In the later stages of married life, it is increasingly common for couples to decide to separate. Whilst it is a difficult and emotional situation regardless of whose decision it is, making sure you get the right advice early can help you begin to move forward.
There are a number of options once a decision to separate has been made. You don't necessarily have to initiate Court proceedings to finalise financial matters, as it is possible for these to be discussed and agreed through the drafting of a matrimonial agreement. You do not have to wait any defined period of time after separation before entering into an agreement about financial matters.
Obtaining independent legal advice before entering into discussions around financial separation is important. You will need to share full details of your financial position with your partner and vice versa; otherwise this may impact on the validity of the agreement. Should either party fail to get independent legal advice or provide their financial information in full, the agreement could potentially be void.
Often when it comes to agreeing the terms of a matrimonial agreement, the most common and significant assets to be dealt with are the matrimonial home and any pensions.
Up to date valuations of property and other valuations such as those for a business or investments, can be sought on a joint basis between the parties by an independently agreed valuer to reduce costs.
Once an agreement is reached regarding the valuation of any property, there are options for this property to be sold with proceeds split between the parties. This can be transferred either in full or in part to a party or for example with the matrimonial home, a right to occupy can be granted to one party with ownership remaining joint. Considering whether your new financial situation will allow you to maintain any property which may be subject to a mortgage is important.
Pensions are often viewed as being more complicated. Commonly, a cash equivalent transfer value (CETV) is obtained to determine the cash value placed on pension benefits. There are then a number of options for how this is dealt with; such as a pension sharing order, earmarking/attachment orders or offsetting.
Arrangements with regards to maintenance will also be written into the agreement to provide security.
Provision is also made within the matrimonial agreement that neither party can make any future claim against the others' assets or interests unless specifically allowed for, and reassurances apply against any party making a claim against the others' estate in the event of death.
The matrimonial agreement can then be made an order of the Court once divorce proceedings are lodged and approved.
Where an agreement is not possible and it is necessary to issue Court proceedings in order to reach a financial settlement, then an application to resolve the financial position can be lodged once divorce papers have been lodged.
This process requires the sharing of financial information and obtaining joint valuations and reports if agreed. However, in this process each party sets out their position by way of a sworn affidavit.
The Court will review the case regularly to ensure the sharing of documents is complied with and to address any issues. If the parties cannot reach an agreement on the financial settlement, the Court will list the matter for a first hearing. If this does not achieve a resolution, the matter will be listed for final hearing, and whilst negotiations will generally continue if no agreement is reached, the Court will make a decision on what the final order should be. The financial arrangements will then be carried out in accordance with the terms of this final order.
At the end of a separation, your renewed financial position should always be considered regarding your estate planning. We can assist you in updating your Will once matters are concluded.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.