For some separating couples, the issue of the matrimonial finances is at the forefront of their minds when contemplating a divorce, or the dissolution of a civil partnership.
For those couples who had long relationships, often with children who may now be in their teens and perhaps a family business or a significant inequality in incomes, untangling the matrimonial finances can seem an intimidating prospect.
However, couples in these situations are very aware that something needs to be done to sort their financial situation out.
Other separating couples may not even consider the matrimonial finances, or may think that they are not so important and can be something “to get around to later” if they become an issue in the future. This point of view can be more likely where:
– The marriage or civil partnership, and usually the preceding relationship, were relatively brief;
– The couple have no children;
– Most (if not all) of the finances were kept separate (for example, no joint property, bank accounts, debts);
– Neither partner has any significant assets;
– Neither partner has significantly more income than the other; or
– Both partners have more debt than they do assets.
Despite that fact that the partners may not think that settling the finances is a priority, it is still important to remember that if the finances are not settled there may be some long-term consequences that all persons considering separation should keep in mind. Arguably the most important of these is that if a financial order is not made, it is open to either party to make an application for a financial order at any time in the future (unless they remarry). Many people do not realise that this is the case when they seek advice about divorce or dissolution.
For example, if one of the former partners comes into any money, property or assets in the years following the divorce or dissolution being finalised, the other former partner could make a claim for a financial order at that time. The Court would then consider the assets at the date of the hearing, not the date of separation. This is the case irrespective of the source of the funds, be it lottery win, inheritance, gift, personal success or any other means.
There are also other consequences, including potential loss of widow’s/widower’s pension rights, and also the risk that continuing to be financially associated with a former partner could affect your credit rating. Continuing to own assets jointly may also be particularly concerning, especially if one former partner goes on to declare bankruptcy.
Getting a financial order does not necessarily mean having to go to Court. If the couple are agreed as to what should happen to their finances, it may be possible to ask the Court to make an Order that reflects that agreement (if the Court thinks that the agreement is fair). If the couple think they can agree, but might need a little help in discussing matters, then mediation can be a very useful tool to get them to the terms of an agreement that they can then ask the Court to make into an Order.
Even if the couple cannot agree themselves, it may be possible for solicitors to assist with financial disclosure and for negotiation to take place, still without having to set foot in the courtroom. It is only those cases where negotiation breaks down or is not possible that can result in contested hearings before the Court.
There is little to lose and everything to gain by trying to address the issue of the matrimonial finances as early as possible. Most couples (some requiring more assistance than others) can reach an agreement about finances at some point in the negotiation process.
Even though in the short-term legal costs might be increased, in the long-term the risk of uncertainty is avoided. A solid financial order can enable both former partners to begin new chapters of their lives with a clear view of their financial circumstances.
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