Getting the Best Financial Settlement
When you separate or divorce, you need the best financial settlement you can get to rebuild your life.
In this article, our Family Lawyers explain your options on how to get the best financial settlement.
Contact the Family Law Team at OTS Solicitors in London for a phone, online or office consultation
What is the best financial settlement you can get?
The best financial settlement you can get depends on what is important to you.
When you separate, it is easy to focus on what is emotionally or financially important to you. That may be shares in a family business or the equity in the family home. or the pension that you have been paying into during the marriage. The job of your Divorce Solicitor is to consider all the assets and to work out what the best financial settlement you are likely to get is and whether it's best to try and negotiate a deal or ask a family judge to make a financial court order.
Our Family Law Solicitors have encountered situations where a business owner is adamant that they want to retain their shares in the family business, and their spouse can have the rest, as all that is important to them is their stake in the business. However, what happens if one key client takes their business elsewhere, or there is some other issue that affects the value of the shareholding?
Other spouses are adamant that they want to keep the family home or retain all their pension, and that is the only financial settlement they are willing to accept. However, the plan may backfire if the pension is underfunded or if the spouse cannot afford the outgoings on the family home, and the deal reached means they are not entitled to apply for spousal maintenance in consideration for receiving all the equity in the family home.
The best financial settlement can depend on the timing
When you first separate, all your focus may be on having somewhere to live or, if you are nearing retirement, on having sufficient pension income to pay your bills.
A Family Law Solicitor should look at your immediate priorities, but will also consider your medium and long-term needs. For example, getting the house may not be the best financial settlement for you if you can't afford the bills and keeping all your pension may not be the ideal financial settlement if you have no mortgage capacity. You can't buy another home, as your ex has kept the family home or taken all the equity in it, and you don’t have any money to use as a deposit.
Working out how to achieve the best financial settlement for you
Sometimes, people want to go to court and have a judge make a financial court order because they believe they will get a better deal if the judge makes the order, as their former spouse won't make any concessions in family mediation, roundtable meetings, or solicitor negotiations.
Some husbands or wives are so difficult that only a judge-made financial court order will get you the financial settlement you want. There are two catches:
- The judge may disagree with you and make an order that does not give you what you want, but what the judge thinks you need.
- In most financial settlement court proceedings, the judge will not make a costs order, so you must pay your legal costs.
If the family assets are valued at around ten million, and you are arguing whether you should receive half or not, then the amount you get in a financial court order should justify the legal bill. If the family assets are around £500,000 and you are in dispute over whether you get 50% or the 48% your spouse has offered its likely that even if you get what you want and the court awards you 50% of the family assets you won't have got the best financial settlement if your legal bill is higher than the extra 2% you achieved through going to a contested court hearing.
Knowing what the best financial settlement for you is
To understand what your best financial settlement is, you need to know:
- What orders the court can make and what it is likely to do.
- The extent of the family assets and their value.
- The value of any non-family assets and their relevance.
The types of financial settlements the court can order
A financial settlement agreement or court order can include:
- The family home – order for sale and division of net equity, or the transfer of the house to one spouse, or the house staying in joint names until a specified date (Mesher order).
- A lump sum payment.
- Pension sharing or offsetting. With pensions, the court must make a pension sharing order for the pension share to be implemented.
- Savings, investments and other financial assets, such as a second home or buy-to-let property.
- Shares and business assets, including the transfer of shares in family businesses.
- Spousal maintenance.
- Child maintenance – this is usually arranged by agreement, through assessment by the Child Maintenance Service, or in limited circumstances, ordered by the court.
- A clean break to prevent all future financial claims between the husband and wife.
The assets
It’s vital to understand the extent of the family wealth and if either spouse is alleging that some of the assets held in their sole name are non-family or non-matrimonial assets. It's equally important to ensure assets are accurately valued, including property, shares in unlisted limited companies and pensions.
Without accurate information, it's not possible for a spouse to know whether what their spouse has offered them is a reasonable financial settlement.
Reaching a financial settlement
There are several ways to reach a financial settlement, and it’s the job of a Family Law Solicitor to advise on the best option that suits your circumstances. The options include:
- Financial court proceedings.
- Family mediation.
- Family arbitration.
- Solicitor negotiations.
There may be reasons why court proceedings for a financial court order should be started quickly. For example, where:
- A spouse is selling off assets at an undervalue or transferring them to family members.
- A spouse needs interim spousal maintenance, and their spouse won't make voluntary payments.
Achieving the best financial settlement for you
There is usually no one right way or wrong way to achieve a financial settlement. For example, you may not want to engage in family mediation because you do not want to be in the same room as your spouse, but in financial court proceedings or arbitration, you would also need to be in the same room with your spouse. One way to resolve your reservations about attending family mediation sessions is to agree to shuttle mediation or solicitor-involved mediation.
At OTS Solicitors, our Family Lawyers will ensure you know your settlement options and have had the financial disclosure required to understand the extent and the current value of your spouse’s assets. We will also discuss how the judge decides in contested financial proceedings, so you are aware of the potential financial court orders the judge may make at the final hearing of the court application.
Frequently Asked Questions on Financial Settlements
Who can apply for a financial order?
A husband or wife can apply for a financial order. The application isn't automatic when you apply for a no-fault divorce. However, you may be prevented from making an application if you remarry before reaching a financial settlement.
What's the best way to get a financial settlement?
There isn't a best way, as the best way depends on your circumstances. For example, if your spouse is not willing to provide financial disclosure of their assets and isn't willing to negotiate, your only and therefore best way to proceed is to apply to court for a financial court order. If your spouse is more likely to be generous when you present a measured case for keeping the family home and consider the impact on the children of a house move, then family mediation may be your best option.
Can you apply for a financial court order if you signed a prenuptial agreement?
If you are both satisfied with the terms in the prenuptial agreement, it's essential to ask the court to make an agreed-upon financial consent order, ensuring you have a binding financial order. If one of you isn't happy with the financial deal reached in the prenuptial agreement because it does not meet your reasonable needs, then you can apply to the court for a financial order. The judge could make an order in the same or similar terms to the prenuptial agreement or hold that the agreement is unfair and make a financial court order that the judge thinks is fair to both of you.
Online and London Family Law Solicitors
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