What is a Financial Settlement?
Going through a divorce is undoubtedly one of life’s most challenging experiences. Beyond the emotional toll, practical concerns often take centre stage, with financial arrangements frequently being the most contentious between separating couples.
If you’re navigating this difficult process, it’s essential to understand how financial settlements work, what factors influence them, and how you can secure a fair outcome. In this article, we’ll explore these aspects in more detail to help you feel more informed and supported during this trying time.
Understanding the basics of a financial settlement in divorce
A financial settlement is the legal resolution of financial issues between separating spouses. It involves dividing assets, income, and sometimes debts to ensure fairness. A financial settlement becomes legally binding through a court order, often referred to as a consent order if both parties agree.
Without a formal settlement, unresolved financial claims could resurface years after your divorce is finalised. This means that, even if you believe you’ve informally agreed on splitting finances, you could face unexpected claims in the future.
To avoid this, you should always formalise agreements through the court. The process typically begins with both parties disclosing their financial circumstances, including property, savings, pensions, and income. Transparency is crucial, as hidden assets or incomplete disclosures can lead to complications or even legal repercussions.
Key factors that influence a fair financial settlement
Every financial settlement is unique, shaped by your specific circumstances. However, there are some common factors that influence what might be considered fair.
Courts in the UK focus on achieving fairness while prioritising the welfare of any children involved. They’ll consider your needs and your ex-partner’s, your earning capacity, and the length of your marriage when establishing what should be considered a fair distribution.
For many couples, a pension is their largest asset after the family home. You can share or offset pensions as part of the agreement, depending on what suits both parties best. Additionally, the court examines contributions to the marriage, which include not only financial contributions but also non-financial ones, such as childcare or homemaking.
It’s also worth noting that courts aim to ensure a clean break where possible. This means that they try to avoid ongoing financial ties unless necessary, such as in cases of spousal maintenance.
Working with experienced divorce solicitors
Navigating the financial settlement process is complex, but you don’t have to do it alone. An experienced divorce financial settlement solicitor can guide you through every step, from disclosing your financial situation to negotiating with your ex-partner and drafting the consent order.
Your solicitor can also help ensure that all assets are considered and valued properly, from property and pensions to business interests or other investments. They’ll use their expertise to secure a fair settlement while ensuring the court formalises the agreement to protect you from future claims.
Choosing the right solicitor is crucial. Look for someone with a proven track record in family law and financial settlements, someone who listens to your concerns and communicates clearly. They’ll not only provide legal advice but also offer emotional support and practical solutions tailored to your unique situation.