SECTION 4 – THE FINANCIAL SIDE TO DIVORCE
This is referred to as Financial Remedy (formerly Ancillary Relief) and means deciding how to share the matrimonial assets and may in turn affect where the children (if any) will live.
The first step for both parties is to give full disclosure of their financial position. This is generally done by completing a Financial Statement – Form E. Financial disclosure includes the following:-
a) The value of the former matrimonial home, or any other freehold or leasehold properties, time shares and mobile homes;
b) Bank accounts, savings accounts, PEPS, Tessas, stocks and shares, endowment policies, insurance policies and the value of any personal items individually worth more than £500;
c) Pensions; and
d) Business assets.
a) Wage slips, P60’s, State Benefits e.g. Income Support, Tax Credits, Child Benefits; and
b) Rental Income Outgoings Current outgoings and possibly future anticipated outgoings. These may be relevant in deciding whether spousal maintenance should be paid.
All debts owed need to be disclosed including mortgages; loans for any purpose; hire purchase agreements and any credit card debts. If all debts are not disclosed the Court may believe you have more assets than you actually do.
a) Either party (provided divorce proceedings have been issued) can file at Court a Notice of Intention to Proceed with an Application for Financial Remedy in Form A.
b) Once the application is issued the Court will set a date for the First Appointment. This must be neither less than 12 weeks nor more than 16 weeks after the date of the filing of the Notice.
c) Four weeks before the First Appointment the parties must file at Court and exchange with each other sworn Statements of their financial circumstances in Form E together with supporting documents. The Form E will require the financial disclosure set out above.
d) Two weeks before the First Appointment the parties must file with the Court and exchange with each other various ‘Practice Documents’. This is information to assist the Court with the background (Chronology), any matters that are contested or have been agreed (Statement of Issues), any questions that the other party needs to answer as a result of the disclosure they have provided in Form E and/or request for missing documents (Questionnaire) and a Form G – this sets out whether the parties are in a position to negotiate at the Hearing, with a view to reaching an agreement or not.
e) At the First Appointment the Judge will either give Directions to bring the matter to the next stage, a Financial Dispute Resolution Hearing (FDR) or, if the parties are ready, perhaps through negotiations prior to or at the hearing, a Final Order may be made.
f) At the Financial Dispute Resolution hearing the Court encourages the parties to negotiate and settle. If an acceptable settlement is brokered the Court may make a Final Order. If no agreement is reached the Court will set the matter down for a Final Hearing.
g) A Final Hearing is where a Judge will decide how the matrimonial assets are to be divided. The Judge’s decision is legally binding upon all parties and the only ground for appeal is if the Judge has applied the law incorrectly and not simply because either party is unhappy with the decision. It is highly unusual for matters to reach a Final Hearing and everything will be done by the Court and the parties’ legal representatives to limit costs and reach an agreement.
The likely cost of contested finance proceedings is usually between £8,000 and £15,000, plus VAT and disbursements and depends on the value of the financial assets, their location and the ease or difficulty in obtaining full financial disclosure and settlement.
We can advise you whether or not you would be eligible (in the limited criteria available) for a Certificate of Legal Aid. Please remember that Public Funding is a loan and any monies you receive will be subject to the Statutory Charge (repayment of legal fees).
Possible Final Court Orders Relating to Finance:-
The terms of any financial settlement will vary depending on the circumstances of each case and the Court has a wide discretion to make a variety of Orders. Some examples of the types of Orders are set out below:-
a) House sold (Order for Sale) and net proceeds split 50/50 and other assets split 50/50.
b) Total assets split 50/50 and one party continues to maintain the other (Spousal Maintenance) until a certain specified event occurs.
c) Total assets split 60/40, 75/25, 70/30 etc. depending on the nature of the assets, the contribution each spouse has made, the parties’ ages, earning capacities and any physical or mental disabilities.
d) Home transferred to one party (usually the person looking after the children) in full and final settlement with no maintenance for that party but agreed maintenance for the children.
e) Home transferred to one party and the other party has a ‘Charge’ on the property for his or her share to be paid upon sale, which he or she will receive when a certain specified event occurs, such as: the party owning the property voluntarily leaves it, dies or remarries or any children leave full time education.
Everyone’s circumstances are different and a Court will try to be fair to both parties. In particular a Court will try to house both parties where possible and especially the person continuing to look after the children.
However the Court must take account of the following:
• the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future;
• the length of the marriage;
• the financial needs, obligations or responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;
• the standard of living enjoyed by the family before the breakdown of the marriage;
• the age of each party to the marriage and the duration of the marriage;
• the contribution that each of the parties has made or is likely in the foreseeable future to make to the welfare of the family;
• any physical or mental disability of either of the parties to the marriage; and
• rarely, the financial conduct of each of the parties during the marriage and/or the divorce proceedings.
The Court will start at the point of equality (50/50) and this will vary depending on each parties needs and whether or not there are children.
In a short marriage (i.e. less than 10 years) where there are no children then the Court would look at the parties financial positions prior to the marriage and any particular contribution either party has made and where possible return the parties to the position they were in before the marriage.
Close or transfer any joint bank or building society accounts if you are concerned your husband or wife will withdraw monies.
SECTION 5 – THE MATRIMONIAL HOME ON DIVORCE
Is it owned or rented in your joint names?
If yes you have a right to live there up until this is changed by agreement or by a Court Order in the divorce proceedings. Therefore do not move out without legal advice.
What if the tenancy or property is owned by only one of you?
Let us know. Your rights to live in the property, if not owned in your name, will have to be protected by a Notice that has to be given. Towards the conclusion of the divorce it may be necessary to protect your rights to remain living in the property because after the Decree Absolute you may lose your right to remain living there.
Unless the property is owned in the sole name of one of you then it will be owned either as ‘Tenants in Common’, where you each own an identifiable share e.g. 50/50, 70/30 or as ‘Joint Tenants’, where you both own the property in its entirety.
What if it is owned in your joint names as ‘joint tenants’ and you die before the divorce is finished?
The property would pass automatically to your husband or wife. If you want to change this let us know, so they can do something about it. It is possible to sever the joint tenancy allowing each party to own separate shares in the property. Severing the joint tenancy in this way is, however, something of a double-edged sword. At present, if you husband/wife is the first to die then the property would automatically pass to you as the surviving joint tenant, whereas once the joint tenancy is severed, then his/her interest in the property would pass to any beneficiaries he/she has appointed under the terms of his/her Will. You could then make a Will leaving your Estate, including your interest in your home, to whoever you want, for example to your children. If you do not make a Will your Estate will pass under the laws of intestacy. Under the Rules of Intestacy your husband/wife will receive your personal chattels, that is your personal items such as cars, china, jewellery, furniture etc. and cash assets from the Estate, plus possibly a life interest in the residue of the estate (that is what is left after payment of debts, funeral expenses etc), depending on whether there are any surviving children of the family (or grandchildren etc) at the time of your death. It is therefore important that a Will is made at the same time as the tenancy is severed. No Inheritance tax is payable on Estates that pass between spouses.
SECTION 6 – MAINTENANCE/PERIODICAL PAYMENTS
Either spouse, that is the husband or the wife, may claim maintenance or financial help from the other depending on each party’s financial circumstances.
A Court Order can be obtained in the divorce proceedings and, if necessary, before all financial matters are finally resolved (Maintenance Pending Suit).
SECTION 9 – MAKING A WILL
Generally you should make a Will, as this confirms your intentions of how you would want your assets/belongings to be divided after your death.
A Will is generally revoked by remarriage and therefore upon remarriage you must consider whether or not you need to make a new Will. In any event you should review your Will every few years to ensure it reflects your current wishes.
SECTION 10 – WELFARE BENEFITS
There are various benefits available to those with no income and those on limited incomes, especially following a change in circumstances, such as separation and/or divorce.
For advice about what benefits you may be entitled to you should contact your local Citizens Advice Bureau or Braintree District Council. Braintree, Witham & Halstead Citizens Advice Bureau can be contacted on 0844 499 4719.
JobCentre Plus 0800 055 6688
Disability & Carers Benefit Advice Line 0800 220 674
Disability Living & Attendants Allowance Help Line 0800 220 674
Tax Credits Enquiry Line 0844 318 0175
NHS Help Line – Help with NHS Costs 0300 330 1343
Pension Service Help Line 0800 731 7898
Braintree Council 01376 552525