Financial relief is the name given to resolve the financial issues arising out of any divorce or judicial separation. Having to deal with financial issues following a separation can be a very stressful time. However, there is more than one option available to you when determining how the assets are divided.These include
- The Court determines how the assets are divided
- Both parties talking to each other directly or through mediation
- Through a Collaborative law approach, i.e. both parties and their lawyers meet to resolve financial issues
When a Court considers resolution of financial issues the starting point is an equal division of the capital assets of the marriage. However, the Court has to achieve fairness and equality.
The Court’s paramount consideration is the welfare of any child of the family under the age of 18 years. In determining financial relief matters, the Court has to have regard to the following matters:-
- The income earning capacity, property and other financial resources which each spouse has, or is likely to have within the foreseeable future, including, in the question of earning capacity, any increase in that capacity which it would be, in the opinion of the court, reasonable to expect a person to take steps to acquire.
- The financial needs, obligations and responsibilities that each spouse has, or is likely to have, in the foreseeable future.
- The ages of each of spouse and the duration of the marriage.
- Any physical or mental disability of each spouse.
- The contributions which each spouse has made, or is likely to make in the foreseeable future, to the welfare of the family, including any contribution by looking after the home or caring for the family.
- The conduct of each spouse, if that conduct is such that it would, in the opinion of the Court, be inequitable to disregard.
- The value of each spouse and any benefit which one spouse, because of the divorce, will lose the chance acquiring for example a pension provision.
Both parties have an ongoing duty of frank disclosure to the Court. In determining an Application for financial relief the Court may make a range of orders:
- Periodical Payments
- The Court can order one spouse to pay maintenance for the other. This can be on an interim basis (maintenance pending suit) or at the conclusion of the case for a limited period of time or until death. Orders for maintenance are variable on a future application as a consequence of, for example, a change in one parties circumstances, change of costs living etc
- Lump Sum Order - The Judge has the power to order one party to pay to the other a lump sum
- Property Adjustment Order - The Judge has a wide range of powers in relation to
property, whether that be owned by one party or the parties together. The principal
asset of any marriage is usually the matrimonial home. The following types of
Property Adjustment Orders are possible:
- -Transfer of property –The Judge has the power to transfer a property from one party to the other, with or without payment of a lump sum in return
- -Sale of property – The Judge has the power to Order an immediate or delayed sale of a property. It is not uncommon, when considering the matrimonial home, for a Court to Order that that should not be sold until the youngest child of the family reaches the age of 18 years or ceases full time education. When ordering a sale the Judge will also determine how the proceeds of sale will be divided
- Pension Order - Pensions are assets of the marriage and will be considered by the Court. The Judge has three options when dealing with pensions:
- -Offset – the pension holder retains his/her pension and the other party to the marriage receives additional capital from other matrimonial assets.
- -Pension Sharing – the existing pension fund is divided between the parties in proportions determined by the Court. The person who receives the benefit of the Pension Sharing Order must invest the monies in their own pension.
- -Pension Attachment – the Court Orders that a proportion of the pension, once it matures, both as lump sum and income, is paid to the other party.
Where necessary, a Judge at a final Hearing will determine how the assets of a marriage are to be divided. However, in a great many cases the parties, at some point, agree how the assets of the marriage are to be divided. In such cases, the parties will be advised to record that agreement into a “Consent Order”. This document summarises the terms of settlement and once agreed by the parties it is lodged with the Court for approval by the Judge. A Judge is asked to approve the Order and, upon approval, the Consent Order has the same weight as an Order imposed by the Judge after a final hearing.
If the parties have not divorced or judicially separated the court does not have the same jurisdiction to deal with financial relief issues. The parties can of course still resolve financial arrangements upon separation and record those arrangements into a contract called a separation deed.