Divorce financial settlements are agreements between divorcing parties to separate their money and assets once the marriage is over. These assets will include things you have built up and acquired during the period of marriage. They typically include property; pensions; savings, personal belongings, cash in the bank, and vehicles. Once a divorce financial agreement concerning these kinds of assets has been drafted, agreed, turned into a consent order, and approved by a judge, it becomes a legally binding document confirming the allocation of the parties’ assets. Divorce financial settlements, during divorce proceedings, are essential because it not only creates a financial certainty between the parties but is essential because it prevents outstanding financial claims from coming back to disrupt your lives years after your divorce has been finalised. This is because, in England and Wales, even when you’re divorced, you still retain the ability to make financial claims against an ex-spouse and vice versa: there is no time limit for making these.
How quickly a divorce financial settlement arrangement, out of court, can be obtained will depend on the relationship you have with your ex and how complicated your monetary arrangement is. Before you look to reach an agreement, you should sort out your day-to-day finances; you need to arrange with your ex who gets what and how you will continue to pay your bills. Assessing your financial situation as both individuals and couples will help build up a picture of your current situation. Ultimately, any divorce financial settlement should consider what you have, what you owe, and how everything could be split. This process is typically done by working through a Form E, which is the document the court would want you to complete. It is important to understand what you will need once you go your separate ways, especially if children are involved.
If you live in England and Wales, the divorce process takes, on average, 14 months. However, if you choose the court route, it can take longer. The Covid pandemic has caused much backlog, and it is not unusual to find your upcoming hearing being postponed due to a lack of judicial resources.
If parties cannot reach an agreement in the way of a ‘Consent Order’, the court will decide what fair divorce financial settlements are, taking several factors into account. Though the starting point will be a 50/50 split, the court ultimately has the final say in all settlements. When concluding as to what the split should be, the court will consider different factors; including:
- Each partner’s assets;
- Contributions to the marriage or civil partnership, both financially and emotionally;
- Earning capacity;
- Standard of living before the break-up;
- Length of marriage;
- Age; and
- Any children involved.
What you think is fair may not be the outcome; the reason for legal break-ups will not usually affect any divorce financial settlements. However, keeping it out of court will ultimately make the whole process easier on the relationship and be much cheaper than the divorce financial settlement terms being issued by the court.
Wyatt v Vince is a case study highlighting the importance of having well thought out divorce financial settlements; here, there was not one.
In the 2015 case of Wyatt v Vince, the Supreme Court allowed the ex-wife of a multimillionaire to pursue a financial claim against her ex-husband almost 20 years after their divorce. Dale Vince married Kathleen Wyatt in 1981 when they were both impoverished new-age travellers living on state benefits.
They separated in 1984 and got divorced in 1992. Mr. Vince subsequently founded green energy supplier Ecotricity which led to him accumulating an estimated wealth of more than £100 million.
In 2010, Ms. Wyatt lodged a claim for financial support, which the Court of Appeal initially blocked. But the Supreme Court overturned this ruling, setting the precedent that there is no time limit for ex-spouses to make financial claims against one another (in the event she was awarded £300,000).
The bottom line for general divorce financial settlements is that the law is complex. There are common factors to consider, but simultaneously, each case will be considered on its merit or circumstance. Rules are not set in stone. Hence, giving the courts flexibility to make fair and reasonable orders by design.
CourtTogether can help you in this transition from marriage to divorce. Acting as a mediator, coach, and case manager, we can help organise your divorce financial settlement as an impartial party; we can show you how to better communicate with your ex-spouse appropriately; we can walk you through the process; we can assist you in getting any divorce settlement agreement legally recognised.