This section aims to give you clear advice as to the general principles that apply in  matrimonial financial matters which could assist you in reaching and fair and cost effective solution to the breakdown of the relationship.  Our lawyers are expertly trained to deal with all aspects of matrimonial finances. 

The Court process for deciding on the division of matrimonial finances is called Ancillary Relief.

We can only advise you fully as to the best settlement for you once both parties have mutually exchanged information setting out their respective financial position with supporting documents.  This is known as full and frank disclosure.  Valuations of these assets and details of all liabilities e.g. mortgages, loans, overdrafts and credit card debts.  This process is usually undertaken by each party completing a document called Form E with supporting documentation.  Only then will we have a very clear understanding as to the overall financial position. 

Our aim then would be to give you the most practical advice as to how to achieve the best settlement quickly and cost effectively.  Our aim would be to negotiate with those advising your spouse in a positive and amicable way with the aim of achieving a sensible settlement which allows you both to move forward and not add to the stress and trauma of the breakdown of the relationship.

In doing this we will base our advice on the relevant law which is the Matrimonial Causes Act 1973. 

Section 25 of that Act sets out the broad range of factors that any Judge must take into account in deciding a financial case and it is on this basis we would advise you.

Click to see the detail of the Financial Considerations Section 25 Factors.

We will normally endeavour to reach a settlement on a voluntary basis without the need to issue financial proceedings.  However, in some cases it is necessary either if one party is not willingly producing information to complete the full and frank disclosure process or agreement is not reached and the Court needs to make a decision.

Each party has a duty to give full and frank disclosure about relevant information and that continues until any financial agreement is approved by the Court.  If the party does not give full and frank disclosure then it can in certain circumstances nullify any agreement or Order.

The Court Process

Click for a detailed guide to the Court process and relevant law for financial ancillary relief cases. 

Approach of the Judge

The Court has a wide discretion as to how assets are to be divided on a divorce or separation.  The Court has powers to award maintenance, lump sum Order, Property Adjustment Orders and Orders for sale of property and Orders relating to pensions. There is no automatic presumption that assets will be divided equally although the recommendation of the House of Lords in cases such as White v White, MacFarlane v MacFarlane and Miller v Miller stress that once each parties needs have been taken into account and especially the needs of the children then as far as possible there should be an equal division of the assets.  Conduct of the parties is very rarely of relevance in deciding financial matters but the duration of the marriage is an important factor.  The Judge must give equal weight to, for example, a woman's contribution in bringing up the children and managing the home as man's devotion to his career and business which may have created the family wealth.

However, it is important to note that each case is different and it is important to obtain advice from experts such as the family law team at Edwards Duthie.

Once an agreement has been reached it is usually best to record the terms of settlement in what is known as Minutes of Agreement or Minutes of Consent Order and have these approved by a Judge.  This will make the terms binding save in the most exceptional circumstances.  A Consent Order can be obtained by paying a Court fee of £40, filing the Minutes of Agreement or Minutes of Consent Order signed by the parties and their advisors and the completion of a two page standard information form which sets out the basic financial and personal background of the parties in order to assist the Judge in deciding whether or not to approve the agreement.

Pensions

There are, of course, many different types of pension and we explain here the important elements of a pension, the powers currently available to the courts and the way that the courts approach pensions on marriage breakdown.

Elements of Pensions

These may include:

• a lump sum payable on death before retirement (sometimes called "death in service" benefits)
• a lump sum payable on retirement
• periodic payments during retirement (the pension)
• death benefits payable on death during retirement (including widow's and dependant's pensions).

Available Powers

The powers available to the courts include

Off-Setting

This means one spouse receives greater capital on marriage breakdown than the other spouse, on the basis that the latter's pension remains intact.

Attachment Orders

These may be made in relation to any or all of the elements of pensions identified above (save for widows' and dependants' pensions), in the case of most types of pension. The husband (and it is usually the husband, although the law applies equally to wives), or the pension scheme itself, may be required to pay part or all of the husband's periodic pension payments on retirement to his wife, or former wife. These payments may continue for so long as the husband is still alive and drawing his pension, and only for so long as the wife is still alive and does not remarry.

The courts have no power to make orders in respect of widows' or dependants' pensions, which may be payable in some circumstances after the pensioner's death.  The husband (or pension scheme) may be ordered to pay part or all of any lump sum he may receive on retirement to his wife, and the husband may be required to "commute" the pension to produce such a lump sum on retirement (which will reduce the level of the subsequent periodic payments).
 
The court also has power to make an order requiring the pension scheme to pay all or part of any death in service benefits (or other lump sum death benefits) directly to the former wife.  However, the court does not have the power to dictate when the husband should retire or start receiving his pension.

Pension-Sharing

For divorce proceeding begun after 1 December 2000 the Welfare Reform and Pensions Act 1999 provides for pension-sharing, so that a percentage (not necessarily 50%) of one spouse's pension fund may be allocated to the other spouse and either maintained within the same scheme but in the other spouse's name and for their benefit, or transferred to an alternative pension scheme in the name of the other spouse.

Approach of the Courts

Essentially the approach of the courts to pensions is the same as the courts' approach in relation to any other assets, for example, the shares in a private limited company intended to be sold to fund retirement, or any other investments. Pensions are, however, different in some respects to other assets, primarily because the investment in a pension cannot usually be realised until the pensioner "retires", and the value of the pension is lost or diminishes if the pensioner dies prematurely. Retirement in the context of pensions does not mean (depending upon the type of pension) to continue to work and draw a pension. The methods of valuing a pension are also complex.  The court will take into account the same factors that are considered in relation to financial settlements generally.

For more information, contact Alex Gilbert, Marissa McKenzie or Sinead Withers on 020 8514 9000.