Divorce financial settlement guide
The financial side of divorce and legalising what has been agreed is often called a divorce financial settlement.
Here's our guide to financial settlements and divorce.
When a couple goes through a divorce, formalising any financial arrangements and agreements is sometimes referred to as a divorce financial settlement.
There are, confusingly, many names for the same thing as it's also known as a consent order, clean break consent order and financial order.
What's important is not what it's called but what it does: financial settlements in divorce outline how the finances will work post-separation. Your financial settlement is legally binding once approved by a judge. In this guide, we answer all of your questions about divorce financial settlements.
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What's included in divorce financial settlements?
In order to get your divorce financial arrangement signed off by a judge, you need to share a snapshot of your finances. This includes things like:
- Assets and debts (including business assets)
- Investments, savings and shares
You also need to outline what you have agreed in your financial arrangements in divorce. For example, how will property be dealt with? Will spousal or child maintenance be paid and to who? How much will be paid? Will it be a lump-sum or paid each month ?
Why should you get a financial settlement?
Many people aren't aware that a divorce doesn't end your financial relationship with your ex. In England and Wales, you need to have a consent order (also known as a divorce financial settlement) approved by the courts.
Formalising your financial arrangement in divorce is crucial because any unresolved financial claim could arise further down the line, even if you are divorced .
Therefore, it's important to that you and your ex-partner get your financial arrangements sorted with a legally binding consent order.
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When should you agree the finances?
It's recommended that financial divorce settlements are sorted at the same time as your divorce or dissolution. Getting a financial settlement after divorce can have implications.
amicable's Divorce Specialists are often contacted by people who have already divorced but are yet to formalise their financial arrangements after divorce. They are often unaware that to get a consent order through the courts, they will need to share a snapshot of their current finances, not what it was when they separated. For some, disclosing their finances years later with an ex can be uncomfortable.
In general, the two main factors that will have the biggest impact on whether you can come to a divorce financial settlement in your divorce is how complicated your financial situation is and how well you can communicate and negotiate with your ex.
To avoid any financial issues, it's really important that you get the right advice and understand what options are available to you before you dive into sorting things out.
It's equally as important that you're both emotionally ready to talk about how the finances are going to split and manage your money moving forward and what this will mean for your future.
If one person feels rushed into the discussions, this can lead to them stalling which will prolong the process and make coming to a financial agreement difficult and is also the main reason divorce can become so expensive.
How are assets usually split in a divorce?
The starting point for divorce financial settlements is to divide everything 50/50. You can then start discussing what you'll both need post-split and what's fair. A family law judge will then review your financial agreement to ensure that it's fair. There are many considerations that a judge will take into account including:
- How old you and your partner are
- You earning abilities and potentials
- Money and property (family home)
- Living expenses and the standard of living you both have
- Assets and debts
- Business assets
- The role you held within the marriage
You can read more details on what a judge considers in this blog.
The main priority, however, is the financial agreement and arrangements for any children involved, such as child maintenance and housing.
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How much does a financial settlement in divorce cost?
On average, it costs £8,000 per person to come to and formalise a divorce financial settlement through two separate solicitors.
If things become acrimonious and you're not able to formalise a financial agreement through lawyers, the cost of going to court can spiral with the associated estimated cost at £13,000 per person outside of London, reaching £40,000 per person in London, although these fees can be higher. Using amicable is a lot cheaper than the above as we work with both people and use technology to reduce expensive overheads.
The cost for amicable writing up your divorce financial agreement costs £953 per couple - this includes the government court fee. If negotiation support is required there are a few options based on amount of support you need.
If you want to know whether your financial arrangement is fair, we have our Assisted Services, which you can explore here.
If you would like support reaching financial agreement in divorce, we offer guided negotiation support, with over 90% of our customers reaching an agreement without needing to go through expensive and drawn-out court proceedings. To find out if our negotiation services are the right option for you and your situation, use our diagnostic tool, or book a free 15-minute consultation at a time that suits. This can be an individual call or a joint call.
Financial settlements can go two ways
1. You both agree to a divorce financial settlement and are amicable
In England and Wales, you can sort financial settlements in divorce without involving mediators and lawyers if:
- There are no safety concerns such as abuse
- You are able to communicate with your ex-partner
- You are open and honest with your financial disclosure and one of you isn’t trying to hide or move assets
To legalise your arrangements, you'll need to start divorce/dissolution proceedings and formalise your financial agreement by getting a consent order drawn up. A consent order outlines how all assets, including investments, savings, money and property (such as the family home), along with the spouse and child maintenance, are divided.
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2. No agreement - application for a divorce financial settlement through court
If you're not able to, or it's not safe to sort out your finances amicably, you can seek support from a mediator or family lawyer.
If these routes don't work out, you can apply for a court order and ask a judge to sort out your divorce financial arrangements.
To qualify for a court order, there needs to be evidence that you both went to at least one mediation meeting. The only exception to this is when social services or domestic violence is involved.
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Financial Settlement FAQ's
Do you need to go to court to get a divorce financial settlement?
To formalise your arrangements, you will need to apply for a consent order which is sent to court for a judge to review, however, court proceedings are not necessary for most divorce cases. If you can agree on the details and come to a fair financial agreement, this can be documented and made legally binding in a consent order.
In some divorces, a judge from the family law court may request more details of how the financial arrangement was decided and may ask if the details are understood, if it appears to be unfair.
How long does it take to reach a financial settlement in divorce?
For a divorce/dissolution only - it takes a minimum of seven months to complete the process.
If you're sorting out your finances and going through the court to make your financial agreements legally binding and are amicable the process takes on average nine to ten months. If things are acrimonious and need to go through court, it can take a lot longer.
What things are considered by a judge for a divorce financial settlement?
It doesn't matter which ground for divorce was used when determining your financial settlement.
The financial agreement shouldn't have anything to do with the reasons for your marriage ending.
The things to consider when agreeing a settlement about your finances will include:
- Child maintenance payments
- What will happen to the family home
- How to separate your assets and debts
- Both of your earning potentials
- How long you were married
- And, ultimately, whether the agreement is fair or not.
Is it best to sort the financial settlement before, during or after the divorce process?
You won't be able to apply to the court for your consent order until you've reached the decree nisi part of your divorce/dissolution which means you need to start divorce proceedings first.
It's often best to arrange your financial consent order alongside the divorce/dissolution process.
For more information on divorce financial settlements in divorce and dissolutions, book in for a free 15-minute call here.
Can you divorce without a financial settlement?
While it may be possible to come to a financial agreement with your ex regarding the division of assets and other financial matters without involving the court, it is generally advisable to have a formal legally binding divorce financial settlement. This helps protect your rights and ensures that both parties fulfil their obligations.
Do I need a consent order to make our divorce financial agreement legally-binding, or is there another way?
You must apply for a consent order to make it legally binding. Once approved by the court, a consent order becomes a legally binding financial agreement and can be enforced if either you or your ex fail to comply with its terms.
What determines unfair divorce settlements UK?
In England and Wales, a judge will consider couples divorce settlements and decide whether they are fair legally speaking. They base their decision on several factors such as need, length of marriage and contributions made. Children are the primary concern when deciding whether an agreement is fair.
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The financial side of divorcing and legalising what has been agreed is sometimes called a divorce financial settlement. Here's everything you need to know…