Financial Settlement In A Divorce

Agreeing a Divorce Financial Settlement

A financial settlement in the context of a divorce sets out how assets including money, property and possessions are shared at the end of a marriage or civil partnership

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What is a financial settlement in divorce?

A financial settlement, officially known as a financial settlement agreement, is an arrangement between two adults who have agreed to legally separate. It is required when divorcing couples have a number of joint financial assets. The divorce settlement is a fair and equal agreement on splitting the assets. The following assets are included when calculating the financial settlement:

  • the family home and any other property
  • savings, investments and trusts
  • joint bank accounts
  • vehicles
  • jointly owned business assets
  • pensions

It also covers how you’ll repay any debts and organise any child maintenance or spousal maintenance payments.

How is a financial settlement calculated?

Guidelines for calculating divorce settlements are set out in section 25 of the Matrimonial Causes Act 1973. In order to reach a fair settlement both you and your spouse will need to provide details of all your assets. This must be ‘full and frank’ and include all assets held in your sole name as well as jointly together or with any third party.  Attempting to hide or conceal assets is not recommended.

Once this information has been exchanged, our lawyers will advise you on your entitlements, and you can evaluate your options.  These include:

  • Agreeing to a split directly with your former spouse;
  • Attending mediation to reach an agreement;
  • Partaking in arbitration; or 
  • Allowing one of our expert lawyers to negotiate a settlement on your behalf. 

If a settlement cannot be achieved in one of these ways, then we will discuss your court options.

What is a typical divorce settlement?

No two divorces or divorce finances are the same, however, there are common aspects that need to be addressed in a typical divorce settlement in order to determine how your assets will be split. These include both couples’:

  • Assets
  • Income and future earning capacity
  • Their financial needs
  • Standards of living and expenses
  • Their age
  • Physical or mental disabilities
  • Significant contributions towards assets
  • The conduct of each party during the divorce process
  • Children

Whatever the extent of your wealth, you will need an expert divorce lawyer with the appropriate financial acumen to protect your interests.

How is property divided following divorce?

The division of a marital home in a divorce can be a complex issue. In England and Wales, the starting point for the division of assets is equality, but this may be subject to certain exceptions. The court will consider a variety of factors, such as the financial needs and contributions of each spouse, the welfare of any children, and any other relevant circumstances. Find out more.

How are pensions split in a divorce?

There are three ways in which pensions can be divided upon divorce: pension sharing, offsetting and pension attachment/earmarking. A good starting point for clients who have initiated divorce proceedings or are planning to is to gather full and up-to-date valuations of all the pensions they and their partner have. Find out more.

Do I need a financial settlement agreement?

Even if you have reached a verbal agreement with your spouse, we strongly recommend that you obtain a financial settlement agreement to protect you and your family in the long term and to ensure the fair division of all assets.  This is called a Financial Remedy Order. It is a legally binding ‘watertight’ financial settlement – agreed consensually and put before the Court for approval. If the case is contested the Court can impose the order.

There have been many cases where, years after they have divorced, applicants have been successful in making a financial claim against their former spouse. A settlement agreement will protect your interests now and will protect you from your spouse making a claim over any future inheritance, assets or windfall.

How long does a divorce financial settlement take?

A financial settlement on divorce usually takes between 9–12 months.

How we can help with your divorce financial settlement?

Each family is unique and at your initial consultation, we will discuss your circumstances, and identify what is most important to you and your desired outcome.  

We will advise you on the law and how best to achieve the outcomes you seek. If you have a prenuptial or postnuptial agreement, we will need to review this. 

The breadth of experience in our team means that we offer the full range of options to obtain your divorce settlement, including:

  • Mediation
  • Collaborative law
  • Arbitration
  • Central Family Court, High Court, County Court, Supreme Court
  • Private FDRs
  • Lawyer led negotiations

Whatever forum you choose, you can rest assured that we will negotiate vigorously on your behalf.  If the divorce does proceed to court, our highly skilled advocates will represent you robustly and we have a track record of excellent results for our clients.

Contact us today

For a free initial conversation call 020 7485 8811

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