When relationships end, whatever the circumstances, it is usually a time of mixed emotions. Even those couples who agree to end their marriage and feel amicable about it, go on to experience the uncertainty (and often anxiety) brought about by the necessary changes to their living and financial arrangements.
Solutions are not often straightforward, either to identify or implement. At a time when the practical realities you must face require sharp analysis, most people find their judgement clouded by emotion.
When it comes to the finances, two over-arching issues are ‘sharing’ and ‘need’, aside from the more detailed factors of each case that a court would consider when dividing up the finances. ‘Sharing’ simply means dividing the matrimonial assets equally. Often, the financial resources, divided equally, do not meet one party’s need (particularly where there are children). In those cases, which are in the majority, the law will be more concerned with ‘need’.
Prioritising need in reaching a divorce settlement
A sound plan settling the arrangements for the children, securing sufficient financial provision and safeguarding your future is crucial. Meeting your children’s needs appropriately is the priority. Not only does this reflect what most parents want, the law in financial cases makes clear the welfare of children under 18 is the court’s first consideration.
In all cases, obviously this means ensuring at least that the kids are fed, clothed and so on and, wherever possible, that they have a secure roof over their heads. If there’s not much money to go around, then the financial resources will be focused on the parent with whom the children live for most of the time.
Sometimes, in more affluent families, it is possible to share family resources so that the needs of both parties are met as well as those of the children.
When there are no children, and both parties are able to work, their needs (e.g. for housing) are often the same. Such cases are usually more straightforward to sort out.
Looking beyond the needs of the parties
Only once needs have been catered for from the available capital and income is it appropriate to look beyond needs.
What further resources are there, should these be divided between the parties equally or should the current ‘owner’ of those assets or income be permitted to retain all or part of them?
The financial disclosure process
The law tells us that to work out what to do next, you and your former partner must honestly and transparently share with each other all relevant information about your financial circumstances. This process is called “disclosure” and is very important to ensuring the outcome is fair. Without full knowledge of what there is, how can anyone assess whether a settlement is fair?
This includes details of bank accounts, policies, savings and investments, income and bonuses (including expected pay increases), pensions and valuable possessions. This might also include tough decisions about earning capacity – if you’re not working at the moment, what sort of work might you be able to do/find?
Steps to reaching a fair financial settlement
A family law solicitor can help you through the process of disclosure to make sure you reach a settlement to both meet needs and provide fairness, in terms of the division of assets. The steps are the same in each case, with common questions to consider:
Step 1 – what are the available financial resources in terms of capital, property, pensions and income?
Step 2 – what are your/your former partner’s monthly expenses and financial responsibilities?
Step 3 – how much are your/your former partner’s debts?
Step 4 – what do the children need and what arrangements are most likely to meet those needs (if there are no children, replace ‘the children’ with ‘you’)?
Step 5 – how can these needs be best met from what is available, including (if possible/necessary) if both parties were working?
Step 6 – Share all of this information with one another.
Step 7 – If lawyers, mediators and the courts get involved, you need to disclose all of this information to them too.
Step 8 – try really, really hard to agree upon a sensible plan with your former partner, with support from sensible friends and family, a family mediator, your family law solicitor and even the court (as a last resort).
It’s hard to separate the emotions from the practical needs when it comes to divorce and separation, but it is essential if you are to reach a financial settlement and make arrangements for your children with a minimum of cost, time and distress.
Fiona Spinks
Family Law Solicitor Cambridge
