How should finances be dealt with in a divorce ?

Divorce proceedings can be a particularly difficult time for all parties concerned. Divorce finances is an area that often causes much debate . In the majority of divorce cases the parties will have a number of assets, such as properties, bank accounts, shares, jewellery and other investments and financial policies. The assets are likely to be a mixture of those owned jointly between the parties and those owned separately by them as individuals. Other assets include pensions which have the intention of providing benefit at retirement. Courts have broad ranging power with regard to reallocation of the assets and use these powers in an attempt to ensure that the assets are divided fairly and justly, regardless of who actually owns the asset.

Ancillary Relief

In most divorce cases, the parties attempt to agree how the assets are to be divided amicably and without the need for further court decisions or scrutiny. In such cases, the agreement may be confirmed by a court consent order which is a legally binding document that both parties must adhere to. This process and in all divorce or separation cases the parties should attempt to a similarly amicable situation. In certain cases, a separation agreement may be used instead, and this will also be legally binding. However, there are certain situations where the relationship between the parties will be strained and in such situations the court will need to look at the specific facts and come to a decision regarding application. In such cases, one of the involved parties will make an application for ancillary relief after which the courts will be required to use their powers to distribute the assets as they see suitable.

Matrimonial Causes Act (1973)

When having to decide how the assets are to be distributed, there are a number of factors that should be taken into consideration. These are listed in section 25 of the Matrimonial Causes Act (1973) and include the amount of time of the relationship, the ages of the concerned individuals, the assets, their incomes and their earning potential. The legislation also explains that in exercising its power the court will consider the living standards prior to the breakdown of the relationship, the contributions made by both parties and any disabilities of those involved.

Case law

It is important to note that the factors cannot be applied in a strict and mechanical manner as each divorce case will have a number of unique facts and therefore will not always be relevant to the particular legislation. This is a particularly contentious area of law with a lot at stake. Case law and decisions that have been made previously may provide help to the courts when it comes to dealing with certain circumstances. However, case law is only used to a certain extent and the particular facts at the time will dictate the findings of the court. The result of this is that it may prove difficult to get a definitive answer or guidance with regard to the division of the assets. However, the fact that the court has so much flexibility in its decision means that all facts can be considered and therefore in most cases the findings should be fair as they are based on the actual scenario and not incorrectly applied rigid legislation. However, this often needs to unpredictable results which would not previously have been considered.

Reform

There has been much debate regarding possible reform of the above provisions. In September 2012 a consultation that sought opinion on possible reform to section 25 of the above mentioned Act. The main area considered was what can be done to ensure that results were more consistent and an attempt to resolve what is a clearly subjective area with contradictory case law. Other areas that were discussed included clearer guidance with regard to certain types of assets and what matters should remain discretionary and therefore under the power of the court. Although there has not yet been any reform, this is a possibility in the future as many are of the opinion that there is not enough clarity and consistency when dealing with financial issues in divorce proceedings.

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