Finance Provision on Divorce
One of the commonest questions we are asked by clients seeking advice in Family Law is “where do I stand financially?”
We will explore the possibility of agreement. However the Court has wide-reaching powers to make Orders for financial provision. The Court has the power to make a range of Orders including:-
1) Orders between spouses.
a) Maintenance Pending Suit
Maintenance pending suit is maintenance (ie, regular periodical payments) paid by one spouse to the other between the date of separation and the date of the divorce. If maintenance pending suit is necessary it is generally replaced by periodical payments after the divorce. Applications for maintenance pending suit are assess by the Court on a “broad brush” approach.
b) Periodical Payments
Periodical payments is the name given to continuing regular maintenance from the date of the divorce for however long the Court decides it is necessary. Either party for a marriage can apply for periodical payments to be made by the other. How long the periodical payments last depends on all the circumstances. For example, if a young couple divorce after a short marriage and with no children and both are equally able to earn their own living, periodical payments may be for a limited period of time if indeed they are ordered at all. After a long marriage where a husband is in permanent well paid employment and a wife may have given up her career to look after the children, the periodical payments may be more significant and longer or even open-ended.
c) Secured Provision Order
In some cases there may be nervousness as to whether a person is actually going to pay maintenance payments, periodical payments of any other sums that are ordered to be paid by the Court. In these circumstances it is possible to “secure” the payment against an asset. This might arise where a husband lives overseas but has property in the UK. Such Orders are very rare but we can advise you about this.
d) A Lump Sum Order
A lump sum order is an order requiring one party to the marriage to pay a lump sum to the other. This might be a means of dividing savings held by one spouse. On other occasions perhaps one party will continue to live in the former matrimonial home and that party would normally make a “lump sum” payment to the other by way of compensation.
e) Property Adjustment Order
A property adjustment order is an order which adjusts shares in property. Very often when a couple are divorced the largest asset is the family home which is usually in joint names. The Court has power to alter the share in the family home, make orders for immediate sale or to delay the sale until any children have left home or until circumstances change.
f) Pensions Orders
The Court has power to adjust pension shares. It is increasingly common for couples to be divorced and to find that their largest asset apart from their home is the value of a pension which has been accumulated, often by the husband. Until recent changes in legislation it has been very difficult for orders to be made concerning pensions and usually the wife was compensated in some other way (by a lump sum order) for the loss of her husband’s pensions. Now the Courts have power to split pensions, even if they are in payment at the time of the divorce. Pension division is a very complex field and requires expert advice, often from actuaries. It becomes particularly difficult if there is a marked difference in age or life expectancy between the husband and the wife, in these circumstances calculating the fairest division of a pension is a complex exercise.
g) Clean Break:
Often couples wish to end their financial dependence upon each other. This sometimes results in an order or agreement providing a number of remedies known as “clean breaks”. We can advise whether this would be desirable and help achieve this.
In general terms the aim of the Court in relation to all the above financial orders is to ensure fairness between the parties, often fairness will equal equality but not always. There are many occasions when equality is not considered the fairest way of dividing family assets.
2. The above provisions all apply in relation to orders between spouses. In relation to children there are orders which are similar. The parent having care of the children is entitled to apply to the Court for the following orders:-
- A Periodical Payments Order
- A Secure Provision Order
- A Lump Sum Order
- A Property Adjustment Order
In each case the orders are as described above. In most cases, however, the capital split is between the spouses and the financial provision for children is limited to income payments. It should also be borne in mind that the issue of children’s maintenance has been largely taken out of the hands of the Court by the operation of the child support legislation (See separate briefing not) and the Courts will only intervene in certain limited circumstances.
Injunctions (Court Orders) can be obtained to preserve assets, prevent their disposal or set aside transactions already made.
4. The process of claiming financial support through the Courts is quite time-consuming and complex. It very often takes much longer than the divorce proceedings themselves, the case can often take a year to resolve. The financial claims do not have to be settled before the divorce is concluded but quite often Decree Absolute of divorce is not granted until all financial issues have been resolved.