When a relationship breaks down, the question of how finances will be dealt with is rarely straightforward. There are often many factors to consider, including the family home, savings, investments, pensions, business interests and ongoing financial support. While many people assume that assets will simply be divided equally, the reality is often more complex and will depend on the individual circumstances of the case.
Obtaining legal advice at an early stage can help you understand your position, identify practical solutions and avoid unnecessary conflict wherever possible.
Led by Sobiah Hussain, Head of Private Family Law, our team advises clients across England and Wales on all aspects of financial settlements following divorce and separation. Whether you are seeking advice at an early stage, negotiating a settlement, attending mediation or considering court proceedings, we can provide clear and practical guidance throughout.
Can Financial Matters Be Resolved Without Going to Court?
Court proceedings are not always necessary. In many cases, financial matters can be resolved through direct discussions, solicitor-led negotiations or mediation.
Reaching an agreement outside of court can often reduce costs, minimise stress and allow both parties greater control over the outcome. Once an agreement has been reached, it can often be formalised through a Consent Order approved by the court.
However, where agreement cannot be reached, or where there are concerns regarding disclosure, valuation of assets or the overall fairness of a proposed settlement, court proceedings may become necessary.
Common Financial Issues Following Divorce
The Family Home
For many couples, the family home is the most valuable asset. Questions arise regarding whether the property should be sold, transferred to one party or retained for a period of time following separation.
Savings and Investments
Financial settlements frequently involve the division of savings, investments and other jointly or individually held assets.
Pensions
Pensions can represent a significant asset and are often one of the most important considerations when reaching a financial settlement.
Business Interests
Where one or both parties own a business, specialist advice is often required to determine how those interests should be treated within the overall settlement.
Maintenance Payments
In some cases, ongoing financial support may be appropriate, either for a former spouse or for the benefit of any children.
Pre-Marital and Inherited Assets
Questions can arise regarding assets acquired before the relationship began, or assets received through inheritance during the relationship.
International Assets
Additional complexities can arise where property, investments or business interests are held outside England and Wales.
Hidden Assets and Financial Disclosure
Concerns sometimes arise that one party has failed to provide a complete picture of their finances. Obtaining full and accurate financial disclosure is often a crucial stage of the process.
Financial Settlements Following Divorce
Where agreement cannot be reached, it may be necessary to seek the assistance of the Family Court through financial remedy proceedings.
The court has wide powers when determining how assets should be divided following divorce. Each case is considered on its own facts, taking into account a range of factors including the parties’ financial circumstances, needs and responsibilities.
The court’s objective is not simply to divide assets equally, but to achieve a fair outcome based on the particular circumstances of the case.
Sobiah Hussain
Partner, Solicitor-Advocate, Collaborative Law Practitioner & Head of Private Family Law
Meet the teamFinancial Settlements - What You Need to Know
When determining a financial settlement, the Family Court will consider a range of factors, including:
- The parties’ financial resources
- Their current and future earning capacity
- Housing needs
- Age and health
- Financial responsibilities and obligations
- The standard of living enjoyed during the marriage
- The length of the marriage
- The welfare of any children
Every case is different. The court will consider the circumstances as a whole and seek to achieve a fair outcome based on the individual facts of the case.
Many people assume that assets will automatically be divided equally following a divorce. While an equal division may be an appropriate starting point in some cases, the reality is often more complex.
The outcome may be influenced by a range of factors, including the parties’ respective financial needs, the welfare of any children, the length of the marriage and the resources available. As a result, settlements can vary significantly from one case to another.
We can help you understand how the court is likely to approach your case, identify the factors that may influence the outcome, and advise you on whether a proposed settlement is likely to be fair and reasonable in the circumstances.
financial settlement can only be negotiated fairly if both parties have a clear understanding of the assets, liabilities, income and resources available.
As part of the process, each party is expected to provide full and accurate financial disclosure. This may include information relating to property, bank accounts, investments, pensions, businesses and other financial interests. Failure to provide proper disclosure can have serious consequences and may affect the outcome of the case.
We can guide you through the disclosure process, review the information provided by the other party and identify any gaps, inconsistencies or areas that require further investigation. This helps ensure that any settlement discussions are based on a complete and accurate picture of the finances involved.
Concerns sometimes arise that one party has failed to disclose the full extent of their finances. This may involve undisclosed bank accounts, investments, business interests, property or other assets.
Where there are genuine concerns regarding non-disclosure, we can take steps to obtain further information and scrutinise the financial disclosure provided. Depending on the circumstances, this may involve raising detailed questions, seeking additional documentation, instructing specialist experts or asking the court to make orders requiring further disclosure.
The Family Court takes a dim view of attempts to conceal assets. Obtaining legal advice at an early stage is important if you believe your former partner has not provided a complete and accurate picture of their finances.
Many people assume that once a divorce is finalised, neither party can make further financial claims against the other. This is not necessarily the case.
A Clean Break Order can bring financial claims to an end and provide certainty for the future. This can be particularly important where one party’s financial circumstances may improve significantly in the years following a divorce.
We can advise you on whether a Clean Break Order is appropriate in your circumstances, ensure that any agreement is properly documented, and help protect you from the risk of future financial claims.
It is not uncommon for one party to place pressure on the other to reach a financial settlement quickly. In some cases, individuals agree to arrangements that do not properly reflect their legal position because they wish to avoid conflict, reduce legal costs or bring matters to an end.
We can review any proposed settlement, advise you on whether it is likely to be fair in the circumstances and explain the potential long-term consequences before any agreement is reached. Where necessary, we can negotiate on your behalf and help ensure that important issues are not overlooked.
Obtaining independent legal advice before agreeing to a financial settlement can provide reassurance that any agreement properly protects your interests and those of your family.
Sobiah Hussain
Partner, Solicitor-Advocate, Collaborative Law Practitioner & Head of Private Family Law
Irrum Shah
Senior Associate Solicitor
Alison Page
Senior Associate Solicitor
Emma Macdonald
Chartered Legal Executive
Frequently Asked Questions
Financial Settlement is the division of assets and financial agreements in the divorce process. This can happen during the divorce, though it can take place after the divorce has been decreed.
A financial settlement can be agreed outside of a court. Usually both parties will enter a process of negotiation or mediation (with or without a solicitor’s assistance) until a financial agreement can be found. The length and success of this process can depend on a full and frank financial disclosure.
If the court is involved in the division of assets, the assets are split according to basic guidelines set out in Section 25 of the Matrimonial Causes Act 1973. If the case involves dependent children, then the Act states that the court must place the needs and welfare of the children as the most important consideration during the financial settlement.
Section 25 of the Act sets out several areas where the court may exercise its powers;
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- Foreseeable Future Financial Considerations.
The act states that the court can consider “the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future”.
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- Financial needs, obligations and responsibilities.
Here the court is concerned with any financial concerns and obligations that either party is likely to have in the foreseeable future. This could include child care costs and the cost of rehousing each party after the divorce.
During this part of the process, the court will request an estimated breakdown of financial concerns and outgoings from each party.
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- The standard of living enjoyed by the family before the breakdown of marriage.
Where possible, the court will try to maintain the same standard of living enjoyed during the marriage for both parties. Whilst this is the ideal, it is usually not possible to make a settlement that will result in no reduction in the standard of living for either party.
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- The ages of each person when they entered into marriage and the duration of the marriage.
The age of the person will impact their earnings, mortgage capacity, and their ability to achieve independence. This may become important when assessing income or deciding how pension assets will be split, especially in situations where one person is planning to retire soon. The longer the marriage the more difficult it may be to achieve independence as two single parties.
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- Any physical or mental disabilities of either party
This may impact a party’s income or earning capabilities as well as their accommodation and expenditure needs. If one or both party has disabilities they may be at a disadvantage when trying to live independently.
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- The ongoing contribution each make or is likely to make to the welfare of the family.
How assets came into the marriage is an important factor. If a party’s needs have not been met, it may not be possible to argue a party’s contribution should lead to a departure from equality.
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- The conduct of each party
Conduct typically refers to exceptionally serious behaviour from one or more party. This may include violence or financial misconduct. The court may disregard conduct if there has not been a serious affect on the party.
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- Consideration of benefits which may be lost after divorce.
This typically relates to pensions. Private pensions made be shared, offset or attached. Government pensions cannot be shared if a marriage or civil partnership ends.
Following a divorce or separation, property is divided with the intent of equality and fairness. This does not always mean a 50/50 split. As you can see from the considerations of the court, there may be many reasons why the financial settlement is not ‘straight down the middle’.
For example, one party may be considered economically weaker, with their financial income and earning capacity less strong than the other party. This person may require a greater share of the financial assets in order to share the same quality of life as the other.
In terms of physical property, the court hold powers to block or force the sale of property, and decide on how the proceeds of the sale are split between the party members. There are times a property is held in only one person’s name. This can become a difficult area. The court will evaluate fairness and equality, property division will depend on the circumstances of the marriage.
Each divorce settlement is different, which means the pension split may differ case-to-case. However, as a marital asset the general starting point for a pension split in divorce settlements is 50/50. A pension may be considered as part of a financial settlement to ensure a fair agreement is reached.
There are three options of dividing the pension during a divorce settlement:
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- Pension Sharing – Where a formal agreement is made to divide your pension assets at the time of divorce. The courts work out percentages and the recipient can either become a member of the pension scheme or transfer the value to an existing or new pension provider.
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- Offsetting the Pension – The value of the pension is ‘offset’ against other assets. So whilst one partner/spouse will receive the pension, the other may receive assets of equivalent value. For example, this can be a greater share of the property or cash to the same value.
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- Earmarking – No legal transfer of pension ownership happens. However when one party starts to draw pension benefits the pension, or part of it, is paid to one party.
Yes, the court can progress a final order (previously called Decree Absolute or the final divorce decree) without a financial settlement agreement. Whilst this is possible, a financial settlement is usually a crucial aspect of a divorce.
Reeds Solicitors recommend seeking legal advice on the financial settlement before progressing the divorce. Not having this in place can leave you open to potential future financial claims.
Whilst it is possible to negotiate an agreement amongst you and your spouse/partner without a lawyer, it is worth seeking legal advice. A solicitor can prevent potential pitfalls, reduce the likelihood of future financial claims being made against you, and help you navigate a potentially difficult process.
Where there are significant assets as part of the considerations, the need for a solicitor is even greater to ensure your interests are best protected.
In the UK a divorce settlement aims at achieving a fair 50/50 split for both parties. However other circumstances and considerations may mean that one party may receive a larger portion of the assets.
There is no time limit after a divorce that financial claims can be made by one spouse/partner against another, provided that they have correctly filled out their divorce petition to inform the court of their intention to deal with their financial claims. In order to protect against financial claims it is necessary to get a court order, setting out the financial settlement and dismissing each parties further claims.
It is important that your divorce financial settlement is recorded in a court order. If it is not, then financial claims can be made against you in future. As there is no time limit on making financial claims as a result of a divorce, this could mean a claim is made against you years after the divorce was settled.
A court order setting out the agreed arrangements and dismissing the other party’s further claims will ensure that further claims cannot and will not be made.
A court order for a divorce financial settlement can be obtained:
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- By consent of both parties.
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- By negotiation between solicitors, meditation or a collaborative process.
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- Or following a contested trial.
This depends on whether all parties are in agreement. If you and your partner/spouse are in agreement, then the court order can be made at the same time as the decree nisi. The court order will take effect when the final order (previously called decree absolute) is made. Depending on the court lead time, this process usually takes between 6-8 months.
If you and your spouse/partner are not in agreement, or one party is not willing to provide a full and frank disclosure of their financial position then the process will take a lot longer. This can be 12-18months or even longer.
To get a fair settlement as soon as possible, it is necessary for each person to identify and value their assets and income. Without this the court cannot make an informed decision, and it can delay the proceedings as discussed above.
The court can make various orders during the course of the proceedings. They include:
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- Periodical payments including maintenance or alimony – alimony is now called ‘Spousal Maintenance’
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- Secured provision
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- Lump sum
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- Transfer of property
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- A pension attachment and a pension sharing order.
The law in England & Wales governing financial settlements sets out criteria which must be taken into account. How these criteria are applied is discretionary and varies according to the circumstances of each case.
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