Divorce And Money - How Are Finances Divided?
During a divorce the family assets must be divided fairly and proportionately between both parties
. This can be a particularly stressful and sometimes complex task.
The following information is a basic outline of the court procedure used to achieve a financial settlement in a divorce and what factors are taken into consideration when this is accomplished.
Taking the case before a court
Parties will need to have obtained all the relevant financial information from each other prior to taking the case before a court. If this does not happen then either party is able to get 'Ancillary Relief'. Ancillary relief is the formal process of gathering and presenting all the necessary information required pre to a court hearing. The following procedure is normally used:
- The applicant for ancillary relief sendsa notice to the court indicating what claim is being made.
- The court then books the case a first hearing within6 to 12 weeks of the application.
- 5 weeks before the first hearing both parties must have completed Form E (a court document showing details of their financial information) and sent this to each other. A copy of this form must also be sent to the court.
- At least 2 weeks prior to the first hearing both parties must provide each other with the following documentation; a list of what they consider to be the key issues, a timetabled history of the case and a questionnaire detailing any further financial information that they require from the opposing party.
The first hearing
The initial hearing of the case is in a court before a judge. It normally lasts around 30 minutes and the aim is to establish whether there are grounds for a potential settlement between the parties. The procedure is instigated via the completion of Form A (this form informs the court that you require a judge to decide how to divide your matrimonial assets) a fee of 210 is paid with this form. If the ancillary relief procedure has been used then the judge will look at the requests of both the parties that were provided in the pre-hearing questionnaire. The judge will move the case along by looking at the all the information provided. At this point the court may feel that some vital information is still outstanding, if so, the judge will instruct either party to go away and come back with the appropriate information or documentation. For example you may be requested to produce a valuation of your matrimonial home.
At the end of the hearing the court may order an appointment to be made for financial dispute resolution.
Financial dispute resolution
Unlike other forms of dispute resolution, this process is still heard in front of a judge. It is however a more informal procedure than being in a court hearing. Solicitors from both parties will present brief details of the case to the judge. He/she will then attempt to recommend a settlement by instructing how the family assets could be split fairly. If the parties reach a financial agreement at this point then the case will be stayed from moving to a final hearing, this saves both parties further time and costs.
Not all cases can be heard in this way. If after the hearing the judge feels that the details of the case are too complicated and therefore are not appropriate for a financial dispute resolution then he/she will state that the case should move to a final hearing.
Final Hearing
A final hearing is a last resort if no amicable settlement can been reached. At this point you will have to ensure that you have a solicitor or Barrister to represent you in court (note this will normally mean considerable additional costs). A final hearing normally takes place 4 to 6 months after the initial Form A was completed.
The final hearing is a formal court procedure lasting up to 2 days and will be heard by a different judge than was present at any financial dispute resolution. Each party will be under oath and cross-examined by the opposition's counsel. The court will look at the evidence that you have provided regarding your financial affairs and the judge will ask further questions if necessary; anything from your earning capacity to your household bills.
At the end of the hearing the judge will deliberate on the facts and produce a final order. This is a compromise settlement and hardly ever provides both parties with what they want.
What financial information does the court consider?
In dividingassets between both parties the court will considerthe following financial factors:
- The current income and future earning capacity of both parties;
- Any financial resources each party has access to or is likely to in the foreseeable future;
- Any property owned;
- Any personal pension;
- The financial needs, obligations and responsibilities of each party. In particular contributions needed for the care and welfare of any children involved;
- The standard of living experienced by both parties as a couple prior to the marriage breakdown;
- The age of each party andthe duration of their marriage;
- Any physical or mental disability or registered illness of eitherparty; and
- Any significant conduct issues (worthy of court consideration).
Divorce is always highly stressful and most people, sadly, find that after divorce, their standard of living suffers. Simply put it is much more expensive to run two households than one. It is therefore particularly important that anyone considering a divorce should appoint a specialist divorce solicitor.
To help limit the risk of a financially damaging financial divorce settlement and to clearly set out expectations, many couples getting married, do so after signing a prenuptial agreement. If you are thinking of entering into a prenuptial agreement - make sure you consult a specialist prenuptial agreement.
by: Tim Bishop
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