I’m Divorcing - Is It Possible To Secure A Fair Financial Settlement?
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The impact of divorce can be devastating – which is why it is important for those in this situation to reach a fair financial settlement without going to Court.
Emotions understandably run high, and our role as family lawyers is to do all we can to control those emotions - because relationship breakdown involves families, often with children, who will continue to be families long after they have separated.
When it comes to finances, the matrimonial pot, in principle, is shared equally when you divorce.
Exceptions include cases where couples have previously tied the knot and owned properties, shares, and investments in their former marriages.
Also, in situations where meeting the financial needs of one of the parties, and in particular the housing needs of the children, means that an unequal division might be needed.
A starting point in securing a fair financial settlement that meets the needs of everyone is for both of you to undergo a ‘full and frank disclosure’ of each other’s financial situations in these three areas:
1. Assets – your house and other properties, savings, investments, shares, and businesses
2. Income – whether you are employed or self-employed, along with dividends and interest payments
3. Pensions – the type of scheme and value
You and your spouse are expected to provide information detailing all your finances including bank account details and one year’s worth of statements for each account. Pay slips and other documents are also needed.
Doing this produces a detailed picture of the financial requirements you both need now - and going forwards - to protect you both.
The repercussions of failing to disclose all your financial assets during the disclosure process include loss of trust with your spouse – which can also make agreeing a settlement out of Court more difficult.
If your divorce goes to Court and a Judge discovers you have not divulged key financial information, you could lose credibility with the Judge and face ‘ligation misconduct’ which can include being ordered to pay your spouse’s Court costs.
If, having agreed a Consent Order - a legal document approved by the Court verifying how you will divide your assets, income, and pension - it later comes to light that you have withheld financial information, your spouse might be able to make future additional claims.
In the worst-case scenario, deliberately withholding financial information in breach of a court order can amount to a contempt of court for which a range of penalties (including ultimately imprisonment) could be imposed.
While the prospect of planning your future finances may seem daunting at such a period in your life, reaching a financial settlement that is mutually satisfactory, and will stand up to legal scrutiny, is vital.
Providing clarity and certainty to you and your spouse, it enables you both to look to the future with security, optimism, and peace of mind.
Neil Dring is a senior family law specialist, at Jones Myers. Neil has almost four decades of expertise in divorce and financial settlements arising from relationship breakdowns.