The legal team at Hungerford Legal and Financial Centre have many years of experience with divorce proceedings. They work hard to minimise costs and conflict for their clients, using third party mediators and keeping out of the courts as much as possible. Here is advice on the financial aspects of divorce from Peyton Matthews-Hewer.
Financial issues during a divorce
After the long process of divorce which can easily take six months plus, you then must try and sort out any financial issues which are left.
The first step is always to try and agree from the outset of what each of you would like and how you should divide your assets. However, we know this can sometimes be hard and many people are not sure what they would like or what they need.
The next step is instructing a solicitor to draft letters and proposals to your ex-partner to try and layout an arrangement. By instructing a solicitor to do this they will advise you on what you are entitled too and a realistic view on how you should be splitting the assets.
If this fails, then the next stage is to meet in person or by video link with a mediator to try and have a third party look at your assets and tell you what should be done and how. A mediator does cost money but if it can help you both agree on a solution then it is much cheaper then going to court to fight about it.
If all the above fails, then then you have to go to court. The first chance to decide on the financials will be a Financial Dispute Resolution Hearing. This is where you now must instruct a barrister which can cost £4000 plus for one day, for them to argue your case and find a resolution. This is the last opportunity for yourself and your ex-partner to try and sort it out between each other before you let a judge decide.
The final stage is a Final Hearing, this is when the Judge reads all the information and decides themselves how it should be split. This hearing will easily double your legal bills you have accumulated so far, so we do really encourage people to try and reach an agreement before. This hearing will consider what both parties want, but the judge may not decide in your favour. As it is the final hearing it will be the final result.
What are the financials to sort?
The house is one of the biggest things to sort out after the breakdown or a marriage. When deciding you must take into account any mortgages, the repairs and also the cost of selling the house. When dividing the property up peoples housing needs need to be taken into account as well as any children which will need to be housed. Individuals mortgage capacity can also play a role as many may have to move to a less expensive area to buy another home.
Pensions are the next biggest financial issue. When in the marriage, one party may have stayed home to look after the children meaning that they do not have a pension, or they have a lot smaller one. The starting point to sharing out pensions is the percentage of the pension accrued during the marriage. But the courts have been known to dip into the pre-marriage pension pot due to couples co-habituating together longer and if one party will be disadvantaged if not. You can hire pension actuaries to calculate a fair way to divide pensions in order to make them balanced, but this means an extra cost of £1,500. When looking at dividing both the house and the pensions it is vital that there is a long term and short-term balance as you may get the whole house now but lose out on a vital pension that you will need as you look to retire.
Child payments can be discussed, the Child Maintenance Service calculate the lowest a partner can pay toward the child or children, but you can agree a higher rate. The courts however do not have the power to make a parent pay more than the CMS have said so this is another reason to try and sort out your financials before getting to court. It could also be a good idea to set up a trust for your child or children which will mean neither parents can use the money which is not in the child’s benefit.
Spousal payments are used when a partner may be dependent on the other can cannot work or provide for themselves due to several reasons. These payments are necessary for the party to live and look after themselves.
You could agree to give one partner a lump sum as a good will gesture or in exchange for something, this again is easily done when in the first stages of agreeing the financials. This money can go towards the house, any fees incurred such as legal fees or could be for the children or a business.
Debts are another issue to decide who pays them or how they will be split. It Is always easier for them to paid off so both parties can have a fresh start, but we know this is not always possible.
If you have separated and then inherited or lucky enough to win the lottery then you can agree to ring fence this money and block it off from the other party. However, during discussions the other side can ask for a share.
For all these issues everyone should take into account the ages of the couple, their working capacity and their working years left, their health, if they have a new partner who they intend to marry and of course the children and how they will be provided for.
When we have clients going through this, we have on hand financial advisors, mortgage brokers, accountants, and emotional support councillors to help them and nay children involved.
If you would like any further advice please feel free to contact Hungerford Legal & Financial Centre for a free, no obligation consultation on 01488 508008 or firstname.lastname@example.org