Financial Proceedings Upon Divorce

The division of finances is dealt with separately from the divorce. Our divorce financial settlement solicitors will advise you on the fair outcome considering your financial position (including properties, savings, pensions, business interests, liabilities and income).

It is hoped that you and your partner will resolve matters amicably and avoid Court (for example, by negotiating through solicitors or attending mediation). If the case progresses to court, the Court will consider the factors within section 25 Matrimonial Causes Act 1973, including the length of the marriage, assets and liabilities, earnings and earning capacity, the contribution each of you has made to the marriage and your needs, and any children of the family. 

The Court’s primary consideration is the welfare of any child of the family (under the age of 18), and this will be at the forefront of any decision made by the Court. 

The Court’s powers are wide in terms of the types of financial orders it can make. The types of orders that can be made by the Court are as follows:

 

Maintenance Pending Suit or outcome of proceedings

This is an application for maintenance to be paid whilst divorce proceedings are ongoing. This is sometimes referred to as Interim Maintenance. It is customary for the court, on this occasion, to consider carefully each party’s needs which are often demonstrated through completing a schedule setting out monthly expenses. 

 

A Property Adjustment Order

This is an Order where one party is ordered to transfer to the other party their interest in a property. This can involve jointly owned property or property held in a sole name.  

 

A Periodical Payments Order

This is an Order for maintenance to be paid after the final Decree Absolute. This is calculated within proceedings by reference to case law and the parties’ income and expenditure. The quantum and duration of such an order will be dealt with by the Court or within negotiations between solicitors. 

 

A Lump Sum Order

This is an Order for a payment of a capital, which is one payment only. It can be made in instalments or paid as one amount. It is permissible to pay by way of one lump sum or a series of lump sums under Section 23(1) Matrimonial Causes Act 1973, thereby ensuring that the lump sum cannot be varied or increased subsequently. However, an agreement to pay one lump sum by instalments is capable of being varied. That said, recent case law has made it clear that the safest way to avoid any subsequent application for a variation is to pay the lump sum in one go. 

 

A Pension Sharing Order/Pension Attachment Order

This is where the Court Orders the pension provider to transfer some of one party’s pension rights to the other. There are options in relation to pensions, including:

Pension sharing – in this scenario, the Court will work out the exact percentage to be transferred, and the pension sharing order is served on the pension trustee. Either the receiving party will become a member of the pension scheme, or it will transfer the value to a new pension provider. It is usual to obtain in this scenario a Pension on Divorce report from a pension actuary to assist with the appropriate calculation. 

Offsetting – this is when the value of the pension is offset against other assets. For example, if one spouse were to keep the pension and the other party is given assets in lieu. 

 

What is required in order to calculate the value of a pension?

In order to work out the pension credit to be transferred or the value to be offset, you will need to apply to the pension trustees for a cash equivalent valuation. This can take some time, and you are advised to apply for the CEV as soon as practicable. 

The recent case of T v T (EWFC) B10, His Honour Judge Hess set out very clearly the procedure involved in making and implementing a pension sharing order, and in particular, the risk of “moving target syndrome”. 

 

Considerations of the court

Section 25 Matrimonial Causes Act 1973 and Schedule 5, Part 5, paragraph 21 of the Civil Partnership Act 2004 set out the factors which the Court will take into account when determining any application. 

These are:

  • The present and future financial resources of each party;
  • The financial needs of each party;
  • The family’s standard of living prior to the breakdown;
  • The ages of the parties and duration of the relationship;
  • Any physical or mental disability of the parties;
  • Relevant contributions by either party;
  • The conduct of each party;
  • The loss of benefit to either party due to divorce or dissolution. 

 

The Court will attempt, if possible, to achieve a “clean break” between the parties so as to ensure that financial ties are severed, and independence is achieved. 

As well as the statutory guidelines above, the Court has a wide discretion when dealing with the division of assets, with the ultimate priority being “fairness”. 

 

Financial Proceedings Process

The financial remedy procedure commences by one party issuing a Form A Notice at Court, prior to which that party must attend a Mediation Information and Assessment Meeting, with a mediator. MIAMS are not free and the cost is set by each mediator. 

The requirement to attend a MIAM does not apply in the following circumstances:

  • When a consent order (financial agreement) has been signed by the parties;
  • Where there has been domestic violence;
  • When the case is urgent; 
  • Where the parties have already attended a MIAM; or
  • Where other exemptions apply. 

 

  • Once the Form A has been issued, the Court will list provide a timetable detailing the following:
  • For Form E financial statements to be exchanged and filed;
  • For questionnaire, chronology, statement of issues to be exchanged and filed. 
  • For a First Directions Appointment to be listed. 

New rules in place also provide that asset schedules (ES2) and background chronologies (ES1) must be agreed upon between the parties and also lodged at Court prior to the First Appointment. 

At the First Appointment, the Court will review the parties’ documents and consider the future directions for the case, including listing the case for a Financial Dispute Resolution hearing. The Judge will also scrutinise both parties’ Questionnaires and confirm if each question is reasonable before making an order that the questions be answered. Valuations of assets, if relevant, will also be ordered to be provided. 

Prior to the Financial Dispute Resolution hearing, Replies to Questionnaire must be provided. In addition, the Forms ES1 and ES2 must be updated and lodged at Court. The Court will, at this hearing, give guidance as to settlement if the case were to proceed to a final hearing and will also encourage the parties to resolve the case. If the case does not settle, it will be listed for a final hearing. An FDR hearing is usually listed for 1 hour, and the parties must attend court some 1 hour beforehand for the purposes of negotiation. 

At the final hearing, both parties will attend court along with solicitors and Counsel. They will be questioned by their own barrister and then cross examined by the other party’s barrister. There may be other experts or witnesses who will also be called to give evidence, following which the Judge will make a ruling which will be binding on both parties. 

 

The duration of financial remedy proceedings can vary, depending on the complexity of each case, along with the particular circumstances, including:

  • The time taken for the other party to provide financial disclosure;
  • The amount of issues that are disputed;

The amount of assets and finances to be divided; and 

  • Delays at Court in terms of listing a final hearing (which can take many months); 

When it comes to financial disclosure, Practice Direction 9A, Family Procedure Rules sets out the requirements in all applications. This highlights the ongoing duty of both parties to make full and frank disclosure of all relevant information and the duty of solicitors to inform their clients of this obligation. It also states that time and money should not be wasted on providing voluntary disclosure (before Court) that is not necessary. 

 

In general terms, however, clients must disclose the following:

  • Property interests and values;
  • Mortgage statements;
  • Bank statements;
  • Value of any investments;
  • Business accounts;
  • Valuations of businesses
  • Pension cash equivalent values;
  • Wage slips;
  • P60 and P11D for the last financial year; and
  • Tax returns. 

The above is normally set out within a Form E, but in some situations, disclosure by way of schedule with supporting documents may be sufficient.

 

Divorce Solicitors London

Our specialist divorce solicitors, based in London, provide a professional and efficient service. To chat our discreet and confidential family lawyers call us on 020 7123 4600, email us at contact@marks-law.co.uk or make an online enquiry here. 

CONTACT US

We are here to help guide you through what can be a stressful and difficult process, and to achieve the best result for you.

 

Lucy Marks specialises in all forms of family law applications, including high value financial applications on divorce.

If you would like to arrange a meeting or have any questions, please contact us or fill in the form to the right.

 

96 Park Street, London W1K 6NY
contact@marks-law.co.uk
020 7123 4600