All marriages are different. Some couples choose to have completely joint finances with a house in both of their names, savings held equally and joint bank accounts. Other couples decide to keep their finances completely separate and the house they live in may be in one person’s name only. In the eyes of the law however, once married, and especially once a married couple have children, their finances are considered joint. So, when deciding how to separate finances on divorce, consideration will need to be given to all aspects, including:
- Pensions
- Property
- Savings
- Investments
- Income
How finances are shared should take account of the needs of both parties and any children of the marriage.
Ways to reach a financial agreement
There are several ways in which you can finalise a financial settlement. It can be done by agreement between you, with the help of a mediator, with advice and support from a solicitor or by taking your case to court for a judge to decide. The time and costs involved will of course increase through this sequence of options.
Regardless of which route you take, it is always important to get advice on the timing of a divorce and finalising financial issues as there can be tax implications as well as implications and loss of death benefits on various pension arrangements.
As part of the new online no-fault divorce process you will be asked whether you wish to apply for a financial order. Some people may not understand this question or be tempted to say no, especially if they have already reached an agreement. However, as explained below, you should ensure that any agreement that is reached is put in writing and sent to the court for a judge to approve. This is known as a consent order sometimes referred to as a financial remedy order.
Why you need a consent order/ financial remedy order
When you divorce, you and your ex-partner need to agree how to separate your finances. The legal process for getting a consent order in place is separate from the divorce process.
A consent order is a legal document that sets out the terms of your agreement and sets out how you are going to divide up assets like your pensions, property, savings, and investments. It can also include arrangements for maintenance payments, including child maintenance.
In most cases, as part of the agreement, the court is also invited to dismiss all future financial claims you could make against each other. This is known as a “clean break”
If you don’t obtain a consent order, your agreement is not legally binding, meaning that a court cannot enforce it at any point in the future if there is any dispute about what was agreed.
It is always important that you seek legal advice before you go ahead with a divorce. It is usually more straight forward if you can agree how to divide money and property before you apply for the final order that ends your marriage. Whilst You can still do this after the divorce, it may change what you are entitled to and there may be tax implications.
If you would like further information about the contents of this article, contact Allen Bailey our family law solicitor on 01748 832431 or email us at: enquiry@scottswright.com