Financially Navigating Divorces
Going through a divorce raises important financial questions. Understanding what to do about your finances during a divorce is not just a matter of adhering to the law; it’s about securing your financial future and ensuring a fair outcome for all parties involved. In this article, we will delve into the key aspects of managing your finances during a divorce under UK law, providing you with valuable insights and guidance to help you make informed decisions during this crucial period in your life.
You can’t simply leave your financial matters as they were when you were together. Fortunately, you have several options to consider:
Mutual Agreement: You and your spouse could attempt to work out an agreement between yourselves. However, it’s crucial to note that this won’t be legally binding. If either party decides to make unilateral changes or even opt out of the agreement, there won’t be much recourse. Even if you put it in writing and both sign it, it won’t carry much weight. If you find yourself in Court proceedings later on, you could present a copy of the agreement, but ultimately, a Court has broad authority in divorce cases to adjust existing financial arrangements. If the Court feels the agreement doesn’t adequately provide for both parties, including dependent school-age children, it’s likely to dismiss it.
Separation Agreement: A step up from a homemade agreement is a Separation Agreement, which both parties intend to be legally binding. Drafting one correctly usually requires legal assistance to ensure compliance. Whilst it is more secure than a mutual agreement, it’s still not entirely foolproof and is not sent to the Court for approval. One party may decide to challenge the terms during a subsequent divorce, although it could be harder to successfully contest a properly drafted Separation Agreement. The possibility of a challenge does exist however, in which the agreement can be altered by a Court should the agreement be deemed to be unfair. Even if the court ultimately deems the terms fair and declines to alter them, you could face significant expenses and stress during the court proceedings.
Court-Approved Settlement: The most effective way to formalise a financial settlement in a divorce is to have it incorporated into a legally binding Court Order. There are two routes to achieve this. The first is for the Court to issue an Order after considering evidence from both parties over multiple hearings. Court proceedings should always be a last resort, given their cost, time-consuming nature, and stress.
A preferable approach is for you and your spouse to negotiate an agreement. Should an agreement be reached the agreement will need to be drafted into a Consent Order, which is a legally binding document and is sent to the Court for approval. If you both agree on how to divide marital assets, you can have a lawyer prepare the necessary documents in the correct format and submit them to the Court. While full financial disclosure isn’t legally required in this scenario, it’s advisable to ensure transparency and protect your interests. You will both need to complete a “Statement of Information” which is supported by a statement of truth detailing your financial positions before and after the proposed settlement. This provides the Judge with a basis for consideration. Approval of the agreement isn’t merely a formality; Judges may request additional evidence and reject the settlement if it appears unfair to either party.
In summary, while you may have a clear understanding of how to divide your assets, it’s wise to have your financial situation reviewed to ensure fairness. Seek advice from a family solicitor if needed, as they can offer guidance on various options available to you. To arrange a consultation, please call us at 01277226644.