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A financial settlement that has been recorded as a court order is a legally binding document between two parties to a relationship that has ended. It is used to determine how the assets and wealth will be divided between the parties. Financial settlements will cover a range of things including:● The family home and any other rights to property;● Major assets such as the family car;● Stocks and shares.
It will cover assets in the UK as well as international assets. A financial settlement does not only cover the positive wealth but will also determine how any liabilities for debts will be distributed. This will include the financial liabilities connected to any children, for example in maintenance payment and for school fees.
Coming to a Financial Settlement
There are various ways to create a financial settlement. Where the parties can agree with how the assets and wealth should be divided then it is possible for the settlement to be agreed between them without the need for court intervention.
The parties can choose to have the financial settlement made as a consent order by a solicitor and processed through the courts together with the divorce. Where the parties cannot agree then it may be that the use of negotiation, arbitration, mediation or collaboration would help matters to be resolved.
How are Financial Matters Settled?
Each case is very different and will turn on the facts. Every person will have a different financial situation and lifestyle that will determine how the financial statement should be operate. There are a wide range of factors that need to be considered in each case including:
● The assets of both parties.● The earnings of both parties as well as the potential earning capacity of both parties.● If there is likely to be a foreseeable change in a party’s finances (for example, a promotion).● The ages of both parties and their state of health. This will have an impact on their earning capacity in the future.● If there are any children. Where there are children then their ages and individual needs will be used to determine how assets need to be divided to best support them.● The length of the relationship (this is not just the length of the marriage but any time spent living together before this).● The needs of both parties now and their expected needs in the future.When determining what is fair, the court has started to move towards a sharing principle or presumption of equality where the assets satisfy both parties’ needs with a surplus. This is based around the assumption that assets built up during the marriage should be equally shared.
However, the court can move away from this principle where the needs approach applies, which will generally be a deciding factor in a lot of cases. If the assets are not sufficient to satisfy both parties’ needs then the one that is financially worse off will be given priority over the assets and wealth. Generally, this is the person that the children will reside with. This approach will take into account that once a couple separate, they will need to be funding two households as opposed to one. It may not always be possible to buy two properties and one of the parties may need to rent and usually this is the party that does not generally have the children living with them. The courts will also consider the compensation principle, which deals with situations such as one of the parties having given up their career in order to raise the couple’s children.
There are various orders that can be used under a financial settlement depending on how the assets need to be distributed between the parties.
A periodical payment order (maintenance or alimony) involves the regular payment of money by one party to the other. It will usually be either weekly or monthly and is used to cover the needs of either the ex-partner or any children. If necessary, the order can be a secured periodical payment order, which the court will use to ensure that the money is paid as required.
Another possible order is the one-off payment of a specific amount of money, which is known as a lump sum order. These are used to compensate a party for their loss of interest in a property as well as any savings and investments. Linked to this is the property adjustment order, which allows the transfer of property from one party to another, an adjustment in ownership or granting an interest in certain property. Generally, this is used for the family home, but it can also be used for other property owned by the couple as well as assets such as stocks and shares and cars.
A pension can be a hugely valuable asset and so there are pension sharing orders that allow for a pension to be apportioned between the parties. It is also possible to offset pension entitlements with other assets, for example by taking a bigger share of the housing capital instead of a share of the pension capital. Life insurance policies can also be handled in the same way as pension rights.
Where there is more disagreement between the parties, it may be necessary for the financial statement to be determined by a court. The court will look at each case individually and the judge will have a wide discretion to determine what are the correct orders in the circumstances. The court’s aim is to make an order that is as fair as possible to both parties, making sure that the interests of any relevant children are a top priority.
When you deal with us, you know you are dealing with solicitors you can trust. We have vast experience in dealing with divorce cases, as well as other areas of family law, including:
Our experience in all areas of family law makes us experts when it comes to dealing with divorce. We provide the best and most reliable experience in Leeds so contact us today to see how we can help you with proceedings.
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Contact Family Law Solicitors in Leeds Today
Our team of dedicated family law experts are on hand to deal with any divorce issues you might have. We know how difficult going through divorce can be for you and your family. Our expert team endeavour to provide all our clients with a friendly, professional and reliable experience.
If you have any family law matters you wish to take care of then we suggest you contact us immediately. Speaking to a solicitor early in the divorce process minimises problems and ensures that you get the best outcome for your circumstances.
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