In England and Wales there is no presumption of community of property. In other words, by being married, a spouse does not automatically acquire an interest in their spouse’s assets (or vice versa). Some other jurisdictions (not ours) have a codified system setting out specific rules for the division of assets and income on divorce. Our legal system is different because it is discretionary.
The law in England and Wales sets out certain criteria which must be taken into account when arriving at a financial settlement. How those criteria are applied varies according to the circumstances of each case and upon the development of case law. The Court’s role is to balance the criteria in assessing the claims of each spouse.
In cases where (often) the family’s resources are insufficient to satisfy both spouses needs, then typically, the needs of the economically weaker spouse (often the parent with whom the children are going to live) is usually given priority in terms of the allocation of resources. This is often referred to as the “needs approach”.
However, in the case of long marriages, where there is a surplus of assets, the Courts have, in recent years, moved away from the needs approach towards a proposition of equal division based on contribution. This approach has developed out of an important case called White v White and has been developed further in more recent cases.
Upon the granting of a decree of Divorce, Nullity or Judicial Separation, the Court has the power to make various orders for a spouse which can include the following:-
Periodical payments (maintenance)
Secured provision (maintenance that is charged against an asset)
Lump sum (a cash payment)
Transfer of property (where legal ownership of an asset is taken away from one spouse and transferred to the other)
Pension sharing or Pension attachment (not possible on Judicial Separation (see Pensions))
Most divorce financial settlements are made up of three main elements; Periodical Payments, Capital Orders (lump sum and/or transfer of property) and long term security (Pension Sharing Orders, Pension Attachment Orders, provision of life insurance cover). In some cases, all three elements are bound together in a one off settlement. This is often referred to as a “clean break”. However, clean break settlements are normally only appropriate where there is not an established culture of dependency (e.g. a short, childless marriage involving a young healthy couple) or where the couple’s resources exceed their reasonable needs.
In order to assess what might be a fair settlement, it is necessary first to identify and value each spouse’s assets. This is the process of disclosure. It is only when the assets have been ascertained and their values agreed, that it is possible to engage in fruitful negotiations to reach a settlement.
Most cases are settled by negotiation between the couple and their lawyers. Increasingly, cases are settled with the help of Mediation or Collaborative Law. Only a small minority of cases are resolved by trial in front of a Judge. However, it is not uncommon for one spouse to start court proceedings about finances to make use of the court procedure. This will typically happen when negotiations have broken down between the parties. Nowadays, it is a requirement that the parties first consider the other resolution options such as Mediation and Collaborative Law. Once financial proceedings are started at the Court, a detailed timetable, dealing primarily with disclosure requirements, is set down for compliance by both spouses. The Court process certainly works to focus the couple in structuring the negotiations and the exchange of relevant information and valuations. Even when the parties agree, a short hearing is sometimes necessary to ask the Court to approve the settlement and make a Court Order in the agreed terms.
“I want to keep things amicable” and “I don’t want to end up in Court” are phrases we hear time and time again at first meetings with our clients. We share these aspirations with our clients. Court proceedings can certainly prove very expensive, lengthy and stressful for the separating couple. Also, outcomes are often very difficult to predict with accuracy, due the discretionary nature of our judicial process. Rarely do we advise our clients to start proceedings unless it becomes a last resort. Rather, we prefer to explore with our clients the array of alternatives such as Mediation, Co-operative meetings, Collaborative Law. Thankfully there is a requirement nowadays that the separating couple consider these other resolution options before starting court proceedings. We are able to discuss all the available process options with you at the first meeting. As an introductory guide, take a look at this diagram setting out the process options. If Court is unavoidable, we have a strong reputation for combining excellent negotiation and mediation skills with tough litigation expertise and can handle the most intricate of financial applications.
Finance and Property Finance and Property FAQ