Managing Your Finances Through A Divorce

The breakdown of your marriage may leave you feeling uncertain about the future of your finances. When applying for a divorce you will need to agree a financial settlement. This settlement can be agreed at any point during the divorce proceedings but does not form part of the divorce application. A financial settlement is a legally binding agreement on how your finances and assets, including any pensions, investments, savings and property, will be distributed following the breakdown of your marriage.

Occasionally, divorcing couples are able to reach an agreement between themselves or through mediation without the need of a solicitor or a judge. If this were to occur, it is still best to apply to the courts for a consent order to ensure the agreement is legally binding therefore preventing any future financial claims from being made to your finances. However, this is not usually the case, and it is often necessary to seek independent legal advice to aid in reaching an agreement.

If an agreement cannot be reached through mediation or with independent legal advice, then the matter will be presented before a judge who will have the final say on how the assets are split by granting a financial order. However, to avoid high legal fees and to ensure you have control over the best financial outcome it is usually best to avoid any court proceedings where possible.

When reaching a financial settlement there is no uniform application as the circumstances of every family are vastly different, therefore there is no one-size-fits-all approach. A vast range of factors will need to be taken into account such as: both party’s assets and finances, current and future earning capacities and how this could be affected by health or age, your current and future needs and the needs of any children. The reason for the divorce will very rarely affect how the assets are distributed and the court will look for a fair agreement that will above all prioritise the welfare of any children.

Even after you have reached a financial agreement, your spouse may still be able to bring a financial claim to your future assets, even if you remarry. To prevent this, it is best to ensure you have a “clean break order”, this means that from that moment on your spouse will no longer be able to bring any claims to any future assets you acquire. A clean break order can only be achieved where you have not agreed or been ordered by the court to make continuous financial provisions in the form of maintenance or once these payments have ceased.