Read more articles in: Blog, Family Law, Stuart Daniel

What factors influence a financial agreement after a divorce?

When a couple decides to end their marriage through divorce or dissolution of a civil partnership, they must decide how to divide up their assets and separate their finances.

This includes:

Property
Pensions
Savings
Investments

This can either be agreed informally between partners or via supported means, such as mediation. In some cases, proceedings may go to litigation through the Court, although this is less common.

The Matrimonial Causes Act 1973 is the primary piece of legislation concerning financial arrangements after divorce, outlining a variety of factors which impact settlements, such as:

Length of the marriage

Typically, longer marriages result in a more equal split, particularly if the decision is made through the Courts.

This may also correlate to your age and that of your spouse, which is another consideration if your age affects your earning capacity or ability to rebuild your assets.

Children

The needs and welfare of any children are the primary consideration for the Courts and for the vast majority of divorcing parents.

If negotiating your financial agreement with your former spouse, you should prioritise making financial arrangements for your children, including meeting their living expenses, educational costs and general living costs.

The Court will prioritise these arrangements to protect your children and their security.

Living expenses

If agreeing on a financial settlement yourself, it is important to consider the living expenses of both partners and any children who will be living with either spouse.

This makes the arrangement fairer and helps to avoid disputes further down the line.

The Courts will also consider this factor, as long as living expenses are reasonable.

Earning capacity

As well as age, you may consider each partner’s earning capacity and whether this impacts a fair separation of assets.

For example, the Court may assess current and future income, earning potential, and financial resources for both parties – including salaries, bonuses, investments, savings, and pensions.

If one party’s earning capacity is significantly lower, this will be taken into account.

A common example of this is where one spouse has put their career on hiatus to raise children and, as a result, have a significantly lower earning potential than peers in their profession.

Financial needs, obligations, and responsibilities

Each party’s financial needs and obligations will be reviewed, including mortgage payments, debts, and ongoing living expenses.

However you choose to divide your assets, whether informally or through the Courts, you should consider whether one party will have a greater financial responsibility, such as being the primary caregiver for the children.

Standard of living

The lifestyle maintained during the marriage may be a consideration.

While it may not be possible to maintain the exact same standard of living after divorce, the court tries to ensure that both parties can continue a similar quality of life.

Pre or post-nuptial agreements

Although not automatically legally binding, pre- and post-nuptial agreements are increasingly taken into account by the Courts as an indication of intent.

Whether you do it yourself or involve mediators or the Courts, you should seek legal advice over separating your assets and finances to ensure you, your spouse and any children you have are supported fairly.

Contact our Family Law team today to discuss your needs.

Stuart Daniel

Director – Head of Family Department

I qualified as a Solicitor in 2006 and now specialise in divorce, financial settlements, childcare arrangements and Pre Nuptial Agreements. I have many years’ experience as a private family lawyer having worked with two other local firms before returning to Mander Hadley, where I first undertook work experience during my university studies.