Divorce and Finances
When a couple divorce there will also be a Financial Order made by the court which sets out the financial arrangements for the future. This is approved and issued by a Judge and is legally binding in England and Wales. It is important to note that this is separate to Child Maintenance payments and you are free to decide how much one parent pays the other. You can get advice and a maintenance calculation from the Child Maintenance Service, especially if you cannot agree what the amount should be. When children divide their time equally between both parents then it is not necessary for Child Maintenance to be paid however it is expected that the child will have the same level of day-to-day support with each parent.
There are different types of Financial Orders and these include:
A Consent Order
This will set out how the assets and debts of the couple should be divided and couples can either reach this agreement themselves or they may need help through their solicitor, a mediator or a Judge. If an agreement can’t be reached then it will be referred to the Court where a Judge will decide on your behalf.
The Judge will only grant the Consent Order if the agreement is fair and reasonable to each person and this will also include a clean break clause which ends any financial commitments between the couple.
A Clean Break Order
A Clean Break Order will end the right of either party to make a financial provision claim against the other. This may be useful where there are no matrimonial assets but both parties still want to cut all financial ties between them. If you don’t have either a Consent Order or a Clean Break Order there is a chance that at any point in the future, unless you remarry, your ex could demand further money from you. Worth remembering in case you ever win the lottery…..
A Pension Sharing Order
A Pension Sharing Order outlines how the pension pot of each person should be divided and this will depend on a number of factors including how much is in each pot, the length of the marriage, personal needs and future career and income prospects.
A Property Adjustment Order
A Property Adjustment Order covers what happens to your family home and includes whose name it will be registered in, who has the right to live in it and until what time. This should also cover scenarios such as if the property fails to sell within a specific period of time.
A Maintenance Order
A Maintenance Order covers how much is paid from one spouse to the other (financially weaker) person and how long this will be paid for. This will depend on a number of factors such as the length of the marriage, each individual’s wealth, their future financial needs and the role each person has played in the marriage. These orders can be obtained whilst the divorce is being finalised.
A Lump Sum Order
This is quite straightforward in that one person gives the other a lump sum of money although it can be paid in instalments, typically once a property has been sold or mortgaged.
Navigating a financial settlement which provides financial security for your future is very important, so get in touch to discuss the options available to you.