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Financial Settlement In Divorce – Your Guide

Financial settlement in divorce can be an extremely stressful, with worries about money and what will happen to the family home, only adding to the emotional turmoil often involved at the end of a relationship.

Knowing what to expect with regards to a financial settlement in divorce the financial proceedings (also known as a FDR hearing), can help you to prepare for what may be ahead.  Before going into more detail about financial proceedings during divorce, it’s important to say that court should always be viewed as a last resort. Court proceedings can be time-consuming and costly and can add to the stress already on the whole family, during what can often be a very difficult time.

Our expert solicitors shall encourage you to reach an agreement with your partner outside of court and can advise you on a number of different ways that could enable you to do this, such as solicitor-to-solicitor negotiation or mediation.

Indeed, most couples will have to attempt mediation before heading to court, unless there are compelling reasons why they can’t. Speak to our expert solicitors for more information about this.  Before we go into more detail about the financial dispute resolution hearing itself, it’s a good idea to take a brief look about how we get there.

 

Applying to court for financial settlement in divorce

If you can’t come to an agreement about how your assets will be split upon your divorce, you may need to go to court.  In order to do this, either you or your spouse would need to make an application to court, by filling in a form, known as a Form A. Our expert solicitors can help you with this.

There is a fee involved, which will need to be sent to the court with the form.  If you send the form, you would be the applicant and your spouse would be the respondent (the court will notify the respondent).  You and your spouse should then receive a timetable from the court, notifying you of what is going to happen next.

 

The next step is filling in the ‘Form E’

A form E is a document about your financial position, which you and your spouse would need to fill in and send to one another and the court, a minimum of 35 days before your first court hearing is scheduled.

You will be required to provide a range of different information on your form E, such as any assets you own and how much you earn. Some evidence will also be required to be attached to your form E. Your solicitor should be able to help you with this.

This form will give the courts detailed information about your finances, so that a judge can make a decision about how your finances should be split when you divorce.

Sometimes, even if you don’t go to court, you may be asked to fill out a form E. This is so that both you and your spouse are providing the same amount of information about your finances for the negotiations ahead.

Some couples reach an agreement after filling in the form E, without the need for any more court proceedings, as it provides them with further information to fuel more negotiations.

It is important to ensure that there is full and frank disclosure when it comes to filling in your form E. If you do not disclose your full financial position, you could be found to be in contempt of court, which, ultimately, could result in you going to prison. Speak to your solicitor for further information about this and other possible consequences.

Some people opt to have an experienced solicitor fill out their form E on their behalf, so that there is no room for error.

 

Questionnaires

If you or your spouse have questions regarding each other’s form Es, you (or your solicitor) can prepare a questionnaire that consists of questions that you want your spouse to answer.

 

What is a First Hearing?

The first court hearing, called the First Directions Appointment (FDA), will take place around 3 or 4 months after the first form (Form A) was received by the court.  The main purpose of this hearing, is to ensure that all parties (including the court) have the information needed to make a decision regarding the financial settlement.

The court can make various directions to enable any disputes to be resolved at this stage, that each party may have to comply with. These could include an order to get a property valued or for any further questionnaires to be answered and exchanged by a certain date.

This hearing can sometimes be used as an FDR hearing, if matters are relatively simple and full and frank disclosure has taken place.  Sometimes, an agreement is reached at this hearing, so there is no need to proceed with the expense of further court hearings.

financial settlement in divorce

 

The FDR Hearing – what is it?

Formally incorporated into court proceedings in June 2000, the financial dispute resolution hearing is the second court hearing.

It was designed so that the parties involved in the proceedings, could discuss and attempt to resolve any issues with regards to their financial settlement, with the ultimate aim of reaching an agreement, with the help of a judge.

In the Financial Dispute Resolution Appointments: Best Practice Guidance produced by the Family Justice Council in 2012, the FDR hearing was talked about as an “innovative development”, which is there to help parties resolve the “real issues in the case, at a time and in a manner intended to limit the overall financial cost for the parties, to reduce delay in resolving the case and to lessen the emotional and practical strain on the family of continuing litigation.”

The FDR hearing is an opportunity to openly discuss and negotiate. Sometimes, refusing to negotiate could result in an order for costs.

As well as full and frank financial disclosure, it is also important that you and your spouse provide the court with details of any previous offers of settlement that have been made and subsequently rejected by you or your spouse.

 

Will the judge make a final decision regarding my financial settlement at the FDR hearing?

At the FDR hearing, the judge should be able to provide you and your spouse with an indication as to what your final settlement could look like, if a judge was asked to decide it at the Final Hearing.

This is not binding. The judge at the FDR does not make a final decision regarding your financial settlement. If you cannot reach an agreement and progress to the Final Hearing, there is no guarantee that the judge at this hearing would reach the same conclusion. However, many people find this to be a ‘turning point’ and reach an agreement soon after hearing this ‘objective’ point of view from the judge at the FDR.

The judge at the FDR hearing should also advise you and your spouse of how important it is to reach a settlement at this stage, in part because of the expense of a Final Hearing.

Additionally, judges may also remind both parties of how unpredictable a Final Hearing can be.

 

Will it be the same judge at the Final Hearing?

It’s important to understand that the FDR hearing is ‘without prejudice’. This means that if you do not reach an agreement in this hearing, these negotiations can’t be referred to in court proceedings if they continue after this point.  Anything said in the FDR hearing is usually not admissible as evidence at the Final Hearing.

Additionally, this means that the judge who hears your case at the FDR, will not be the same judge as the one at the Final Hearing (if you proceed to this).

The judge at the Final Hearing will not even know the FDR judge’s indications of how your financial settlement might look if a judge was asked to decide it at the Final Hearing.

It is often the case that an agreement is reached at this stage in proceedings, before the Final Hearing. If an agreement is reached, the judge can then endorse your financial settlement and make a binding court order.  If, for example, you think full and frank disclosure has not taken place, this can be brought up at the FDR hearing and the judge may make directions with regards to further disclosure.

 

How long will the FDR hearing last?

Normally, an FDR hearing will last for around an hour. However, it is often necessary to be at court longer than this, so that negotiations can take place and both parties are often told to expect to spend the whole day at court.

You would usually meet your solicitor and/or barrister before the hearing. Sometimes, an agreement can be reached between legal representatives of each party (based upon their clients’ instructions) before the FDR hearing itself.

It is worth pointing out that although there are often many advantages to settling at this stage, there are also risks and you are under no obligation to settle at the FDR. Speak to our expert solicitors for more information about this.

financial settlement in divorce

 

Can negotiations continue after the FDR hearing?

Yes. Our expert solicitors would usually encourage you to continue to negotiate with your spouse/their solicitors, with the aim to reach an agreement before the Final Hearing.

 

When will the Final Hearing take place?

If you can’t reach an agreement at the FDR hearing, the judge will then give you a date for the Final Hearing. This hearing will normally not take place for month or two (sometimes longer), so any interim arrangements would usually have to continue until then.

However, as mentioned above, in many instances, negotiations can and do continue, so even if an agreement is not reached at the FDR hearing itself, a Final Hearing may still not be necessary if an agreement can be reached beforehand.

Indeed, hearing what a judge had to say at the FDR hearing regarding what your financial settlement could look like if a judge was asked to decide it at the final hearing and having time to digest this information, can sometimes result in a settlement being reached soon afterwards.

Your solicitor may advise you that a meeting a short time after your FDR hearing with your spouse and their legal representative, may be a good idea, so that negotiations can continue outside of court but with the judge’s indication of a possible financial settlement now known. Sometimes, these negotiations soon after the FDR hearing can be successful, even if no agreement was reached at the FDR hearing itself.

 

What happens at the Final Divorce Hearing?

Final Hearings are relatively rare, as agreements regarding the financial settlement upon divorce are often reached before this stage.  However, sometimes an agreement cannot be reached and a Final Hearing is necessary.

At a Final Hearing, it is a judge who will make a decision about what your financial settlement will look like.  As we discussed above, this will not be the same judge as the one who heard your FDR hearing.

It is at the Final Hearing where you and your spouse will be required to give evidence under oath and answer questions posed by your spouse’s legal representative.  Judges can make various orders at final hearings, including the sharing of a pension or the sale of a property.  A judge may also order maintenance payments or the payment of a lump sum.

 

Financial proceedings upon divorce

Although court should always been seen as a last resort due to the expense and often lengthy nature of the process, in some cases an agreement cannot be reached and it is necessary to ask the courts to become involved.

Here at Austin Kemp, although we will always encourage our clients to reach an agreement outside of court, our solicitors have the experience and expertise required to take your case to court if necessary. Get in touch with our expert solicitors for more information.

The words ‘final hearing’ and ‘family court’ conjure up images of lengthy and costly court battles, fought out in a highly stressful setting. However, the reality is that while the final hearing and family court in general can be an intimidating experience, it will be much less stressful if you know what to expect.

 

The First Hearing

The initial hearing, known as the First Directions Appointment (FDA), normally takes place around 3 to 4 months after the court has received your Form A. The main purpose of this hearing is to ensure that everyone (including your FDR solicitors and the judge) has all of the information required, in order to make a decision regarding the financial settlement.

The court has the power to make directions at this hearing, such as an order to have a property valued or for more questionnaires to be completed.

Sometimes, if full and frank disclosure has taken place and it is a relatively simple case, this hearing could be used as an FDR hearing. Your FDR solicitors will explain if this could apply to you.

If an agreement is reached at this point, there’s no need to continue to the final hearing and family court ends for you.

It is important to note that you are under no obligation at this point to continue with the final hearing and family court in general.

 

The FDR hearing – what is it?

The FDR hearing (financial dispute resolution hearing) is the second court hearing. You, your spouse and your FDR solicitors should all attend the FDR hearing.

The aim of the FDR hearing is for you and your spouse to reach an agreement, with the help of a judge. Your FDR solicitors will be there to advise you during court, should you have any questions or concerns at any point. Sometimes, FDR solicitors are able reach an agreement (based on their clients’ instructions) just before the FDR hearing takes place.

During the FDR hearing, you and your spouse will have the opportunity to discuss and resolve any issues regarding your financial settlement. It is your chance to openly discuss and negotiate. If one party refuses to negotiate during the FDR hearing, this could result in an order for costs.

The judge at the FDR hearing should provide you and your spouse with an indication as to what your final settlement could look like, if a judge was asked to decide it at the final hearing. This is not binding. The judge at the FDR hearing does not make the final decision. You are free to continue with the final hearing and family court.

There is no guarantee that the judge at the final hearing will come to the same conclusion as the FDR hearing judge.

Soon after the point in the FDR hearing when the judge gives his ‘objective’ viewpoint, many people reach an agreement (with the help of their FDR solicitors) and need not progress to the final hearing. Indeed, the judge at the FDR hearing should advise you and your spouse of how important it is to reach a settlement at this stage, in part because of the expense of a final hearing.

 

Final hearing and family court – what to expect

It is during the final hearing that a judge will make a decision about what your financial settlement will look like.

You and your spouse will be required to give evidence under oath and may be questioned by the other party’s legal representative. Your FDR solicitors should be on hand to answer any questions.

The judge can make a number of orders, including the sharing of a pension, the sale of a property and the payment of a lump sum.

 

FDR Solicitors

Although we will always encourage our clients to reach an agreement outside of court, our FDR solicitors have the experience and expertise required to take your case to the final hearing and family court, if necessary. Get in touch with our FDR solicitors for more information.

 

Final Hearings at Family Court

The end of a relationship can be an extremely emotional and difficult time. Reaching the decision to apply for divorce is often not easy.

Dealing with the financial settlement aspect of a divorce can, for many, seem very low down on the ‘to-do’ list. As divorce solicitors, it is not unusual for clients to come and see us to start divorce proceedings and to have not yet considered how the financial settlement may look further down the line.

 

Why deal with finances at the same time as divorce?

If a couple do not agree a financial settlement at the time of divorce, there is a possibility that  financial claims could be made by either party in the future.

One such case hit the headlines in March 2015, when a woman, Kathleen Wyatt, who had been divorced for over twenty years, was granted permission by the courts to lodge a claim against her ex-spouse, Dave Vince.

The couple had met back in 1981, when they were reportedly “penniless travellers”. They went on to have a child together but, after ending their relationship in 1984, later divorced in 1992. They reportedly did not make a financial settlement when they divorced, as they had “so few assets”.

Mr Vince later became a multimillionaire businessman.

In June 2016, Ms Wyatt was awarded a £300,000 lump sum. The couple had, at this point, been divorced for more than 23 years.

 

financial settlement

 

Dealing with finances at the time of divorce is vital

This case illustrates how important it is to deal with finances at the time of divorce.

Whilst the circumstances are somewhat unusual (not many of us will see our previously penniless partners become millionaires), it serves to highlight how important it is to finalise financial matters and not to leave claims for financial provision open.

It is also worth noting here that not dealing with financial matters upon divorce could result in you being financially associated with your ex-spouse i.e. still linked to them financially. This may affect your credit score if, for example, your ex-spouse runs up debt in the future.

 

Reaching a financial settlement

Sometimes, a couple can agree what their financial settlement will look like, between themselves.

If no agreement can be reached, other methods such as mediation or Collaborative Law can be utilised.

Due to the time-consuming and expensive nature of asking a court to decide a financial settlement, this should usually be viewed as a last resort if no agreement can be reached.

 

The importance of consent orders

When a financial settlement is agreed, a couple can make this legally binding by obtaining a consent order from the courts.

This can set out everything from what will happen to the family home to any pension sharing that will take place.

It is highly recommended to seek advice from a solicitor regarding whether a consent order would be right for your circumstances.

 

FDR Hearings and financial settlement

Anyone who has been through a divorce will know that it can often be the financial settlement which causes the most anxiety.

Ensuring that your financial settlement reflects your needs, is key to both your and your family’s future. Sometimes, it is possible for divorcing couples to reach a settlement between themselves. Others require some kind of professional help, in the form of mediation or collaborative law, for example. Alternatively, if an agreement cannot be reached, the courts may need to become involved.

But what happens after the financial settlement is finalised and the divorce papers are signed? Most people will find that their financial situation looks very different post-divorce, compared to when they were married and living in the same property as their spouse. This means that, after your divorce, it is vital to take the time to re-look at your finances and draw up a plan, detailing how you will manage your money from now on.

 

Draw up a budget

It’s not uncommon to be financially worse off after you divorce, compared to when you were married. A married couple live under the same roof, share the cost of the bills and often have two incomes to support themselves on. Divorce means that the same money that once funded the cost of only one house, now potentially has to fund two places to live and double the amount of bills.

Drawing up a post-divorce budget, taking into account your new financial situation, is not only a good way to ensure that your spending reflects your new circumstances, but it can also help you to take control and move on with your life.

Knowing exactly how much you have coming in and going out, enables you to calculate your new disposable income, so you know precisely how much you have to spend, which should hopefully enable you to avoid getting into debt.

Also, if you haven’t done so already, check whether any joint accounts still need to be closed.

 

 

Update your Will

This is something that divorcing couples can often forget to do, as it can be tempting to place it very low down on the “to-do” list.

However, it is vital to update your will, so that should something happen to you in the future, your estate would go to the people that you want it to.

 

Divorce can be a fresh start

Getting a divorce can feel like the end of something, rather than the beginning. This needn’t be the case.

Going through your finances and drawing up a budget, can help you to put in place the necessary financial foundations for your new life without your spouse.

Although it can seem daunting at first, many people ultimately find the process to not only be empowering, but also something which can help them to move on.

 

Three financial settlement principles you need to know

Multimillionaire Richard Caring has reportedly left his wife of 45 years, in what could turn out to be Britain’s biggest divorce financial settlement to date. His wife, former model Jacqueline Stead, could be entitled to around half of his £700 million fortune. If they do get divorced and cannot agree on how they will split their finances, they could end up in a lengthy legal battle played out in front of a judge.

Even if you’re hoping to come to an agreement about your financial settlement outside of a court, it can be helpful to understand what judges use as a starting point when a divorcing couple end up inside their court room.

Although each case is looked at on an individual basis, with the interests of any children always being a top priority, there are three principles that courts use to help them make their decision about how your financial settlement will be split.

 

The sharing principle

The starting point for any court is that everything should be divided equally between the two spouses when dealing with a financial settlement . This includes any investments, savings or pensions, as well as the family home.

financial settlement divorce lawyer

It’s worth noting, however, that income is not looked at in this way. Also, if property is ‘brought in’ to the marriage by just one spouse, then it may be that the court will look at it as a ‘non-matrimonial’ asset and not use the sharing principle as a starting point. However, this is a complex area of law, so if you think it may apply to you, it’s a good idea to get legal advice as soon as possible.

 

The needs principle

If you and your spouse are both high net worth individuals, this principle may not be as important for you, because there is likely to be more than enough money to go round.

Under this principle, the courts will look at what you and your spouse need after you get divorced. This could include things such as where you’ll both live and how much money you’ll need. This may mean that, in reality, because of the needs of each spouse and their children, the fifty/fifty split starting point may not be viable in the end.

 

The compensation principle

This is the principle by which the courts take into account the fact that one spouse may have given up their career to support the other and look after any children. In doing this, they may have put themselves at a disadvantage when it comes to earning money in the future – therefore deserving some compensation. This could, for example, take the form of maintenance payments from their ex-spouse’s future earnings.

Children are always considered a top priority and their needs will always be looked at first and foremost by a court. These principles can provide a helpful starting point in negotiations with your spouse, even if you don’t end up in court.

 

Make an appointment with your solicitor

If you are unsure as to what to do about some aspects of your finances once you divorce, it can be helpful to speak to a solicitor about your concerns.

 

How can our expert divorce solicitors help you with your financial settlement in divorce?

Our expert divorce solicitors can help you with a range of legal issues relating to your financial settlement in divorce, including:

 

Contact our expert divorce solicitors for advice on financial settlement in divorce

For more information call our divorce solicitors on 0845 862 5001 or email mail@austinkemp.co.uk.

Our expert divorce solicitors offer a nationwide service. We have client meeting office facilities available, in order to have face-to-face client meetings / conferences as and when required in:

Leeds Office: St Andrew House, The Headrow, Leeds, LS1 5JW

Wakefield Office: Market Walk, Wakefield, WF1 1QR

Halifax Office: Old Lane, Halifax, HX3 5WP

Huddersfield Office: Northumberland Street Huddersfield, HD1 1RL

Coventry Office: Warwick Road, Coventry, CV1 2DY

Canary Wharf Office: 25 Canada Square, Canary Wharf, London, E14 5LB

Please contact us for more details.

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10th October 2017

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