Financial Settlement Myths
As Divorce and Family Law Solicitors we often come across a number of “myths” or misunderstandings about how the law works with regards to the division of Matrimonial Assets and finances.
It can be a complicated area of law and you should always seek advice from a Family Law Solicitor who specialises in complex financial matters as they will be able to offer you tailored legal advice to your circumstances.
Here are some of the financial settlement myths that we encounter;
A 'fixed price' online Divorce will include the Financial Settlement agreement
We are unaware of any fixed price online Divorce offerings that will also include the legal services required to come to a Financial Settlement. These are usually handled along the legal process of Divorce but are not included within it.
There is a “Secret” formula that the Court uses to work out who gets what financially
The Court have to look at what is fair and reasonable given each case’s unique circumstances both financially and factually. The starting point is that all of your assets, liabilities, income and pensions are put in one “pot” and then split equally between yourself and your spouse. This may not result in a fair split depending on the facts of your case. The Court can then use factors called Section 25 factors to move away from that. The formula, therefore, is not secret but it is subject to a Judge’s discretion and the Judge can make any order they want to make as long as fair and reasonable.
My Decree absolute ends any financial claims that my spouse has against me and vice versa
The only document that dismisses the claims between the two of you is a financial Court Order which is obtained alongside the divorce. This sets out the financial settlement and will dismiss the claims that you each have against the other. The Final Order (formerly the Decree Absolute) only dissolves your marriage and not the financial claims. The “Clean Break” finalises the financial applications between the two of you in life and in death. This means that if you win the lottery and get a windfall in the future your ex-spouse cannot make a claim against it. If you do not have the Clean Break then they could make a claim against it.
Selling the house and splitting the money automatically sorts out finances
This is also a common misconception. You can transfer or sell the matrimonial home or other property if the joint owner agrees and there is no Court Order or restriction at the Land Registry, even if there are no divorce proceedings or financial Court Order. The conveyancing lawyer can legally transfer or sell the property without the financial Court Order on divorce. However the sale/transfer and split of proceeds of sale or payment of a lump sum does not resolve the financial matters and the claims are still open to each of you. You still need a Court Order which either sets out what is happening with the property or what has happened and again that this is a Clean Break.
The Court in financial matters on divorce could consider that the money paid to one or both parties was not fair and reasonable and you could end up having to pay more or receiving more. It is best to agree the split and have it in a Family Law document before completing the sale or transfer.
There can also be problems if you don’t agree to the split of the proceeds of sale before the house is sold and you accept an offer. The conveyancing lawyer can deal with the legal process of selling the house but if there is no agreement on the split of the proceeds of sale then they will be held to order in a solicitor’s bank account pending a written agreement or a Court order. This can lead to significant delay and financial difficulties.
We don’t have much money/any assets so we don’t need to sort out our finances
It is not the case that you don’t need to sort out your finances if you have little or no assets. A Court Order dismisses the claims and can protect you and your finances in the future, including against any potential bankruptcy of your ex-spouse. It is best to sort out the finances when you know where the other person is and what your finances are. It is a gamble not to sort them out alongside the divorce as you never know what the future may hold.
How can we help
From our 3 office locations in Oldham, Failsworth and North Manchester (Junction 22 of the M60) we help people, in your situation, across Oldham, Saddleworth, Failsworth, Hollinwood, Manchester, Stalybridge, Hyde, Rochdale, Bury, Tameside, Glossop, Stockport, Cheadle, Sale, and Altrincham areas.