Financial Arrangements on Divorce
Sorting the marital finances is a crucial aspect of divorce proceedings and it’s often the complexities surrounding finances that pose the biggest challenges and can lead to delays if not handled correctly.
We’re here to guide you throughout. Our starting point is always to obtain a clear picture of what assets are to be taken into consideration and then to establish what the proper value of these assets are (e.g. the family home, pensions, savings, investments, income, business interests).
We understand that everyone’s situation is different, so we’ll help you find the best way to negotiate and settle these money matters that fits with your specific circumstances whilst also ensuring nothing important is overlooked.
We’ve been there for countless clients, from those with no clue as to the scope and value of marital assets to others who have a firm idea from the outset of what the assets are worth and how they want the settlement to look.
Whether you’re feeling a bit lost about what comes next or you’ve got a clear vision of your ideal financial arrangement, we’re here to support and guide you through the financial aspects of divorce.
From our experience, early advice on finances is key and we strongly recommend setting up a no obligation first meeting as early as possible so you can establish where you stand legally, the options available to you and the next steps required.
In the midst of current cost-of-living challenges, we understand the concerns about managing on your own, especially when supporting both yourself and your children. The process of ensuring your income meets your needs in family law is twofold. Firstly, child maintenance is established to cover the specific financial contribution required in respect of the children. Following this, spousal support comes into play and addresses any potential shortfall in the lower-earning spouse’s income to help them meet their reasonable outgoings if further contribution is needed. Of course, in real-life situations, the dynamics of spousal support and child maintenance can be much more complex and it is crucial to receive personalised advice.
The short answer is no, income is not treated the same as assets on divorce. Assets, such as property and investments, are subject to division whereas income is evaluated for it’s potential to support ongoing financial needs. However, family law is nuanced and there can be overlap so it’s best to seek advice aimed at your specific circumstances.
While there are legal rules and guidelines that the court will follow if a court application is made in respect of deciding the asset division, couples who can find an alternative path to resolution will have more flexibility in reaching an agreement that deviates from these legal principles. However, receiving legal advice is instrumental for subsequent court approval, as it demonstrates that both parties have been informed of their legal rights, enhancing the likelihood that the court will approve the agreement reached.
No, and we would encourage you to avoid litigation if at all possible. Many couples reach agreements through mediation or solicitor negotiation – see our Ways We Can Help section for a better idea of the alternative options to court – and some couples can reach agreements independently. In these situations, where agreement has been reached and a decision as to division of assets is not required from the court, it is still important to have the agreement legally formalised through a court approved order so as it is binding. However, this is a paper process that does not require court attendance.
Not necessarily, but this will depend on your particular circumstances. If you agree that the family home shouldn’t be sold, then it won’t be. If you can’t reach agreement, there are a number of factors that are considered by the court when deciding this issue e.g financial contributions, health and age of the parties, needs of the children, the reasonable housing needs of you both, affordability and both your earning capacities and future financial situations. When deciding whether to sell the home the court looks at these factors and will also piece together information obtained about money, children, mortgage capacities and each person’s circumstances to make a decision that makes sense for everyone.
Financial Arrangements on Marriage
A prenuptial agreement, commonly known as a “prenup”, is a written contract that outlines how financial matters will be handled between spouses in the event of a divorce or separation. Although these agreements are typically established before marriage, it’s worth noting that similar agreements can be entered into after marriage and are referred to as postnuptial agreements.
Although not automatically enforceable by UK courts, a well-drafted prenup can carry substantial weight, guiding judges in their decisions and providing a roadmap for asset division.
However, for it to be an influential document there are some key considerations;
1. Full Financial Disclosure: Complete transparency is essential. Disclose all assets, debts, and income to ensure the agreement is based on a comprehensive understanding of each other’s financial situations.
2. Independent Legal Advice: Both parties should seek independent legal advice to understand their rights and responsibilities. This ensures that the agreement is fair and doesn’t favour one side disproportionately.
3. No Pressure or Duress: A prenuptial agreement should be entered into willingly by both parties. Coercion or pressure can undermine the validity of the agreement, so it’s crucial to create an environment where both individuals feel free to make informed decisions.
4. Reasonable Provision for Both Parties: While a prenup can protect assets, it should also make reasonable provision for the financial needs of both spouses, especially if circumstances change during the marriage.
5. Review and Update: Life is dynamic, and circumstances may change. Regularly review and update the prenuptial agreement to ensure it remains relevant and reflects the current financial situation of both parties.
If you’re considering a prenup as an option prior to marriage, then it’s important that all these factors are considered so as you obtain a comprehensive agreement that stands up to scrutiny.
Prenuptial agreements can help ring-fence assets but they must also consider both parties reasonable needs to be legally valid. Given this, the agreement should aim to provide fair provisions for each spouse, acknowledging their respective needs and circumstances. It’s advisable to contact us to ensure any agreement you have in mind aligns with legal requirements.
If done properly then a prenuptial agreement need not detract from the romance of marriage; instead, they address the
practical aspect of two individuals uniting, ensuring financial protection. Establishing clear guidelines can prevent a messy divorce and there is nothing as unromantic as that.
In order for any prenuptial agreement to be as influential as possible we would urge you to seek legal guidance to ensure it complies with guidelines and adequately addresses both parties’ interests. Solicitor assistance can help create a legally sound and fair document, minimising potential issues in the future.
Although it’s probably fair to say that these agreements are more commonly considered in second marriages where individuals seek to safeguard assets for the benefit of their children from previous relationships, they are not exclusive to 2nd marriages and can be valuable for individuals entering marriage at any stage of life. They provide a legal framework to protect assets and clarify financial arrangements, irrespective of whether it’s a first or subsequent marriage.
