What You Can Include In Your Financial Settlement Agreement Agreed Between Yourselves Or Through Mediation
Whether you and your ex-partner are sorting out your financial settlement by yourselves or with the help of mediation, you both need some idea of what you need to sort out and include in your financial settlement agreement.
Although every financial settlement agreement between a couple is specific and unique to their family, here on this webpage we will give you an overview of the type of things you and your ex-partner will need to discuss and come to some sort of agreement on.
Your financial settlement agreement will detail the division of all your marital assets, finances, pensions and maintenance payments between both you and your ex-partner.
The things to remember when dividing marital assets, finances and pensions is the following:
- THE CHILDREN – The needs and requirements of any children within the marriage or partnership needs to be prioritised and catered for first.
- CAPITAL GAINS TAX – You will both need to find out how much capital gains tax will need to be paid if assets are to be transferred or sold.
LINK TO OUR L.I.P HELP GUIDE FOR CAPITAL GAINS TAX
3. PRIVATE RESIDENCE RELIEF – You will both need to find out if either of you are entitled to private residence relief if the family home is to be transferred or sold.
LINK TO OUR L.I.P HELP GUIDE FOR PRIVATE RESIDENCE RELIEF
4. VALUATIONS – You will both have to decide how to best sort out valuations of your assets.
LINK TO OUR L.I.P HELP GUIDE TO VALUATIONS AND EXPERT EVIDENCE
5. THE MARITAL POT – All the marital assets, finances and pensions will all go into one pot. Then this pot will be divided between both partners so each gets a fair settlement.
6. OFFSETTING – How assets will be offset against one another so both parties get a fair settlement.
LINK TO OUR L.I.P HELP GUIDE FOR FINANCIAL TERMS & FINANCIAL COURT ORDERS EXPLAINED – OFFSETTING
7. PRE-NUPTIAL & POST-NUPTIAL AGREEMENTS – These legal agreements are not enforceable in the English and Welsh family courts.
LINK TO OUR L.I.P HELP GUIDE FOR PRE-NUPTIAL AND POST-NUPTIAL AGREEMENTS
8. SECTION 25 FACTORS – These are things that the court has to take into consideration when dividing marital assets. These S25 factors are detailed in section 25 of the matrimonial causes act 1973.
LINK TO GOVERNMENT WEBSITE FOR SECTION 25 OF THE MATRIMONIAL CAUSES ACT 1973
LINK TO OUR L.I.P HELP GUIDE FOR YOUR S25 STATEMENT EXPLAINED
Some of the things that you and your ex-partner can include in your financial settlement agreement:
- Property – Who will continue to live in the family home, if this is possible, or will it be sold and other smaller properties purchased or transferred to one party?
- Money (cash) – It has to be agreed how the money will be divided.
- Savings – It needs to be agreed how savings will be divided between both parties.
- Shares – Both parties will need to agree who gets which shares and how much.
- Debts – It will need to be agreed upon how debts will be shared and/or paid off. Do debts get paid off first and then assets are divided?
- Pensions – Do both partners have pensions and they keep their own? Or if one partner only has a pension, will this be divided or offset against another asset?
LINK TO OUR L.I.P HELP GUIDE FOR DIVIDING PENSIONS & PENSION SHARING ORDERS
7. Maintenance (spousal and child) – Spousal and child support has to be agreed and decided between both parties so no party is left unsupported.
LINK TO OUR L.I.P HELP GUIDE FOR THE PROCESS OF CHILD MAINTENANCE
8. Taxes to be paid – There are laws governing the tax that has to be paid on the sale or transfer of marital assets during a divorce. There are also laws that are in place that state if a financial agreement and divorce can be settled in a certain timeframe then the tax liability is reduced.
The more details that are discussed and agreed, the better for both you and your ex-partner. There will be less arguments and disagreements because both you and your ex-partner will have a clear understanding of what you will get, what taxes will have to be paid and when and how assets will be divided.
Once you both have agreed the division of your marital assets, finances and pensions, you and your ex-partner must write down all your agreements and decisions onto a piece of paper called a draft consent agreement.
If you have agreed the division of your marital assets, finances and pensions with the help of a mediator, they can write the draft consent agreement for you. Please ask the cost and decide if you can afford it.
LINK TO OUR L.I.P HELP GUIDE FOR MEDIATION
If you have agreed the division of your marital assets, finances and pensions between yourselves (DIY), you can write it yourselves using our template for a draft consent agreement. Please click on the link below so you can be taken to the page where you will find a template. This will not cost a penny.
Once you have an agreed draft consent agreement for the division of your marital assets. finances and pensions you must send it to the court for approval. Please click on the link below to access the write up on how to get the court to approve your financial settlement agreement.
Please click on the link below if you need any help on other aspects of the division of your marital assets, finances and pensions.
LINK TO OUR L.I.P HELP GUIDE 5 – DIVIDING YOUR MARITAL ASSETS, FINANCES AND PENSIONS