Financial settlements after divorce

When a married couple goes through a divorce it can be a stressful time for everyone involved. The issue of dividing up two lives that have been intertwined for years is not only difficult on a logistical level but also extremely difficult emotionally.

Ensuring that financial arrangements are made fairly during a divorce is essential in order to help both parties move on to the next stages of their lives, whilst taking the time that they were together into account and other considerations such as children and who will be looking after them.

Looking to start divorce proceedings?

Making the decision to get divorced as a couple is not easy. It is a big decision, but once that it has been made, it is important to get things sorted out as quickly as possible. There are many things that need to be considered, but one big factor is the financial settlement.

Financial matters in a divorce cover everything from what to do about a house that is owned, pensions, savings, assets, any other property, as well as payments relating to children. It is important that all of these are considered, as well as who put money in, who put their career on hold for childcare, and other important factors.

Depending on the situation, a financial settlement may be required. This means that a court can be used to stipulate the details of the financial split when there is a divorce, meaning that everything is clear and fair at the time that the divorce goes through.

What happens to a house in a divorce?

When a couple gets divorced, the issue of what happens to the marital home is an important factor. There are several considerations to make, and no two cases are the same. However, there will normally be one of four different outcomes:

  • The house is sold and the equity split between both parties – this, however, will not necessarily be an equal split.
  • One party buys the other out. This would normally need a new mortgage on behalf of the party that is staying in the property, passing a lump sum to the other.
  • One party stays in the house and the other leaving but receives a lump sum or percentage of the proceeds when the property is sold.
  • One party stays in the house but leaves it at a pre-agreed point – such as when children leave the home or turn 18, for example.

Depending on your ongoing relationship with your ex-partner and the current situation, you might not necessarily need to go to court to make this agreement. Going to court can be stressful and difficult at the time of going through a divorce. However, it may be the best solution if you cannot reach an agreement and have also tried mediation.

What is spousal maintenance?

For many couples, the finances have not been equally split over the years. It is often the case that one person earns more money, one has put their career on hold to bring up children, or done part-time work in order to support the other. Spousal maintenance takes this into account and is a payment between the two parties that is given to help to compensate for this. Spousal maintenance is not the same as child maintenance and can be ordered to pay regardless of whether there are children involved or not.

Spousal maintenance can be ordered either for a specific, set period of time or ongoing. It does, however, not apply if/when the receiving party remarries (although this does apply to co-habiting parties). There is no formula to calculate the amount of spousal maintenance that should be paid and is usually only granted when there is proof that one of the parties cannot support themselves.

How much child maintenance should I pay?

If there are children involved in the divorce, the issue of what each party contributes to their upkeep is key. This can be settled in an agreement between the two parties, however, it is recommended that you both check what the legal requirement is, as either party can contact the Child Maintenance Service at any time to find out what the legal responsibility is.

There are a number of factors that affect the amount that you pay or are wanting to pay, including:

  • How many children do you have?
  • Your income as a paying parent
  • How much time do you spend with your children?
  • Whether you would prefer to pay a percentage of your earnings or a regular lump sum
  • Whether you wish to pay for specific things throughout the year

Child maintenance payments will normally stop when the child is either 16 or up to 20 and finishes full-time education.

Divorce: Pension Rights

Pensions are designed to give people an income when they retire. It is often taken from the earnings of one of the parties and put into a pension scheme. When a couple gets divorced, as with their regular income, this can often mean that one party will receive a proportionately unfair amount of the money.

If this is the case, it is usually one of three options that can happen:

  • Pension Attachment Order occurs when the pension is in payment. In this instance, a proportion of the pension payment is paid to the other party. These are not particularly reliable as the receiving party has no control over what payments are made into the pension fund.
  • An Offsetting Arrangement is when the amount of money that will be missed out on by the ‘receiving’ party is offset by granting them other assets – such as property. This is also a rare agreement as there are not many assets (after property) that are of a similar value to a pension and it can be difficult to compare like-for-like.
  • Pension Sharing Order stipulates that a proportion of the pension is transferred into a new pension for the receiving party. This is the most common of pension rights solutions.

Dealing with pension rights can require expert knowledge and this is why it is usually recommended that you employ a professional to resolve this for you.

How to solve a divorce dispute with family mediation

Unlike marriage guidance or counselling, mediation occurs after a couple has decided to separate. Regardless of your relationship after the split, talking about financial matters is not always easy and can often end up in arguing and conflict.

Mediation can help both parties come to an agreement, allow both to listen and be heard, and is a useful way to resolve disputes before the last resort of going to court.

Contact Waldrons Solicitors

Here at Waldrons, we have a team of experienced solicitors who can help you. Contact us today to discuss your circumstances.

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