Financial Separation In Divorce

• Published date: 27 April 2021
• Subject Matter: Finance and Banking, Employment and HR, Family and Matrimonial, Financial Services, Retirement, Superannuation & Pensions, Divorce, Wills/ Intestacy/ Estate Planning
• Law Firm: Cleaver Fulton Rankin
• Author: Lorraine Keown

In the later stages of married life, it is increasingly common for couples to decide to separate. Whilst it is a difficult and emotional situation regardless of whose decision it is, making sure you get the right advice early can help you begin to move forward.

There are a number of options once a decision to separate has been made. You don't necessarily have to initiate Court proceedings to finalise financial matters, as it is possible for these to be discussed and agreed through the drafting of a matrimonial agreement. You do not have to wait any defined period of time after separation before entering into an agreement about financial matters.

Obtaining independent legal advice before entering into discussions around financial separation is important. You will need to share full details of your financial position with your partner and vice versa; otherwise this may impact on the validity of the agreement. Should either party fail to get independent legal advice or provide their financial information in full, the agreement could potentially be void.

Often when it comes to agreeing the terms of a matrimonial agreement, the most common and significant assets to be dealt with are the matrimonial home and any pensions.

Up to date valuations of property and other valuations such as those for a business or investments, can be sought on a joint basis between the parties by an independently agreed valuer to reduce costs.

Once an agreement is reached regarding the valuation of any property, there are options for this property to be sold with proceeds split between the parties. This can be transferred either in full or in part to a party or for example with the matrimonial home, a right to occupy can be granted to one party with ownership remaining joint. Considering whether your new financial situation will allow you to maintain any property which may be subject to a mortgage is important.

Pensions are often viewed as being more complicated. Commonly, a cash equivalent transfer value (CETV) is obtained to determine the cash value placed on pension benefits. There are then a number of options for how this is dealt with; such as a...