Fair Financial Settlements in UK Divorce Explained | LegalDocuments.co.uk

Overview

A financial settlement is the arrangement that sets out how a divorcing couple will divide their money, property, pensions and any liabilities they have built up together. When this arrangement is recorded in a document approved by the court, it becomes a financial order, most commonly a consent order where the parties agree, or a contested financial remedy order where a judge decides.

The aim is to draw a line under the financial ties of the marriage so both people can move on with certainty. A settlement can cover a wide range of matters, including the family home, rental properties, bank accounts, investments, business interests, pensions, vehicles, debts and ongoing spousal maintenance.

Child maintenance is usually dealt with separately through the Child Maintenance Service, though parents can agree figures between themselves. Importantly, getting divorced does not automatically sever financial claims between spouses. Without a properly drafted and sealed financial order, either party could, in principle, bring a claim years down the line, which is why formalising the settlement matters so much.

Key steps

1. Gather full financial disclosure. Before any sensible conversation about splitting assets can happen, both spouses need to lay their cards on the table. That means listing all property, savings, investments, pensions, business interests, debts and income. Hiding assets tends to unravel badly later.
2. Consider mediation or round-table negotiation. Most couples benefit from trying to resolve matters outside court. A trained mediator or collaboratively minded solicitors can help you work through difficult issues, explore options and find common ground without the costs and delays of contested proceedings.
3. Agree the heads of terms. Once you have a workable outline, who keeps the house, how pensions are shared, whether maintenance is payable, how debts are handled, it needs to be captured clearly. Ambiguity at this stage causes real problems when the formal order is drafted.
4. Have a consent order drafted and submitted. A solicitor will usually draft the consent order and accompanying financial statement. This is lodged with the court alongside a modest court fee. A judge reviews the terms to check they are broadly fair before sealing the order.
5. Apply to court if agreement is impossible. Where negotiation stalls, either party can apply for a financial remedy order. The court process involves disclosure, a First Directions Appointment, a Financial Dispute Resolution hearing and, as a last resort, a final hearing where a judge imposes terms.