Financial Settlements and Financial Remedy Orders
When a marriage or civil partnership ends, one of the most significant concerns is how finances will be divided. Understanding your options, the legal framework, and how to reach an appropriate settlement can help reduce uncertainty during what is often an emotionally challenging time. This guide explains what financial settlements involve, how they work in England and Wales, and how Heritage Park Family Law can help you navigate the process.
A financial settlement – known as financial remedy in legal proceedings – is the arrangement that determines how a divorcing couple’s money, property, pensions, and other assets will be divided. It may also include ongoing financial support, such as maintenance payments.
You may hear several terms used to describe this area of law:
Whatever term is used, the fundamental purpose remains the same: to achieve a division of assets that meets the needs of both parties and any children, and where appropriate, provide ongoing financial provision.
Obtaining the divorce itself – the legal ending of your marriage – does not automatically deal with your finances. Without a financial remedy order, your ex-spouse could potentially make a financial claim against you at any point in the future, even many years after the divorce. This is why securing a legally binding financial order is essential, even if you have already informally agreed how to divide your assets.
Think of it this way: the divorce decree ends your legal status as a married couple, but only a financial remedy order ends your financial connection to one another.
In England and Wales, financial settlements on divorce are governed by the Matrimonial Causes Act 1973. When deciding how finances should be divided, the court must consider a range of factors set out in Section 25 of this Act. These are commonly known as the ‘section 25 factors‘.
There is no mathematical formula for dividing assets on divorce. Instead, the court has considerable discretion to achieve an outcome that is appropriate to the specific circumstances of each case, with the primary focus being on meeting the parties’ needs.
The welfare of any minor children (under 18) is the court’s first consideration. This does not mean children’s needs automatically override everything else, but it does mean they are given particular weight when determining what outcome is appropriate.
After considering children’s welfare, the court must have regard to the following factors:
In many cases, the available assets do not exceed what the parties need. As the Family Justice Council guidance explains, ‘needs’ is a broad concept that goes beyond mere survival. It includes ensuring each party has appropriate housing and income for daily living, both in the short term and often the longer term.
The standard of living during the marriage provides context for assessing needs. However, most separating couples find that resources which were sufficient to support one household simply cannot maintain the same standard across two. A more realistic view of what each party needs is usually required.
Courts will distinguish between ‘matrimonial’ and ‘non-matrimonial’ assets:
However, in most cases where assets do not exceed the parties’ combined needs, this distinction has limited practical significance. All assets – regardless of their source – may be used to meet the parties’ needs. The concept of non-matrimonial property becomes more relevant only where there is a surplus after needs have been met.
The court has wide powers to distribute assets between the parties. The main types of orders include:
A requirement for one party to pay a specified sum to the other, either immediately or by instalments.
Regular payments from one party to the other, which may be:
Where appropriate, the court will aim to achieve a clean break – ending all financial ties between the parties so that each can move forward independently. This is not always possible, particularly where there are children or where one party cannot meet their needs without ongoing support.
Pensions are often one of the most valuable assets in a marriage, sometimes worth more than the family home. They must be properly considered in any financial settlement.
The treatment of pensions depends on factors including:
In many cases, particularly after a long marriage, the court will seek to ensure that both parties have adequate pension provision for retirement. This may involve sharing the pension, or it may be achieved through offsetting against other assets.
Pensions are technically complex, and professional advice – from an independent financial adviser or pension actuary (often referred to as a ‘PODE’ Pension on Divorce Expert) – can be invaluable in ensuring they are properly valued and appropriately divided.
Both parties must provide full and frank disclosure of their financial circumstances. In court proceedings, this is done through Form E, a comprehensive financial statement. Even where matters are resolved by agreement, proper disclosure is essential – without it, any agreement could later be set aside.
Disclosure typically includes:
The majority of financial settlements are reached by agreement, without a judge deciding the outcome. There are several ways to reach agreement:
Once agreement is reached, it must be recorded in a financial consent order and submitted to the court for approval. The court will check that the agreement is appropriate before approving it. This is an essential step – without a consent order, your agreement is not legally binding and enforceable and your ex-spouse could still make claims in the future.
Where agreement proves impossible, either party can apply to the court to determine the financial arrangements. Financial remedy proceedings typically involve:
Court proceedings should generally be seen as a last resort. In family cases, there are rarely any real winners when matters proceed to a contested final hearing. The costs, both financial and emotional, can be significant. However, where one party is being unreasonable or refuses to engage properly, court proceedings may be necessary to protect your interests.
In some cases, there may be concerns that one party will dispose of, hide, or dissipate assets before a financial settlement can be reached. The dissipation of assets – whether through reckless spending, transferring assets to third parties, or other means – can seriously undermine the other party’s position.
Where there is a genuine risk of dissipation, the court can grant a freezing injunction (sometimes referred to as a freezing order) to prevent assets from being depleted or transferred. These orders are not granted routinely and require proper evidence demonstrating:
Freezing injunctions can be a powerful tool in protecting your position, but they should only be sought where genuinely necessary. Making an application without proper grounds can have costs consequences.
No. While equal sharing of matrimonial assets is often considered to be the starting point, the court’s primary concern is ensuring that the outcome meets both parties’ needs and is appropriate to the circumstances. This does not necessarily mean a 50/50 split. The division of assets depends on the specific circumstances, including the length of the marriage, the parties’ needs, contributions made, each party’s financial resources and the welfare of any children. In many cases, particularly where there are dependent children or one party has significantly lower earning capacity, the division may not be equal.
In the vast majority of cases, no. The court focuses on achieving an appropriate financial outcome, not on punishing past behaviour. Conduct is only taken into account in exceptional circumstances where it would be inequitable to disregard it – typically involving serious financial misconduct (such as deliberately dissipating assets) or conduct so severe that it would be offensive to a sense of justice to ignore it. Simple relationship breakdown, including adultery, is not relevant.
This varies considerably depending on the complexity of the assets involved and whether agreement can be reached. A straightforward case where both parties cooperate and reach agreement might be resolved within a few months. More complex cases, or those where there is significant disagreement, can take considerably longer – potentially 12 to 18 months or more if court proceedings become necessary.
A clean break – ending all financial ties between the parties – is the court’s preferred outcome where it is achievable. However, whether a clean break is appropriate depends on the circumstances. It may not be possible where one party cannot meet their needs without ongoing maintenance, particularly where there are young children or after a long marriage where one party has limited earning capacity.
Full and frank disclosure is a fundamental requirement. If you suspect your spouse is not being honest about their finances, there are various steps that can be taken, including seeking specific disclosure of documents, instructing forensic accountants, and in serious cases, applying for search orders. The court takes a dim view of parties who fail to provide proper disclosure and can draw adverse inferences or make costs orders against them.
No – and in most cases, you should try to avoid it. The majority of couples reach agreement without a judge deciding the outcome. However, even where agreement is reached, you will need to apply to the court for a consent order to make your agreement legally binding. This is usually a paper exercise and does not require you to attend court but it is still a judicial decision, meaning that the Judge must consider the terms of the order to be appropriate in your particular circumstances, it is not a ‘rubber stamping’ exercise because you have agreed matters.
Pre-nuptial agreements are not automatically binding in England and Wales, but the court will give significant weight to a properly prepared agreement, provided both parties entered into it freely, with full knowledge of its implications, and it would not be inappropriate to hold them to it. A pre-nuptial agreement is more likely to be upheld where it meets both parties’ needs.
Debts are taken into account alongside assets. While the court cannot transfer a debt from one party to the other (the creditor’s rights are not affected by divorce), it can take debts into account when deciding how to divide assets. In an appropriate case, one party may receive a greater share of assets to compensate for taking on a greater share of the debt.
Financial settlements involve complex legal principles and often significant sums of money. Instructing an experienced family lawyer helps ensure that:
Getting expert advice early, before positions become entrenched, can save time, money, and stress in the long run. Understanding the best and worst case scenarios helps you evaluate any offers and make sensible decisions about how to proceed.
At Heritage Park Family Law, we understand that financial uncertainty during divorce is one of the greatest sources of stress. Our approach is to provide clear, practical advice so you understand your options and can make informed decisions. All our lawyers are specialist family lawyers with many years of experience.
We believe that court proceedings should be a last resort. In family cases, there are rarely any real winners when matters go to a contested final hearing. We strive to resolve issues through negotiation and discussion, aiming for outcomes that meet both parties’ needs as quickly and cost-effectively as possible. However, when court proceedings are necessary, we will fight hard for you.
We know that cost is a major concern. We offer a blend of fixed fee and hourly rate packages, so you can budget and understand the costs in advance. We explain all fees upfront with no hidden extras.
You can instruct us to handle all aspects of your matter, or you can engage us for specific tasks – such as reviewing a proposed settlement, advising on strategy, or representing you at a court hearing. This flexibility allows you to control costs while still accessing expert advice when you need it most.
If you are facing a financial settlement on divorce, the first step is to understand where you stand. We offer a fixed fee initial discussion at a reduced rate of £250.00 plus vat for a meeting of up to one hour to talk through your situation and explain how we can help.
Contact us today to arrange your initial discussion. Call us on 01525 406030 or complete our online enquiry form.
