Chairman and partner in our leading Family Law team, Brenda Long, explains why we recommend seeking legal advice on formalising a financial agreement on separation or divorce.
When a married couple separate, they are sometimes able to reach agreement between themselves about the financial issues. Whilst we always encourage our clients to try and reach an agreement, we recommend that this is done with the benefit of legal advice and that it is formalised in some way. Why?
Advice on settlement
Before you agree to a financial settlement you should ascertain what you might be entitled to. An agreement which seems acceptable to you might not be fair.
Although equal division of assets is a starting point, there are probably as many cases which do not result in equal division as cases which do. The court will focus on the parties’ needs when deciding how assets should be divided and this can often lead to one person requiring more than the other. An offer to divide everything equally might seem appropriate, but could result in an unfair outcome and financial difficulties later on.
Pensions can be an often overlooked, but very valuable asset. This is particularly so if your spouse has a public sector pension. The value attributed to these by the scheme is usually a significant under-value. It is important that you obtain full information in relation to pensions to enable you to decide what claims you should be pursuing.
You might have claims for spousal maintenance, if only for a period of time whilst you adjust.
A good solicitor will not seek to persuade you to pursue claims which you do not wish to make, but will ensure that you know what you might be giving up before you finalise an agreement.
Formalising the agreement
Only the court has the power to dismiss claims so that neither person can pursue claims – income and/or capital and/or pension claims, or all three – in the future. This is done in a court order. Without this, either of you could try and seek more at a later date.
Many court claims have what is known as a limitation period which provides a deadline after which a claim cannot be pursued. That is not the case in respect of claims following divorce. That was made clear in a recent case of Wyatt v Vince when the wife pursued claims many years after the separation. It might be more difficult to succeed on such a claim, but it is possible to pursue a claim which can result in costs being incurred for both parties.
It is therefore very important to ensure that any agreement you reach is formalised. If there are court proceedings, this can be in a court order, which is the most watertight way of finalising things. If everything is agreed, the order can be obtained by consent and through the post. However, it needs to be drafted using the correct formal language, so you will usually need a solicitor to do this.
If there are no court proceedings, you can have a separation agreement, which is essentially a contract between you. Although this does not dismiss claims, it can make it clear that what has been agreed is intended to be in full and final settlement of all claims, both now and in the future, which makes it much harder to try and pursue claims at a later date.
For further information or legal advice, please contact email@example.com or call 0118 951 6800.
This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.