Financial Settlements in Divorce: What You Need to Know

Obtaining a financial settlement is a crucial part of the divorce process and it is also one of the most daunting for many people going through or considering a divorce. However, with the right lawyers by your side, this doesn’t need to be the case. 

In this financial settlement guide, we’ve outlined the 5 key points that you should be aware of to help address common questions and misconceptions.

1. Yes, nuptial agreements can be enforced - if certain criteria are met

Following Vardags’ victory in the landmark Radmacher v Granatino case, nuptial agreements will be given effect, provided that certain conditions are met, namely:

• Both parties entered into the agreement freely
• Both parties had a full appreciation of the implications of the agreement
• It would not be unfair to hold the parties to the agreement

In assessing whether these criteria have been satisfied, the family court will take into account numerous factors, such as whether the parties received independent legal advice or if enforcing the agreement would leave a party “in a predicament of real need”.

Learn more about the criteria for a valid nuptial agreement here.

2. Providing full and frank disclosure is mandatory

First and foremost, expect to provide complete disclosure of your assets. Many people going through a divorce are naturally concerned about protecting their wealth. However, it not advisable to attempt to hide or dissipate your assets in an attempt to prevent your spouse from receiving a share of it.

Both parties are obliged to provide full and frank disclosure, and a failure to fulfil this obligation may result in punitive action from the court (learn more about the penalties for non-disclosure here).

3. Equal sharing of matrimonial assets

In England & Wales, the family court draws no distinction between ‘homemakers’ or ‘breadwinners’ – both parties are treated as equal partners to the marriage.

To reflect this, the court’s starting point is to divide all matrimonial assets equally. Matrimonial assets are those which have been acquired by either party from cohabitation until separation. Who legally owns the asset is irrelevant.

Non-matrimonial assets are those which derive from a source outside the marriage, and they will generally be kept separate. An asset may be deemed matrimonial if it was acquired prior to the parties’ cohabitation, post-separation, or if it was inherited by one party. 

Learn more about matrimonial and non-matrimonial assets here.

4. The marital home is usually shared equally

Many people believe that if they bought the marital home prior to the marriage, and it remains in their sole name, that their spouse will have no claim to it. This is not true.

The marital home is given unique status by the family courts. It will usually be considered a matrimonial asset, regardless of legal ownership or if it was acquired prior to the relationship. Therefore, it will generally be shared equally.

Other properties, which were not treated as the family or marital home, are not afforded the same unique status. Whether they are shared will depend on whether they are considered matrimonial or non-matrimonial, and the needs (including housing needs) of both parties.

5. The importance of obtaining a financial order before your divorce is finalised

Prior to obtaining a Final Order, which legally ends your marriage, it is important to get a financial order. This should either be in the form of a financial order from the court, or a consent order enshrining an agreement between you and your former spouse. Either way, the financial settlement should be resolved in the form of a legally binding order – it not enough to just come to a verbal agreement.

Crucially, your former spouse may still make financial claims against you after the Final Order. Having a financial order in place can prevent them from doing so, providing protection for any wealth you may have accumulated post-divorce.

Need Help Navigating Your Divorce Settlement?

Whether you’re considering divorce or already going through it, Vardags can help you secure a fair and legally sound financial settlement. Click below for a free initial consultation with one of our expert divorce solicitors.

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