Divorce and financial arrangements

One of the most complicated practical implications of divorce or separation from a long term partner is having to sort out your financial affairs. Identifying your shared assets, disentangling your finances and deciding who keeps what can be very challenging. In addition, former husbands and wives may be obliged to pay maintenance towards their former spouse, particularly if there are any children involved.

Most divorcing couples come to their own arrangements (known as voluntary agreements or family-based arrangements) regarding the distribution of money, property and other assets. The government's Money and Advice Service has a divorce and separation calculator which can help with identifying assets and considering how to split them. You can also find useful information in a 'survival guide to sorting out your finances when you get divorced' produced by charity Law for Life.

Mediation can often be helpful when discussions are tricky - and divorcing couples must generally at least consider mediation (ie. by attending a Mediation Information Assessment Meeting) before taking a dispute to court.

You can obtain a 'separation agreement' (also known as a ‘minute of agreement’ in Scotland) which sets out the provisional and temporary financial arrangements in advance of the divorce going through.

In Scotland, a minute of agreement should be registered, to ensure that the document is legally enforceable and cannot be changed by one party alone. If one party defaults of breached one of the agreed upon terms, the other party can then apply to the courts to have this agreement enforced.

In Scotland, an agreement on financial support can be either verbal or written. It is advisable to seek legal advice before agreeing on a financial support package. It is also advisable to have such an agreement recorded in writing by a solicitor in case of future dispute.

This only applies in England and Wales.

If you manage to agree on the financial arrangements following a divorce, you can draft a 'consent order'. This will generally include details on how you are going to divide up your assets such as money, property, savings and investments - and it can also include arrangements for spousal and/or child maintenance payments.

Normally a family lawyer will help you draft a consent order, which must be signed by both former partners. You also both need to fill out a 'notice of an application for a financial order' and a 'statement of information form' which, together with the draft consent order, are sent to a court. A family judge will then decide whether to make this order legally binding.

Where there is no ongoing spousal maintenance, a 'clean break' clause may be inserted into a consent order. Sometimes simply known as a 'clean break order', this clause essentially severs all financial ties between former husband and wife. So, for example, if either person later comes into a fortune (eg. as a result of inheritance etc.) the other person cannot claim any of this new money.

In England and Wales

If you cannot come to an agreement together (eg. if there have been issues of domestic violence), you can apply to the court to decide on the post-divorce financial arrangements, in the form of legally binding 'financial order'. This may include things such as a lump sum payment, ongoing maintenance payments and ownership of property. You will need to fill in a financial order application form and send two copies of the form to the court dealing with your case. The process can take 6 - 12 months and will involve going to court.

There are no exact rules on how assets should be divided between spouses during a divorce in England and Wales. Judges have wide discretion to consider the financial arrangements between the divorcing spouses but each case will be assessed on its own individual facts. There are a number of considerations that the courts will take into account such as the welfare of any minor children of the family, the financial needs of both spouses, their ages and the duration of the marriage, as well as any contributions to the marriage made by either party. 

Usually, both parties will have a strong claim to share equally all matrimonial property built up during the marriage (for example, the family home, pensions and savings). However, in cases where the claimant's financial needs cannot not be met with recourse only to this matrimonial property, the court could consider non-matrimonial property which was brought into the marriage, inherited or gifted during the marriage. 

In Scotland

If you cannot come to an agreement together (eg. if there have been issues of domestic violence), you can apply to the court to decide on the post-divorce financial arrangements, in the form of legally binding financial provision. This may include things such as regular payments or a lump sum payment. The courts may also make an order regarding pension arrangements.

You will need to state that you are applying for financial support in your Initial Writ (Form G1) which can be found on the Scottish Courts and Tribunals website. A divorce where finances are contested is likely to take 9 - 12 months.

In Scotland, the ‘matrimonial property’ in question will be formed by all assets acquired over the course of the marriage and up to the date of separation. Assets that are acquired post-separation or pre-marriage  (with the exception of a house bought as a family home and its furnishings), as well as gifts or inheritance from a third party are all excluded. Inherited gifts that have been sold to buy something else over the course of a marriage have the potential to be included as part of matrimonial property although this can be arguable on the facts of a case. Additionally, all assets which make up the matrimonial property must be valued at that date and this figure becomes the net value available for division between spouses.

In the majority of cases the net value of the matrimonial property identified and valued at the ‘relevant date’ will be divided fairly between the spouses. The courts can depart from equal sharing but this must be justified by ‘special circumstances’ or a compelling argument from a spouse. 

Date of separation

The date of separation of spouses (also called relevant date) can be the date from which the spouses ceased to cohabit, an earlier date or the date of service of the summons in an action for divorce. It is most often recognised as the date spouses actually separated.

Depending on the individual circumstances, a court can also make 'maintenance order' which usually requires the person with the highest income to provide regular financial assistance (eg. monthly payments) to their former partner. Although child maintenance can also be decided on by the court, it's usually dealt with by the Child Maintenance Service.