Financial orders refer to the orders that the court can make concerning the financial arrangements between spouses or civil partners in case of divorce or dissolution of a civil partnership. Financial orders can cover various aspects such as the division of property, maintenance payments, and lump sum payments. The purpose of this article is to provide an overview of financial orders in the context of UK family law. It will discuss the legal requirements for financial orders, the types of financial orders, the factors that the court considers when making financial orders, and the challenges and limitations of financial orders. A family law solicitor specialises in navigating the complexities of financial orders and can provide valuable guidance throughout the process.
Definition of Financial Orders
Financial orders are legal directives issued by the court in family law cases concerning the division of finances, assets, and income between the parties involved in a relationship breakdown. Financial orders can be made in divorce, civil partnership dissolution, and other family law proceedings, and they are aimed at ensuring a fair and equitable distribution of assets, income, and other financial resources between the parties.
Financial orders are essential in family law cases as they establish the financial arrangements and obligations of the parties involved, including child support, spousal maintenance, division of property and assets, and other financial matters. Financial orders are crucial to ensure that both parties are treated fairly and equitably in the division of financial resources, and that the interests of children and other dependents are protected. Financial orders also provide certainty and stability to the parties involved, enabling them to move on with their lives after a relationship breakdown.
Types of Financial Orders
A. Maintenance Orders: These are court orders that require one party to make regular payments to the other party for the maintenance of the latter and/or any children of the family. Maintenance orders may be for a limited or indefinite period and can be varied or discharged by the court upon an application by either party.
B. Lump Sum Orders: These are court orders that require one party to pay a specified sum of money to the other party in one payment or in instalments. Lump sum orders are often used to provide a clean break between the parties and may be made in addition to or in lieu of other financial orders.
C. Property Adjustment Orders: These are court orders that require the transfer or sale of property between the parties, such as the family home, to achieve a fair division of assets. The court may also order the transfer of other assets, such as shares, savings or investments.
D. Pension Sharing Orders: These are court orders that require the pension provider to transfer a portion of one party’s pension to the other party to achieve a fair division of assets. Pension sharing orders may be made in addition to or in lieu of other financial orders.
E. Child Maintenance Service: This is a government agency that provides an alternative to court-ordered maintenance payments for separated parents who cannot agree on the financial support of their children. The Child Maintenance Service can calculate the amount of maintenance payable and enforce payment if necessary.
F. Financial Remedies Order: This is a comprehensive financial order that can include maintenance, lump sum, property adjustment and pension sharing orders. A financial remedies order is made after a contested hearing and sets out the financial arrangements between the parties.
G. Clean Break Order: This is an order that provides a complete and final settlement of financial claims between the parties. A clean break order may be made in conjunction with other financial orders or as a standalone order.
H. Variation Order: This is an order that varies the terms of an existing financial order. A variation order may be made if there has been a significant change in the financial circumstances of either party.
I. Enforcement Order: This is an order that enables a party to enforce compliance with an existing financial order. An enforcement order may be made if a party has failed to comply with the terms of a financial order.
J. Interim Order: This is a temporary order that can be made by the court to provide financial support pending the final resolution of the financial proceedings. Interim orders may include maintenance, lump sum or property adjustment orders.
Legal Requirements for Financial Orders
A. Criteria for granting financial orders: In order to grant financial orders, the court must consider the financial needs, obligations, and resources of each party and any dependent children. The court also takes into account the standard of living during the marriage or civil partnership, the length of the marriage or civil partnership, and the age, earning capacity, and contributions of each party.
B. Process for applying for financial orders: Financial orders can be applied for by either party during or after divorce or dissolution proceedings. The application must be made on the appropriate court form and a fee must be paid.
C. Timeline for obtaining financial orders: The timeline for obtaining financial orders can vary depending on the complexity of the case, the availability of information, and the court’s schedule. Generally, financial orders are made after the court has considered all the evidence and arguments presented by both parties.
D. Consequences of non-compliance with financial orders: Non-compliance with financial orders can result in legal action, including enforcement proceedings and possible sanctions. The court may also consider non-compliance when making future orders.
E. Discretionary nature of financial orders: It is important to note that financial orders are discretionary and not automatic. The court will consider all relevant factors and make orders that are fair and reasonable in the circumstances of the case.
Factors Considered in Financial Order Determination
A. Income and earning capacity: The income and earning capacity of both parties are taken into account in determining financial orders. This includes their current income, potential future income, and any income from pensions or other sources.
B. Assets and property: The value and ownership of assets and property are considered in determining financial orders. This includes both marital and non-marital property, such as inheritance or gifts.
C. Needs and expenses: The needs and expenses of both parties are taken into account. This includes reasonable living expenses, medical expenses, and child-related expenses.
D. Standard of living during the marriage: The standard of living enjoyed by the family during the marriage is also considered in determining financial orders. This is to ensure that the party with the lower income can continue to enjoy a similar standard of living after the divorce.
E. Age and health: The age and health of both parties are taken into account. This is to ensure that both parties have the resources they need to maintain their health and well-being.
F. Contributions to the family, including childcare: The contributions of each party to the family, including childcare, are taken into account in determining financial orders. This includes both financial contributions, such as earning an income, and non-financial contributions, such as taking care of the children or managing the household.
Procedures for Obtaining Financial Orders
Mediation is a form of alternative dispute resolution where the parties work with a neutral mediator to reach a mutually agreeable settlement. The mediator facilitates discussions between the parties, but does not make decisions for them. Mediation can be a less confrontational and less expensive process than going to court. During mediation, the parties may work with an independent financial advisor to help them understand the financial implications of different settlement options.
Collaborative law is another form of alternative dispute resolution that is focused on negotiation and cooperation. Each party has their own legal advisor, and the parties and their advisors agree to work together to reach a settlement without going to court. Collaborative law can be particularly useful for complex financial cases, as it allows the parties to work collaboratively with financial experts to explore potential settlement options.
If mediation or collaborative law is unsuccessful, or if the circumstances require it, a party may initiate court proceedings to obtain a financial order. The court has the power to make orders for maintenance, lump sums, property adjustment, and pension sharing. The court will consider all relevant factors, including the parties’ financial circumstances, the needs of any children, and any other relevant factors.
During court proceedings, each party presents their financial information and makes submissions to the court. The court will consider all the evidence and make a determination as to what financial order, if any, is appropriate in the circumstances. The court’s decision is based on the law and the specific facts of the case.
It is important to note that court proceedings can be costly and time-consuming. Additionally, the parties will have less control over the outcome than they would in mediation or collaborative law. However, in some cases, court proceedings may be the only option to resolve the dispute.
Challenging Financial Orders
Grounds for appeal
A party may wish to challenge a financial order if they believe that the order is unfair or incorrect. Some of the grounds for challenging a financial order include:
- Failure to properly disclose assets or financial information
- Misapplication of the law or legal principles
- Inadequate reasoning by the court in making the order
- Error in the calculation of the financial order
Procedure for appealing financial orders
If a party wishes to challenge a financial order, they can do so by appealing the decision to a higher court. The appeals process can vary depending on the type of financial order and the specific circumstances of the case. In general, the process involves filing a notice of appeal and providing grounds for the appeal, and then attending a hearing to present arguments to the court.
Time limit for appealing financial orders
There are strict time limits for appealing financial orders, which can vary depending on the type of order and the court that issued the order. In general, parties must file their notice of appeal within 21 days of the date of the order, although this may be extended in certain circumstances. It is important for parties to act quickly if they wish to challenge a financial order, as missing the deadline can result in the order becoming final and binding.
Enforcing Financial Orders
Options for enforcement
Once a financial order has been made, it is legally binding and must be complied with by both parties. However, in some cases, the paying party may fail or refuse to comply with the order. In such cases, the receiving party may need to take legal action to enforce the order. There are several options for enforcing financial orders, including:
- Charging Order: This is a court order that places a charge on the paying party’s property, usually their home or other assets, to secure the payment of the outstanding amount.
- Attachment of Earnings Order: This is a court order that requires the paying party’s employer to deduct the amount of the outstanding payments from their wages and send it directly to the receiving party.
- Third-Party Debt Order: This is a court order that freezes the paying party’s assets held by a third party, such as a bank or building society, to secure the payment of the outstanding amount.
- Warrant of Control: This is a court order that authorises enforcement agents to seize and sell the paying party’s goods to recover the outstanding amount.
Legal consequences of non-compliance with financial orders
Non-compliance with a financial order can have serious legal consequences for the paying party. They may be held in contempt of court, which can result in fines, imprisonment, or both. In addition, their credit rating may be adversely affected, and they may be subject to further legal action to recover the outstanding amount.
Assistance from the court or enforcement agencies
If the paying party fails to comply with a financial order, the receiving party can seek assistance from the court or enforcement agencies. The court can issue various orders to enforce the financial order, as outlined above. Enforcement agencies, such as the Child Maintenance Service or the court bailiffs, can also be instructed to enforce the order. It is important to note that these options may involve additional costs, which may be borne by the paying party.
In conclusion, financial orders play a crucial role in family law by ensuring that both parties receive a fair share of assets and support following a separation or divorce. It is important to understand the legal requirements and criteria for obtaining financial orders, the factors considered in determining financial orders, and the various procedures for obtaining and challenging financial orders. Additionally, it is crucial to comply with financial orders and understand the consequences of non-compliance. By navigating the complex process of financial orders, individuals can secure a stable financial future and move on from their separation or divorce with confidence.