Financial Provision Fact Sheet
We can assist you in a wide range options for resolving your family law issues
FINANCIAL INFORMATION SHEET
Following divorce, judges have a wide discretion to look at the financial arrangements between the divorcing couple. There is no magic formula involved in deciding how assets and income should be divided, although certain factors must be taken into account and these are listed further on in this fact sheet. It must be remembered that each case is very different and will be judged on its own individual facts. As your solicitors, we cannot predict exactly what would be awarded but we can advise you of the type of settlement to expect within certain limits.
2. Orders The Court Can Make
The orders available are as follows:-
- Maintenance pending suit:-
Maintenance for a spouse to tide him/her over during the proceedings. It stops once the divorce is concluded.
- Periodical Payments:-
This is maintenance for an ex-spouse which will commence after divorce. It can be open-ended or limited in time.
- Secured Periodical Payments:-
These are maintenance payments which are secured against property or assets to ensure payment. This is a rare type of order, but will be considered in exceptional circumstances.
- Lump Sum Order:-
This is a payment of a lump sum of money from one spouse to the other. There is no limit on the amount that can be awarded and it can be ordered to be paid by instalments.
- Property Orders:-
Various orders redistributing interests in property (usually the home) can be made. These include a transfer of property from one spouse to the other and a sale of the property which, if ordered, would include a direction on how the proceeds are to be divided.
- Pension Orders:-
The court can earmark part of one spouse’s pension scheme for the benefit of the other spouse or can split a pension.
- Variation of Settlement Order:-
This gives the courts power to vary settlements or trusts that have been set up in favour of one spouse. This is a rare type of order.
3. Factors The Court Must Consider
It is the duty of the court in deciding what financial orders to make to consider all the circumstances of the case to achieve a fair outcome, but first consideration must be given to the welfare of any minor child of the family.
The specific factors that the court must by law consider are as follows:-
- The income, earning capacity, property and other financial resources of each party including what each party is likely to have in the foreseeable future e.g. by way of inheritance.
- The financial needs, obligations and responsibilities of each party.
- The standard of living enjoyed by the family before the marriage broke down.
- The age of each party and the length of the marriage
- Any disability of either party.
- Contributions made by each party to the welfare of the family including contributions to be made in the foreseeable future.
- The conduct of each party but only if that conduct is extreme.
- The value to each party of any benefit that they will lose as a result of the divorce e.g. pension rights.
The court will, particularly in longer marriages, consider equalising each party’s assets although there may be many reasons why an equal split would not be appropriate. The court will also specifically consider making each party financially independent of the other, thus achieving a "clean break".
4. When Orders Can Be Made
An application can be made for a financial order any time after the filing of the divorce petition. The court can make an order for maintenance pending suit any time after the issue of a divorce petition but cannot make the other financial orders until the Decree Nisi, the first decree of divorce. The order does not become enforceable until Decree Absolute, the final divorce decree.
It is important to note that remarriage bars you from making a claim against your former spouse if you have not initiated such a claim before remarriage. Further, your remarriage would end any entitlement to maintenance that was previously ordered to be paid by your former spouse.
5. The Procedure
If agreement can be reached, then the solicitors on behalf of the parties can draw up a draft order, which is signed by the solicitors and lodged with the court, where it is made into a formal court order, known as a ‘Consent Order’. If agreement cannot be reached, then one or other party may want to make an application to the court. We list below the steps taken before such an application is heard finally by a judge.
5.1 The application
Your solicitor will prepare an application which will initiate the process. On submission to the court, a hearing date will be fixed, known as the First Appointment, some 12 to 16 weeks ahead. A strict timetable is then applied. At least 35 days before the first hearing, the parties must each send to the court and to each other a financial statement known as ‘Form E’. This provides a full summary of their financial position. 14 days before the hearing, the parties must each prepare a concise statement of issues, a chronology and a questionnaire setting out any further questions they want to ask or any further documentation required of the other party. For each hearing in the process the parties must also prepare an estimate of their legal costs to that point.
5.2 The first appointment
The court will give directions as to what questions are to be answered, whether any valuations are to be obtained etc. A further timetable will be fixed and a judge may adjourn the First Appointment or more usually direct that a Financial Dispute Resolution Appointment (FDR) must take place. This will usually be fixed a few months ahead. In the interim both parties must comply with all the directions given.
5.3 Financial dispute resolution appointment (FDR)
This hearing is designed to define the issues and encourage the parties to reach agreement. Prior to the appointment each party must have submitted their proposals to the court. The judge will have read those proposals before the hearing, and will then give his/her view on a reasonable outcome for both parties. This can help each person to consider whether their expectations are realistic, and often leads the parties to find a compromise to the case.
No order can be made unless the matter is agreed. If agreement is reached then the court can make an order thus finalising matters. If no agreement is reached then further directions can be given and the matter fixed for a Final Hearing. The judge who conducts the appointment cannot then sit at the final hearing.
5.4 The final hearing
If it is necessary for there to be a final court hearing, then both parties must attend court, to give oral evidence and be cross-examined by the other party's legal representative. This hearing usually takes place in front of a District Judge and no-one, other than the parties, their legal representatives and any necessary witnesses, such as valuers, are allowed into court. In theory, accredited members of the press can also attend court, although they can be excluded by the judge in some circumstances. In practice, the press rarely attend court unless the case is a matter of public interest.
6. Legal costs
Any agreement reached on financial provision should also provide for the payment of each party's legal costs. It is usual for each party to be responsible for their own costs if agreement is reached, although this is not always the case. If the matter proceeds to court, then the judge will decide, after making the financial orders, what orders for costs to make. This can involve her/him ordering one party to pay the other's costs. In family cases, costs orders are not generally made unless one party has clearly been unreasonable in the way that they have conducted the litigation.