Negotiating Your Divorce Financial Settlement

In my last post, I talked about How to Split Your Assets in Divorce and this is a follow on post to help you with your negotiations.

When you are trying to negotiate your divorce financial settlement you are told that the agreement should be ‘fair’. But in practice, most people don’t know what that means so they either try to split everything 50/50 or they just try to walk away with as much as they can. This is not a good way to negotiate and makes the process longer and sometimes pointless.

To help you to keep your negotiations smooth I have put together some principals that you need to keep in mind when you are working out what you should each get. Not all will be applicable in your scenario but broadly speaking you should try to negotiate within these guidelines so that you can come to an agreement as quickly as possible and avoid ending up in court.

The principals I have set out are generally what the court will look at when they are dealing with financial settlement cases:

1. Children Come First. When making a decision about your finances, you should prioritise the welfare of your children (under 18 years old) – just like a judge would. You should make sure the child has a home to live in and there is enough money to maintain the house and to pay the bills.

2. There is no 50/50 rule. Many people think the judge has to divide everything on a 50/50 basis but there is no such rule. When the judge makes a decision, they have a lot of flexibility and they look at different areas of your life such as: what your children need, how old you both are, how long you were married, what you are both capable of earning, what your living standards were when you were married and what your needs are etc. The judge may start with a 50/50 basis but s/he will tweak the agreement in line with the circumstances of the case.

3. Fairness Does Not Mean 50/50. Most people think being fair means dividing everything equally but that’s not always the case.  What is going to be fair will depend on your situation. For example, the parent caring for young children will probably need a larger share of the assets so that they can provide a home for the young children and pay the mortgage and bills, whereas a young childless couple who were married for a few years and earning the same as each other would split everything equally.

4. Aim to Become Financial Independent from Each Other (Clean Break). You want to try to work out an agreement that allows you to be financially independent of each other – as soon as possible (many of you will know this is called the ‘clean break’). This means you both work towards breaking financial ties with each other, however, you have to make sure this is practical in your situation. It is not always possible to achieve a clean break immediately – especially if you have small children and only a few assets. Look at what realistic prospects each of you has to get a job or to re-train. Then consider a realistic timeframe of when you can make this happen. For example, you might be qualified to get a certain job but you can not do so until your children are of full-time school age. Alternatively, you might not have young children but you do not have the right qualifications so it might take you a year or two to re-train so that you can get a suitable job. You both need to talk about these timescales and how that person will be financially supported whilst they are making the transition.

5. Look at All Income Resources. Don’t overlook your eligibility for benefits. If there is not enough income to support two households, find out if you can apply for benefits, as well as council tax deductions.

6. Housemaker’s Role is Equally Valuable. In family law, there is no difference between the person who earns the money and the person who stays at home to look after the children. Both roles and contributions are equal so in most cases you cannot ask for more simply because you were the one who went out to work and put the deposit down for the house.

7. Debts Should be Considered As Well As the Assets. Don’t forget the debts and work out how these are going to be paid off. Remember whoever is named on the mortgage is legally responsible to pay the mortgage, whether they live in the family home or not. I once had a client who took out a £105,000 loan against the house, spent the money and then expected the wife to take on the loan as the house was being transferred into her name which already had a large mortgage on the property when the house was bought. These types of demands do not help and only delay settlement.

8. Assets You Had Before Marriage. If your financial resources are limited, you will have to do your best to make sure the needs of each party are met – even if this means using assets that you had before you married. Many times, clients will want to exclude property (from their financial settlement) that they had before the marriage, but these arguments are not usually relevant if you have limited assets.

There are many issues that will sway the settlement so in my next blog, I will look at section 25 factors that you might have read about and how these apply to you in practice.

If you need help working out how to split your property and money contact me on 07967 012 006 for a friendly chat about your options. You can also email: sl@divorceconsultants.co.uk   or complete my FREE Enquiry Form 

This article is for general information purposes only and does not constitute legal advice.

“Call Sonia Limbada. Trust me. You won’t regret it.”PETER