Financial Remedy Proceedings
When a marriage breaks down there has to be a distribution of income and assets. This can be more complex where children are involved.
Resolution of financial matters following divorce
If the parties themselves cannot reach an agreement either direct, via mediation or via solicitors the court proceedings will need to be issued.
Once issued the Court provide a timetable which must be adhered to otherwise the court can order you to pay the other sides costs. We will advise you in detail as and when it becomes necessary but briefly it involves:
- The issue of the Application (Form A)
- Lodging a Statement of Financial Information (Form E)
- Dealing with any questionnaires
- First Directions hearing at which the Court will ensure that all necessary but proportionate information is obtained
- A Financial Dispute Resolution Hearing which is in effect compulsory mediation by the Court
- A Final Hearing in default of agreement
There can be a settlement by agreement at any stage, and most cases will resolve without the need for a final contested hearing.
The Powers of The Court
It is important that you understand the options available to you before you decide on how to deal with the financial arrangements between you and your former husband/wife.
Spouses and former spouses have rights to make financial claims against each other by applying to the Court for orders for any or all of the following:
- Maintenance (ie income payments)
- Adjustment of property ownership (eg transfer of a house from joint ownership to the sole ownership of one spouse, orders for sale of properties)
- Lump sums (ie capital payments)
- Pension sharing/attachment
These rights can only be brought to an end in two ways. The first and most usual way is by a Court Order. Where one or both spouses do not wish to proceed with financial claims then, provided the Court agrees that such an Order would be appropriate, an Order can be made dismissing their financial claims.
The second way is where someone obtains a divorce and then re-marries. In this situation, unless that person has already applied for the Orders for a lump sum or transfer of property which they are seeking either in the divorce Petition or by way of formal application on Form A before they re-marry, then they are caught in ‘the re-marriage trap’. The effect of this trap is that they have lost the right to make those financial claims against their former spouse.
Should the spouses decide not to obtain Court Orders dealing with financial provision and in the event that the re-marriage trap does not apply, then the claims which each of them have against the other are simply left open. This situation is unsatisfactory in that it creates a degree of uncertainty because it leaves the possibility of one spouse making a claim against the other at any time. On the other hand, where one spouse’s financial position is likely to improve substantially it may be in the other’s interest to delay a final financial settlement.
Where neither spouse wants to claim against the other it is usually better for an application to be made by consent for the respective claims of each spouse to be dismissed.
What The Court Take Into Consideration
With regard to financial arrangements between you and your spouse, the Court takes various matters into account when considering what Order should be made. The Court considers all the circumstances of the case, gives first consideration to the welfare of any children of the family under the age of 18 and, in particular, the Court has regard to the following matters, set out in S25 M.C.A 1973.
- The income, earning capacity, property and other financial resources which each spouse has or is likely to have in the foreseeable future including, in the case of earning capacity, any increase in that capacity which it would be, in the opinion of the Court, reasonable to expect a person to take steps to acquire.
- The financial needs, obligations and responsibilities which each spouse has or is likely to have in the foreseeable future.
- The standard of living enjoyed by the family before the breakdown of the marriage.
- The ages of each spouse and the duration of the marriage.
- Any physical or mental disability of each spouse.
- The contributions which each spouse has made or is likely to make in the foreseeable future to the welfare of the family, including any contribution by looking after the home or caring for the family.
- The conduct of each spouse, if that conduct is such that it would in the opinion of the Court be inequitable to disregard.
- The value to each spouse of any benefit which one spouse because of the divorce will lose the chance of acquiring (most usually pension provision).
The aim of the court is to achieve fairness. Often a key factor is the reasonable needs of yourself and your spouse. Resolving the financial matters following divorce is very complex and legal advice should always be sought. It is an art rather than a science hence why we recommend you speak to an experienced family solicitor.
In most cases, the Courts no longer have power to make orders for child maintenance except by agreement. An application to the Child Support Agency has to be made for child maintenance to be assessed if maintenance cannot be agreed.
Both you and your spouse have an absolute duty to each other and to the Court to disclose fully your financial position so that a proper financial arrangement can be made.
Before any proper advice can be given we have to be sure that all relevant information about income and assets is available. The basis of the information required is in the Statement of Financial Information (Form E). The information and the documents that we require for that are:
- Any written valuation of the matrimonial home which you have obtained in the last six months
- Your most recent mortgage statement
- Statement of all bank, building society and national savings account which are in credit which you hold or have an interest in including TESSA’s and ISA’s for the last 12 months
- Any surrender value, quotation which were obtained for any life policies
- If you are in business the last two years accounts and any other documents upon you based your valuation of your interest in that business
- If you have a pension, the value of your pension rights. These are in a special form which we can supply
- If you are an employee your last three payslips and your P60 for the most recently completed financial year
- If you are self-employed your accounts for the last two completed accounting years