Going through a divorce is said to be one of the most stressful experiences a person will go through during their life time, and often it is the sorting out the finances that proves the most difficult.
We will advise you during any divorce proceedings about financial matters relevant to your case. We will seek to do this by agreement and negotiation if possible. Alternatively, we will represent you in any court “financial remedy proceedings”. Either way, we will advise you about what is a suitable settlement.
In order for us to be able to advise you how the assets are likely to be divided between you and your spouse, it is usual for us to exchange financial information regarding your income, assets and pension provision with your spouse. This process is known as disclosure. It helps us (and keeps your costs down) if you can collate as much of the documentation regarding your finances as possible.
It is important to remember, however many people you speak to, that everyone’s circumstances are different. There is no “right answer” because, if the matter does come to be decided by the Court, the judge will have a wide discretion to do what he or she feels is reasonable or fair. We can advise on the factors that the court take into account and what weight is likely to be attached to those factors in your particular case.
We have considerable expertise in dealing with medium to high net worth divorces where there are substantial assets to be divided. Many of our clients have their own businesses and we are experienced in dealing with accountants in valuing the business assets. Our firm also has a strong corporate department who work with us in addressing business disputes. We are also used to dealing with large pension assets, and advising clients about pension sharing orders or the offsetting of pension assets against other realisable capitals. We have relationships with a number of specialist pension actuaries who we can instruct to assist us with these issues.
In other cases where the matrimonial pot to be divided is smaller, the difficulty will be funding two different homes where previously there was only one. In these cases, specialist advice is vital to get the best deal whilst balancing this against the costs of litigating to try and avoid any disproportionate legal bills being incurred. A number of our team are members of Resolution, a specialist group of family lawyers who subscribe to a code of conduct to try and resolve matters as amicably as possible and who seek to avoid unnecessary hostility between the parties. However, we also take an assertive approach when faced with an opponent who is conducting matters in an unreasonable way.
Divorce & Financial Proceedings FAQs
Q. What factors are taken into account when financial matters are determined?
The court has a wide discretion to do what is fair and reasonable in the circumstances of the case. Different judges may come to different decisions, but they do have a statutory checklist of factors they must take into account when deciding the case:
- First consideration being given to the welfare of minor children
- The financial needs, obligations and responsibilities of the parties
- The income, earning capacity, property and resources of both parties now and in the future
- The standard of living enjoyed by the family during the marriage
- The age of the parties and length of the marriage
- The contribution each of the parties has made to the marriage
- The value of any benefit, such as a pension, which may be lost by one party as a result of the divorce
- Behaviour is only taken into account in very exceptional circumstances
The weight to be attached to these factors will depend on the particular circumstances of your case.
Q. What is “disclosure”?
Disclosure is the term used for the exchange of financial information between the parties supported by documentary evidence.
We need full information of yours and your spouse’s income, assets, pensions and liabilities to be able to advise you on suitable settlement. Without this information, we won’t know what the pot of assets is to be divided. There is a duty on both parties to co-operate with financial disclosure. Usually this is done voluntarily early on in the process, as soon as both parties have collated their information. It may be that the documents are sent with a covering letter to the other side but often we use a Form E, a financial statement which is used in court proceedings, as this ensures that the disclosure is thorough. If there is any missing information, the other party can raise questions or request further documents. The following documents are considered standard disclosure:
- Your last P60 and wage slips
- Your P11D if you receive benefits in kind
- Last two years tax returns, if relevant
- In the case of businesses, two years unabbreviated accounts
- Proof of any other income such as welfare benefits,investment income
- Bank statements for any bank accounts in which you have an interest for the past 12 months
- Mortgage redemption statement
- Proof of any other debts, including settlement figures or recent credit card statement
- Pension cash equivalent values
Although we can help you in obtaining the above, it will help avoid delay and keep your costs down if you can collate as much of the above as possible at the outset.
Q. Will I be referred to Mediation?
Mediation is process by which you and your spouse are referred to a specially trained mediator to help you to discuss the issues in your case and to try and reach an agreement. A referral can be made to mediation at any time, so, if this is something that you believe would help you to resolve matters, please discuss it with us. Mediation can be a useful tool as the cost of mediation is usually significantly less than the costs of litigating. However, there will be cases where mediation is not suitable. If you don’t succeed in resolving matters during mediation, you will have incurred those costs in addition to the costs of negotiating through solicitors and/or court proceedings.
Before we can issue a court application, you are now required to attend an Information and Assessment meeting with a mediator to consider the suitability of your case for mediation, but you are not required to embark on the mediation process with your spouse if at the end of the assessment meeting you do not feel it would be beneficial.
The role of your solicitor is still important even if you do decide to enter mediation. Although we do not attend the mediation appointments with you, you can consult with us during the process as to what is being discussed between you and your spouse and seek our advice on any proposed settlement. If mediation is successful, in order to make any agreement legally binding, you will need us to embody the agreement in a consent order, which will then need to be approved by the Court.
Q. Why do I need a pension report?
Pension assets are not like other realisable assets. They cannot usually be cashed in and their value cannot be treated in the same way as cash or the value of a house. The starting point is a Cash Equivalent Value (CEV) which is a useful figure representing the funds you have invested. However this does not always reflect accurately the true value of benefits under the scheme, particularly in the case of occupational final salary schemes. It may be that there are pensions of a different nature to be considered, for example one of you may have an occupational scheme and the other a personal pension. Comparing the Cash Equivalent Values of the two is not always reliable.
A pension expert, an Actuary, will prepare a report on the Values and whether they accurately reflect the benefits of the scheme. He will be able to compare different types of schemes and consider how they should each be treated. He will also look at gender and age of the parties and consider what fund each would need to have in order to be in an equal position. He will advise on what pension sharing orders would be needed to achieve equality. Finally, he will also advise what capital sum would need to be paid if the parties opt to offset the pension disparity against the other saleable assets i.e. where no pension sharing order is made but the party with the smaller pension receives a lump sum or larger share of the saleable assets to compensate for the loss of pension benefits.
Q. Do I have to go court or can my spouse and I reach an agreement ourselves?
If you can reach an agreement between yourselves this will certainly help to keep your costs down. However, it is wise to consult a solicitor to advise on the suitability of the settlement and whether is a “fair deal” for you. You also need a solicitor to formalise the agreement by embodying it in a Consent Order. The order would be drafted and sent to the other party to see if they agree the terms, and then is signed by you both and your respective solicitors and forwarded to court for approval. If approved, the court will seal the order and this will finalise the settlement: neither of you will be able to go back on the agreement. The process of obtaining a consent order is relatively inexpensive as we will not usually have to attend court to deal with this. The consent order is simply sent in to court and placed before a judge to consider in the absence of the parties and their solicitors. There are some accompanying documents which need to be sent in, but again we will prepare these for you. It is really important not to leave the agreement on an informal footing as often the court will not uphold the agreement if one party seeks to renege on it.
Q. What happens if court proceedings are issued?
When we commence court proceedings, the Court will issue a timetable for the filing of Form E financial statements and other documents we will prepare on your behalf, namely a Schedule of Issues, Chronology and Questionnaire of further information and documentation required after the Form Es have been exchanged. The Court will also fix a First Directions Appointment(FDA), usually 12 to 16 weeks after the application has been issued.
The FDA is a short appointment, usually only 15 to 30 minutes where the court will look to define the issues. The judge will consider the Questionnaires and decide which questions need to be answered and order the replies to be filed by a certain time.
The court will consider what, if any, joint valuations or experts’ reports are necessary. The Judge would then usually list the matter for a Financial Dispute Resolution appointment (FDR). Before attending the FDR, both parties should have made proposals for settlement. The objective of the FDR is to help the parties reach an agreement on financial matters and it is important both parties attend the hearing personally so that negotiations can take place. The FDR will be conducted by a Judge who will not have anything else to do with the case in the future. Having considered the parties’ respective proposals for settlement and the representations made by their solicitors at the hearing, the Judge should give an indication of the likely order that he would make if the matter had come before him as a final hearing. He will then usually send the parties and their representatives out of the court room to continue negotiating. If matters can be agreed, the Judge may make a Consent Order on that date.
However, the Judge cannot make an order unless the parties both agree. If an agreement cannot be reached, the matter may be adjourned for a further FDR but, more often than not, it will be listed for a Final Hearing. Before the Final Hearing, both parties should file their statement of Open
Proposals saying what order they are asking the court to make. On the day of the Final Hearing there should be an opportunity for further negotiations to take place. If matters can still not be agreed, the Judge will hear submissions from both parties representatives and evidence from the parties. He will then make an order determining the financial matters, giving a judgment setting out his reasons for his decisions. Sometimes the Judge will deliver his judgment on the day of the Final Hearing. On other occasions he will “reserve judgment” where he will hand it down at a later date.
Q. Will I need a barrister?
We are experienced advocates and conduct many of the court hearings ourselves. Often the court appointments are conducted by the person with conduct of your file, although sometimes there are reasons why another member of the team will attend to represent you. We will discuss this with you in advance of any court appointment. However, there are some hearings where we take the view that you would benefit from the expertise of a barrister, for example, we would usually instruct a barrister at the Final Hearing. On other occasions, we will suggest that advice is taken on your case by a barrister. This may involve a barrister giving his written opinion on the merits of your case, or us attending a conference with the barrister. We will consult with you as soon as it becomes apparent that the involvement of the barrister is necessary, discussing with you both the selection of the barrister and the likely fees involved.
Q. How much will sorting out the finances cost me?
Our specialist advisors will listen to the detail involved in your case and provide bespoke legal advice tailored around your desired outcome. We aim to be as transparent as possible when it comes to costs. When we take your case on, after your initial appointment, we will send you a costs estimate. This is a bracket within which we believe your costs will fall, with a breakdown of what it might cost to get to each stage of the proceedings. We try to be as realistic as possible in our costs estimates and we think it is important for you to have an idea of what costs are involved at all times during the process. We will then send regular interim invoices and cost information letters to keep you informed as to what costs have been incurred to date, how much your account is in credit or debit, and how much your further costs are likely to be. We believe it is vital for clients and their solicitors to keep an eye on costs as the case proceeds to ensure that they are proportionate to the value of the assets in dispute.
Q. Can I recover my costs of the financial proceedings from my spouse?
In financial proceedings, the general rule is that the court will not make an order requiring one party to pay the costs of the other party. However it may do so at any stage of the proceedings where it considers it appropriate because of the conduct of a party, having regard to:
- Any failure by a party to comply with the court rules or any order of the court
- Any open offer to settle made by a party
- Whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue
- The manner in which a party has pursued or responded to the application or a particular allegation or issue
- Any other aspect of a party’s conduct in relation to proceedings which the court considers relevant, and;
- The financial effect on the parties of any costs order
In other words, you should not expect to recover any costs from your spouse unless he has been guilty of “litigation misconduct”. Conversely it is important to ensure that you comply with the directions of the court and do not pursue unreasonable arguments to avoid being at risk of being ordered to pay some of your spouse’s costs.
There are some exceptions to the general rules, for example interim applications such as Maintenance Pending Suit (which is an application for maintenance during the court proceedings), where costs are more routinely ordered against the losing party.
If you have an enquiry in relation to a Family law matter or simply want to speak to a member of our expert team, please get in touch.