Resolving the financial issues in divorce

Assuming that after issuing a divorce petition husband and wife don’t each go to their respective solicitors and say, “This is what we have agreed, now please draw it up as a legally binding and final agreement,” (which does sometimes happen and is to be encouraged) a solicitor who is asked to advise on these financial issues will first of all want to know exactly what the assets of the marriage are and the respective incomes or earning capacities of the parties together with various other details such as whether there are any dependent children, age, length of marriage etc. His client will very often be able to provide much of this information but much of it may also only be known to the other spouse. The divorce solicitor will, therefore, write to the spouse (or, more likely, his or her solicitor) and ask for “full and frank disclosure” of that party’s financial position.

It is important to understand that such “full and frank disclosure” is necessary if any agreement is to be fully binding. If it were subsequently to come to light that one of the parties had significantly misrepresented his or her financial position in coming to the agreement then such an agreement could be set aside and this would be the case even if it had been turned into a “consent order” by the courts. Full and frank disclosure is a necessary precondition of any agreement which is intended to be binding and so a solicitor will ask for this from the other side.

It may be that after each side has made full and frank disclosure in correspondence in this way (and, probably, provided details of bank accounts, pay slips etc) it will then be possible to reach agreement fairly quickly and move on to drawing up the agreement in legal terms. Unfortunately, this is uncommon for two main reasons:-

1. One of the spouses often believes that there are other assets which have not been disclosed. (This is sufficiently common a phenomenon to have received a name – “the crock of gold phenomenon”).
2. The solicitor for one or other spouse (or possibly both) wants to raise various queries about the information disclosed.

One needs to be particularly wary of both these situations because the degree of suspicion can soon escalate and so can the correspondence that goes with it. Although it is difficult for a client to be anything other than subjective about this one should always try and stand back and ask oneself how far one wants to go in pursuing financial information and/or what the chances of finding a “crock of gold” actually are. There is also the possibility, of course, that although “full and frank disclosure” is made on both sides it is not possible to reach agreement for one reason or another.

It is always worth trying to reach agreement amicably and the parties should remember that not everything needs to be done through their solicitors. Very often a conversation between themselves can break a log jam. Conducting all negotiations through solicitors is normally a bad idea unless it is absolutely unavoidable (as it sometimes is). Some behind the scenes discussion between the parties is often helpful although, of course, it depends on the relationship and the degree of bitterness etc. Sometimes it just isn’t possible. Remember also that even if direct dialogue is not possible it may still be possible to reach agreement through mediation. Provided it is entered into in good faith mediation can often result in agreement and where that is possible it is cheaper and less confrontational than doing everything through solicitors.

If correspondence between solicitors does not result in agreement within a relatively short time it is probably best to make an early application to the court to resolve the matter. Although one hears horror stories of “X’s” divorce taking “years” (and by “divorce” is normally meant these financial proceedings) there is no reason why this should be the case in the vast majority of instances. The reason it sometimes happens is that correspondence between solicitors has continued for far too long. How long a divorce takes is often determined by this. If preliminary correspondence does not look like being productive of an early result it is almost always best to apply to the court because the court will impose a timetable on the whole proceeding so that both spouses know that everything will be settled between them within a determinate time frame.

To find out more about these financial proceedings please continue.

Spouses involved in divorce in England always want to know on what basis the UK divorce law decides financial issues between husband and wife if the Courts have to decide the issue. Indeed, this is what is at the heart of most divorce cases. If there is a dispute it is more likely than not to be about money whether that is about periodical payments for a spouse, dividing the equity in the former matrimonial home or divorce and pensions. In fact, the relevant principles are set out in Section 25 of the Matrimonial Causes Act 1973 which, essentially, reads:-

”It shall be the duty of the court in deciding whether to exercise its powers ….. to have regard to all the circumstances of the cases, first consideration being given to the welfare while a minor of any child of the family who has not attained the age of eighteen.

25 (1) It shall be the duty of the court in deciding whether to exercise its powers …. to have regard to all the circumstances of the case including the following matters, that is to say –

(a) the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future;

(b) the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;

(c) the standard of living enjoyed by the family before the breakdown of the marriage;

(d) the age of each party to the marriage and the duration of the marriage;

(e) any physical or mental disability of either of the parties to the marriage;

(f) the contributions made by each of the parties to the welfare of the family, including any contribution made by looking after the home or caring for the family;

(g) …the value to either of the parties to the marriage of any benefit (for example, a pension) which … (by reason of the divorce) ..that party will lose the chance of acquiring;…”

Copyright © Terry & Co. Terry & Co is not responsible for the content of external sites linked to this site. This firm is regulated by the Solicitors Regulation Authority SRA No 76180

Terms of Use                                                         Privacy Policy