions;
Cars;
Valuable possessions such as antiques, boats and jewellery;
A family business or interest in another business;
School fees;
Payment of legal fees;
Maintenance (both for children and spouses);
Third Party Payments; and
Debts.
In order that we can advise as to the basis of a reasonable and fair settlement, it is usual and preferable for full and frank financial disclosure to be exchanged. Without financial disclosure there is a risk that assets may be missed, omitted or hidden. As a result, the true extent of the matrimonial pot can be impossible to determine.
There are many ways that a financial settlement can be addressed. We can be creative! It is all about what works for you, in your circumstances (within legal boundaries of course!)
Often, we are presented with an agreement from a client which they ask us to make legally binding by drafting a Financial Remedy Consent Order and filing it with the Court. This is usually straightforward and we will advise you if all bases have been covered and whether it is likely to be accepted by the Court.
Alternatively, negotiations may take place between Solicitors, or in the course of mediation. Again, if an agreement is reached, a Financial Remedy Consent Order may be prepared.
Ultimately, if negotiations and|or mediation break down, we will advise as to the merits of an application to the Court for a Financial Remedy Order. This process is known as Financial Remedy Proceedings (previously known as Ancillary Relief).
If an application to the Court does become necessary, it does not automatically have to become a costly and lengthy process. Often, the Court structured process ensures a timely resolution. Even if proceedings are issued, it is still possible (and encouraged) to negotiate. If an agreement is reached in the course of proceedings, we simply notify the Court and file a Financial Remedy Consent Order.
An Application for a Financial Remedy Order starts with an application to the Court by way of Form A, accompanied with the usual court fee of £275.
On receipt of the Form A, the Court will set a formal timetable up to and including the First Directions Appointment (FDA) Hearing.
The next stage is for both parties to file a comprehensive financial disclosure document, known as a ‘Form E Financial Statement’. This ensures consistency of the disclosure provided by both parties. The Form E is a lengthy document and can appear daunting at first, but we will guide you through it and advise you as necessary. We have prepared hundreds, if not thousands, of these documents during the course of our careers to date.
Thereafter, Forms E are exchanged and a copy filed (sent) to the Court. We then encourage our clients to go through their spouse’s Form E with a fine toothcomb and a highlighter pen, and prepare a list of any questions or irregularities. We will do likewise.
We are required to prepare various documents for the Court in readiness for the First Directions Appointment (FDA) Hearing. These include a questionnaire and request for information from your spouse of any disclosure missing from their Form E, together with a statement to assist the Judge with the issues in your case which need to be determined.
We will also advise you at this stage whether any experts need to be instructed to help assist the Court. Examples may include valuing a property if the same cannot be agreed, analysing pension assets or advising as to tax implications.
The First Directions Appointment (FDA) Hearing is usually procedural in nature. It is very much a ‘getting your ducks in order’ hearing, to ensure that the Court timetable has been adhered to and to determine whether we have all we need to properly negotiate, and if we don’t, what else we do need. If, by the time we attend the First Directions Appointment (FDA) Hearing, we have everything that we need, we can treat the first Hearing as the second Hearing, the Financial Dispute Resolution (FDR) Hearing; resulting in a speedier and more cost-effective process.
Following the First Directions Appointment (FDA) Hearing it is usual for questionnaires to be answered and missing documents provided. Additionally, any experts will prepare their reports and file their evidence. With this in place we will be in a position to advise you as to the likely basis of a financial settlement and potentially make proposals on your behalf.
It is important to bear in mind that there is no right answer as to what is fair and reasonable. It is what works for you and your specific circumstances. We are guided by the law, specifically, the factors set out in Section 25 (2(a-h)) of the Matrimonial Causes Act 1973, case law, and often the gut feeling that comes from experience in this field.
The Financial Dispute Resolution (FDR) Hearing is an important hearing as it is an opportunity for the parties to get together with their respective legal advisers and attempt to ‘thrash out’ an agreement. There is often considerable ‘to-ing’ and ‘fro-ing’, with the parties’ positions getting closer and closer, in the hope that an overall settlement can be agreed, which is often the case. The Judge on this occasion will also give an indication as to what they believe to be reasonable in the circumstances of the case. This is often helpful is steering and focusing the parties towards a realistic settlement. If an agreement is reached, a Financial Remedy Order can be prepared at court reflecting the terms.
If there are elements of an agreement, or even if there is no agreement, it is usual for negotiations to continue between Solicitors in the hope of avoiding a Final Hearing. These negotiations often continue to the eve of the Final Hearing or, sometimes, on the day of the hearing itself.
A Final Hearing is the last and most formal hearing within Financial Remedy Proceedings as it is, in effect, an occasion for the Judge to consider all the financial disclosure, hear evidence from the parties and make a final and binding decision as to the distribution of the matrimonial assets. This route is never desirable, not least from a costs perspective. Having the decision taken away from you can also be very difficult for some clients, however, the finality for others is a huge relief. The decision of the Judge will be set out in a Financial Remedy Order.
Financial Remedy Proceedings can take a number of months to conclude depending, of course, on the stage that settlement is achieved. Either way, we have considerable experience of all these routes and can give you specific, honest advice, tailored to your circumstances, at each and every stage of the process.
We will also guide you through the implementation of the Financial Remedy Order, such as the potential sale or transfer of the family home, the assignment of policies and|or sharing of pensions etc.
We should mention for completeness that a Separation Agreement (a written agreement in the form of a contract) is a separate possibility if you would prefer to deal with the finances of the marriage now, but issue Divorce proceedings at a later date. A Separation Agreement is negotiated voluntarily and ‘by agreement’ and cannot have Court involvement.
With a view to getting ahead of the game, we would encourage you to start organising your financial paperwork to ensure that it is all to hand when we need it. The following list is not exhaustive but should give you an idea of the typical documentation required in the disclosure process:
Your last 12 months bank statements for any account you are named on, or have been named on within the last 12 months;
An informal valuation|estate agent appraisal of any property you own;
A mortgage redemption statement for any property you own;
Surrender values of any policies you have an interest in;
Your last 3 months payslips, or most recent business and management accounts if you own a business;
Your most recent P60, or self-assessment tax return if self-employed;
The Cash Equivalent Transfer Value (CETV) of any pensions you hold, whether current or frozen; and
A schedule of your monthly outgoings.
We would also suggest that you have a good think about your priorities and what you really want to achieve, for example, do you have your heart set on keeping the family home or is retaining your pension a particular priority? It is often helpful to have an idea of your key priorities early on in any proceedings, so please do let us know what is important to you, so that we can work with you to achieve the best possible outcome.
We offer a FREE first appointment, so take the first step and reach out to us now by either telephone on 01962 809056 | 02380 653785 or email us to arrange a convenient time on contact@mitchellryansolicitors.co.uk.