England and Wales the courts regard the divorce
as of primary importance and the question of financial
matters and matrimonial
assets as being ancillary. However, usually the husband and wife will agree
that the marriage is over and that getting a divorce is the correct procedure, so this part of the process
is quite simple.
for the children will often be resolved by agreement,
however there can often be disputes over the financial
matters also including a members pension rights.
In the case of pension arrangements, this could
take the form of an earmarking order or pension
sharing order against retirement benefits.
It is not unusual for ancillary
relief proceedings to take longer than the divorce
to resolve but even so the whole process is typically
measured in months rather than years as can be seen
in detail from the step-by-step
guide. On divorce, even if the parties agree
to a financial order, it cannot be made final until
the decree nisi is granted. For couples either on
separation or nullity of marriage the court has the power to make a financial
order against the assets owned by the husband or
wife in their own names or assets owned jointly.
In addition the court has the power to make a financial
order that will apply to the sale or transfer of
property, a payment of a lump sum from the assets
or a members
pension rights or where there are children and
an income for a non-working spouse is required,
maintenance payments. It is important to realise
that the court does not have the same jurisdiction
where the couple is not married but living together.
Under the Matrimonial
Causes Act 1973 (MCA 73) the courts are given direction
for the resolution of the financial matters for a couple on
divorce and this includes having regard to a clean break.
This means that the matrimonial assets will be divided between
the couple resulting in a complete separation when the marriage
ends, usually sometime after the court grants the decree
absolute. However, where
there is an obligation to maintain children of the marriage
it may not be possible to achieve a clean break.
This could occur if there were limited
assets of the marriage and one of the parties was a high earner (usually the husband)
whereas the other party looked after the children (usually
the wife). On divorce she would be unable to support herself
and there may be a requirement for a maintenance order. Even
so, the courts will usually expect an order for maintenance
for the spouse to be restricted by time so as to achieve a
clean break in the future. One assumption is that the wife
will have existing skills from a previous employment, can
be re-trained and will eventually have a sufficient income
to support herself.
Where there is a pension
arrangement involved and an earmarking order against the
members pension rights at retirement age, a clean break will
not be possible. This arrangement will mean the former spouse
will have to wait until the member chooses to retire before
payment of a pension income or any tax
free lump sum. As most couples usually want a clean break
of the financial matters on divorce, it is understandable
why earmarking is only occasionally used to settle the retirement
A clean break would result in an internal or external transfer of pension benefits and in many cases the spouse is nearing retirement and requires a pension income. Where this is a money purchase scheme, the spouse can use the pension fund to buy an annuity and has the option to use an open market option to search for the highest pension annuity. Once you have purchased an annuity it cannot be changed, so learn more about annuities, compare annuity rates and before making a decision at retirement, secure a personalised pension annuities quote offering guaranteed rates.
During divorce procedures the court will divide the matrimonial assets based on the
rules as set out in section 25 of the Matrimonial Causes Act
1973 (MCA 73). These rules consider for each party the matters
of income, property, financial needs, obligations, standards
of living, age of the parties and may other factors.
However, there has been an increasing
tendency for the courts to concentrate on and aim to satisfy
the needs of the parties when deciding on financial matters.
This means that where the couple have young children the court
assume they will stay with the wife and that they will need
a roof over their head. Usually the wife will remain in the
former matrimonial home and the property will be transferred
to her name with the husband receiving other assets, for example
retaining the full value of his pension arrangements and this
process is known as offsetting.
Satisfying the parties, in particular
the wife, on a needs basis has occurred in most cases even
if the parties are wealthy. The wife has received only enough
for a house and an income to satisfy her needs and this is
often been only a fraction of the value of the total assets.
With the case of White
v White (2000) the needs basis approach has been changed
as the ruling by the House of Lords emphasised the starting
point should be on an equal split of assets, based on the
equal contribution by the parties whether one is an income-earner
or a home-carer.
In the United Kingdom it is important
to remember that the existence of a pre-nuptial agreement
specifying the ownership of assets as a result of a marriage
breakdown is not binding in law. The court has the jurisdiction
over the division of assets and can look beyond any agreement
when making a final order. If the couple are not married and
remain so, then the existence of such an agreement will be
effective in UK law.
Powers of the Court
Throughout the legal procedure to settle ancillary relief
appointment, financial dispute resolution (FDR)
appointment and final hearing the judge will work with the
parties to achieve an outcome where there is mutual agreement
as shown the step-by-step
guide. Only as a last resort
where agreement cannot be reached will the court use its power
and impose a judgment. When the court makes a final order
it can decide to split the matrimonial assets in any way it
feels is satisfactory.
This can mean the transfer of legal
ownership between assets or from a joint to a single ownership.
In the case of a members
pension rights, since 1 December 2000 the Welfare Reform
and Pensions Act 1999 (WRPA 99) has made it possible to grant
a pension sharing
order that would result in dividing the retirement benefits.
This creates a pension arrangement in the name of a former
spouse. The court also has the power to grant a financial
order after divorce. As there is no time limit this could
be served years after the divorce.
At the time, the couple may have thought
they could reach an agreement but then find this is no possible.
The court will consider several factors for such a case but
in particular, an increasing time delay will be detrimental
to the application. If the parties have lived apart for a
long time and are not dependent there is less of a case for
ancillary relief and this is especially true if the party
has since re-married. The court would consider it unreasonable
after time and without expectation to make a claim for ancillary
relief against a former spouse.
Where the married couple
are joint legal owners of the matrimonial home, both have
the right to remain in the property unless the court makes
an exclusion order. Various orders can be made to achieve
one party's sole ownership;
Interest Order granted by the court. There is the right
for one of the parties to occupy the matrimonial home
up to an agreed point in time, such as the children are
independent. It will be agreed who will pay what bills;
granted by the court. In this case usually the wife is
allowed to remain in the property rent free, and the sale
of the matrimonial home is postponed until the children
are 17 years of age;
Order granted by the court. The wife or husband remains
in the property for the remainder of their life or until
a "trigger" event occurs such as remarriage
or a voluntary decision to leave the property.