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Divorce and Financial Resolutions - The Finances

April 25, 2012 | Comments: 0 | Views: 228

The previous articles in this series looked at the procedures and processes involved in reaching financial resolutions during divorce proceedings, as well the ways in which divorcing couples can work together to make the negotiations smoother, more productive and most importantly, more amicable. Having done so, the following article outlines the actual financial issues that need to be resolved and some of the decisions and agreements that can be arrived at.

Before taking any course of action both parties must fully disclose all of their financial details. to the court if necessary or to the other party during collaborative processes. Obtaining this information may involve the arrangement of valuations and some level of input from financial experts with the most obvious example of this being the need to value properties. The actions that will need to be taken to fully detail each party's financial position will be determined either at the outset of mediation or collaboration or by the judge at the first court hearing.

The financial elements that have to be distributed at divorce are not just limited to shared assets such as property, possessions, investments and savings, but also shared debts, individual assets that have been accumulated during the relationship and even future earnings or income that have been impacted by the relationship and the input of the other party.

For financial disputes that end in court, judges will therefore, consider a myriad of different factors in order to achieve a fair distribution of assets, which will not necessarily equate to a fifty-fifty split. These factors can include not just the financial contributions and position of each party during and after the marriage but their physical inputs into the maintenance of the family unit and their responsibilities towards children and family going forward. In considering all of these factors courts and judges consequently have a large amount of discretion and so leaving financial disputes to the courts can introduce a significant degree of uncertainty for the couple. The best way of achieving a resolution in which the couple feel they have a degree of control is to follow either the of the mediation or collaboration routes.

When a decision or agreement is reached there are a number of ways in which individual assets can be distributed, whether they are liquidated (sold) with the proceeds split, assigned to one individual (maybe counterbalanced by another asset) or left in shared ownership. For example, a family home can be sold (with the sale monies distributed), assigned to one party if it is deemed that party has a need for a stable home in the immediate future (where children are involved especially) or can even remain in shared ownership with one partner keeping a silent share (again if there is a particular need to keep a child's home life stable). Pensions, on the other hand, can be split with the partner being apportioned a slice of the pension fund, a lump sum payment or a share of its income payments.

Partners can even be ordered to make regular cash transfers from their income to reflect the contributions of the other party to their wealth (maintenance payments). For example a wife who made career sacrifices to support a family and her partner whilst her partner continued to progress in his career may be entitled to continue receiving a slice of the proceeds of that career progression. These payments can be set to run up until certain criteria are met such as until the receiver remarries, gets a job or their children leave home. Conversely, a decision or agreement which frees both parties from any such financial responsibility to each other, regardless of their future wealth and changes in circumstances, is called a clean break.

As mentioned above the most important factor to consider in divorce resolutions is the welfare of children and ultimately the best way of ensuring that they receive the most advantageous outcome from a distressing process is usually to take the more empowered, collaborative and amicable routes of mediation or collaboration. Doing so can encourage couples to reach agreements, as opposed to enforced decisions, and get there with more of their wealth intact to invest in their children's futures.

© Stuart Mitchell 2012

If you want to find out more about the most effective ways of resolving financial disputes during divorce proceedings then visit Hampshire Solicitors or if you are interested in how to better spend your money on your child's future visit Child ISA.

Source: EzineArticles
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