When relationships end, regardless of the circumstances, they typically evoke a range of emotions. Even couples who mutually agree to divorce and maintain an amicable relationship often experience uncertainty and anxiety due to necessary changes in their living and financial situations.
Finding solutions during this time is rarely straightforward in identification and implementation. When facing practical realities that require clear analysis, most people find their judgement clouded by emotions.
Regarding finances, two overarching issues are ‘sharing’ and ‘need’, apart from the detailed factors a court considers when dividing assets. ‘Sharing refers to dividing matrimonial assets equally. However, when financial resources are divided equally, they may not meet one party’s needs, especially where children are involved. In such cases, which are common, the law places more emphasis on addressing the parties’ needs.
Prioritise needs in reaching a divorce settlement
Creating a solid plan to settle arrangements for children, ensure sufficient financial provision, and safeguard your future is essential. Prioritising the appropriate care for your children is paramount, reflecting the desires of most parents and aligning with legal considerations where the welfare of children under 18 is the court’s primary concern.
This involves ensuring that children are adequately fed, clothed, and provided with a secure home in all cases. If financial resources are limited, priority is typically given to the parent with whom the children primarily reside.
In more affluent families, sharing family resources to meet the needs of both parties and the children may be feasible.
In cases without children where both parties are employed, their needs (such as housing) are often similar, making these situations generally easier to resolve.
Looking beyond the needs of the parties
It is appropriate to consider additional resources only after addressing needs with available capital and income.
Further considerations include whether additional resources should be divided equally between the parties or if the current ‘owner’ of those assets or income should retain some or all of them.
The financial disclosure process
The law requires you and your former partner to openly and transparently share all relevant information about your financial circumstances to determine the next steps. This process, known as “disclosure,” is crucial to ensuring a fair outcome. Without a complete understanding of your financial situation, it isn’t easy to assess the fairness of any settlement.
This disclosure encompasses details such as bank accounts, insurance policies, savings and investments, income, including bonuses (including anticipated pay rises), pensions, and valuable assets. It may also involve discussions about earning capacity—for instance, if you are currently unemployed, what type of work could you potentially pursue or find?
Steps to reaching a fair financial settlement
A family law solicitor can guide you through the disclosure process to ensure a settlement that meets needs and achieves fairness in asset division. The steps involved are consistent across cases, with key questions to address:
- Identify the available financial resources, including capital, property, pensions, and income.
- Determine your monthly expenses and financial obligations for you and your former partner.
- Assess the amount of debt held by each party.
- Understand the needs of the children (or yourself if there are no children) and identify the most suitable arrangements to meet those needs.
- Strategies how to address these needs with the best available resources, considering potential employment contributions from both parties.
- Exchange this information openly with each other.
- If lawyers, mediators, or the courts become involved, disclose this information to them as well.
- Collaborate diligently with your former partner, seeking support from friends, family, mediators, and family law solicitors, to develop a sensible plan. As a last resort, involve the court for resolution.
Separating emotions from practical needs during divorce or separation is challenging but crucial for achieving a financial settlement and making arrangements for children efficiently and with minimal cost, time, and distress.
