financial basics

In coming to an agreement with your spouse it would be good to bear in mind a few basic matters.

o There are no firm rules on how matrimonial assets are divided or how much money should one spouse should pay the other. Assets include properties, things such as cars jewellery, boats etc. and also intangible things such as rights to receive income from a trust fund or an expectation of an inheritance.

o There is no presumption that a jointly owned asset must be split equally between the husband and the wife.

o The law should treat husband and wife equally.

o A spouse’s conduct must be extremely serious to affect any financial issues.

Always remember that when making your financial arrangements you must (because the court will if you do not!) keep the interests of the children as the most important consideration.

money payments for children (maintenance)

Maintenance is usually paid for children until they are 17 years old or when they cease full-time education.

There can be no clean break (ie dismissal of the obligation to maintain) in respect of maintenance for the children.

The Child Support Legislation controls the amount of maintenance a parent must pay for a natural child. If the parent responsible for the care of a child is receiving state benefits then he or she is obliged to apply for an assessment by the Child Support Agency (CSA). If that parent refuses then he or she will be penalised by having their benefit payments reduced.

Remember the CSA can only deal with cases where the child and parents are living in the UK.

For further information relating to CSA assessments visit the following site

www.csa.gov.uk. The CSA website also offers a useful 'calculator' for separating parents who wish to come to an agreement on the level of maintenance for the children. This may be reviewed as the parents' circumstances change.

money payments for the spouse

A financial clean break order will only be made when the judge considers it appropriate to make an order. He will not be convinced if one of the spouses cannot earn at all or can only earn much less than the other unless substantial assets are transferred or a lump sum payment of money is made which is sufficient to meet that party’s needs.

However it is possible to have a financial clean break order where there is an agreement to pay maintenance for a fixed period (for example to enable a spouse to re-train, or attend a course of education).

tax

Remember that you are unlikely to receive tax relief on maintenance payments for either a spouse or children.

If you agree to transfer assets or a lump sum of money it is important to get tax advice both for the tax year in which the separation occurred as well as the divorce.

the matrimonial home

This is often the only substantial asset of the marriage.

The priority will be to provide a home for the children, this may be in the matrimonial home or a new home purchased out of the sale proceeds.

business assets

If a court is ever asked to decide it will be reluctant to make an order that will result in the business having to close down especially if the business produces the income necessary to support the children.

new partners

The assets of the new partner do not come into the account for the purposes of a financial settlement but are relevant to the former spouse’s financial obligations. For example if the new partner provides a house then it is less important for the former spouse to be able to buy one.

pensions

Pension rights are often the second most important asset of the marriage after the matrimonial home. Please see our separate pensions section for more information.