This is almost certainly one of the most complicated areas of family law and one that really merits specialist legal advice.
Our team of family solicitors are highly qualified and well-seasoned family law practitioners who understand this complex area in detail. Even if you decide to try mediation as a means of coming to your own agreements regarding the division of assets, income and pensions (mediation is something that we promote as a firm wherever possible) you still need legal advice before you go into mediation to know what sort of claims you or your spouse/partner may have and what would be a fair agreement for you both.
If you do not have this legal advice first, you will struggle in mediation since the mediator is not allowed to offer legal advice even if they are a trained lawyer as well as a family mediator. Reaching agreement about the finances upon the breakup of a marriage or civil partnership is something that should only be attempted once you understand your legal position fully.
Where there is a lot of information available to you on the internet, much of it is conflicting and it will be difficult for you to know which websites contain reputable, reliable information and which offer inaccurate or misleading information. The best thing you can do is seek legal advice with a highly specialist family law firm who are committed to out of court settlements to maximise the likelihood of binding agreements being reached in such a way that the family suffers less impact and court proceedings can be avoided.
When dealing with financial matters in a divorce or civil partnership dissolution both parties must provide full and frank financial disclosure of their financial positions. This is necessary whether you are negotiating through your family lawyer or in mediation. The duty of disclosure is an ongoing obligation and includes the duty to disclose any material changes in your financial situation after the initial disclosure has been given.
The court can make a range of orders including lump sum payments, transfers of capital assets, maintenance provision or pension sharing. The financial arrangements can be settled on a Clean Break Basis which means once a settlement has been agreed and implemented the parties can make no further financial claim against each other. Sometimes the Court will order ongoing maintenance provision in cases that are not suitable for a Clean Break. Even if you reach an agreement out of Court, you still need to receive the approval of the Court by filing what is called a Consent Order. This is not a rubber stamp exercise. The Court have the jurisdiction to reject any divorce settlement they do not think is fair or equitable and therefore even where agreements have been reached in mediation, you must seek legal advice to be sure that your agreement is capable of winning the approval of the Court before filing any documents.
If it proves impossible to come to an amicable out of court settlement, you will need detailed advice about how to issue an application with the Court to have the matter finally resolved. The number of cases that go to Court for financial orders to be made are much less than the number resolved out of court.
The court process:
To issue an application for a financial order (which was until recently called an application for ancillary relief) a document know as a Form A must be filed with the court. A court fee is payable, at present this is the sum of £255.00. On that form, you will be asked to confirm whether you have attended a Mediation and Information Assessment Meeting to consider mediation as an option prior to court proceedings being issued. This was enshrined within the pre-action protocol for mediation which came into force on 6 April 2011.
Upon the court issuing the application you will receive a timetable for your case making directions for the exchange of financial disclosure in a format known as a Form E and the court will fix a date for the Hearing called the FDA or First Directions Appointment.
At the FDA the District Judge will identify the issues between you and your spouse and will make directions or orders to manage the case. For example, a typical direction made at an FDA may be for the formal valuations of assets to be carried out e.g. the value of a shareholding in a private company, or the value of the family home if that is in dispute. The court will then list the matter for what is known as a Financial Dispute Resolution (FDR) Appointment.
Both of you will be required to attend court together with your family lawyers in the hope that a financial settlement can be negotiated with the assistance of the District Judge. The Judge may give guidance to assist you in reaching an agreement, often indicating what he/she thinks would be a reasonable settlement in the circumstances of your particular case. If it is not possible to settle, there will be a Final Hearing listed at a later date to be heard before an independent District Judge. Any time after proceedings have been issued and up to the Final Hearing, if it is possible to reach an agreement voluntarily the family lawyers can submit a draft of the proposed Order (called a Consent Order) to the District Judge for his/her approval to bring the proceedings to an end.
The Matrimonial Causes Act 1973 and Civil Partnership Act 2004 set out the factors to be considered in deciding what is fair.
The factors to be considered are as follows:
• Welfare of any children of the family
• Income, earning capacity, property and resources of each party now and in the foreseeable future
• Financial needs, obligations and responsibilities of each person now and in the foreseeable future
• Standard of living enjoyed by the family before the breakdown of the marriage or partnership
• Age of each person and the duration of the marriage or partnership
• Contribution made by each person to the welfare of the family, including looking after the home and bringing up children
• Conduct of each person, but only if it is so bad that it would be unfair to disregard it
• Physical or mental disability
In reality, the interplay of all of these factors and the weight given to each is highly complex because the financial landscape and background facts to every case will be different. Some will raise issues of legacy monies received. Are legacies matrimonial capital or not? Others will ask how private shares in companies are valued. Some will want to know if their contribution as the breadwinner overrides the contribution of the other as the main carer or are they held to be equal contributions? Some will think the case is suitable for a clean break on spousal maintenance whereas the other party may think that spousal maintenance should be payable. Even if it is agreed that spousal maintenance is payable, how much and for how long?
These are just examples of the kinds of issues that have to be resolved in divorce settlements and it is for that reason that you really do need advice from a specialist family law firm such as ours before matters can be resolved. It is what we do day in and day out. We can save you time and money by offering you the advice and guidance needed from the outset which will prevent you floundering in mediation or believing you have resolved matters through a private agreement that in fact could never meet with the approval of the Court.