Types of Financial Relief - Court Orders
Finances on Divorce
What the Court Will Take into Account When Making an Order
The starting point for dividing assets is generally fifty-fifty, with the court only departing from equality if there is good reason to do so, most commonly due to the “needs of the parties” and any relevant children. The latter is the Court’s primary concern.
The Court will take the following factors, set out at Section 25 of the Matrimonial Causes Act 1973, into consideration when making any financial order:
- The financial needs, obligations and responsibilities of the parties
- The income, earning capacity, property and other financial resources of both parties now and in the foreseeable future, to include earning capacity
- The standard of living enjoyed by the family during the marriage
- The age of both parties and the length of the marriage
- Any physical or mental disability of either party
- The contribution each party has made or is likely to make in the foreseeable future, including any contribution made by looking after the home or caring for the child of the family
- The loss of the value of any benefit, which by virtue of the dissolution or annulment of the marriage, a party will not have the opportunity to acquire
- The first priority is always the welfare of any child of the family and consideration will be given to: the financial needs of the child; the income earning capacity (if any) of the child, the property and other financial resources of the child; any physical or mental disability; the manner in which the child was being educated or trained and the expectations of the parties in this regard; and whether a party has assumed any responsibility for a child’s maintenance
- The court will ultimately consider all the circumstances of the case
There are also a number of factors that the Court will NOT take into consideration:
- The reason the marriage failed
- The behaviour of the parties, unless it would be inequitable to disregard it
- Which party made the application for the divorce or financial order
Types of Relief - Court Orders
The main orders that a Court can make under Section 25 of the Matrimonial Causes Act 1973 are as follows:
Periodical Payment / Maintenance Orders:
Periodical payments to a party to the marriage or to/for a child of the family. Every spouse has the right to make a claim for maintenance, but this will be dependent upon as assessment of “needs” cross checked with “income”.
The purpose of periodical payments is to ensure each party can meet their reasonable daily outgoings and those of any child of the family. A periodical payments order, requires one party to make regular payments to a party to the marriage or to/for a child of the family.
'Child of the family' is a child of both parties or any other child who has been treated by both parties as a child of their family, including any step-children or adopted children, but not foster children placed in the parties care by a local authority.
The regularity of the payments will be determined by the court, but usually the payments are made weekly or monthly.
This kind of order is often referred to as an order for 'maintenance'.
Once made, it is possible to vary the order by applying to the court. A common reason for seeking to vary a periodical payments order is a change in the financial circumstances of the person ordered to pay, usually following a loss or change of employment.
The order may well be specified to last for a certain amount of time: it may be deemed to run 'until further order' or until either party marries again or dies.
When considering an order for periodical payments, the court must also consider whether a clean break (no ongoing financial obligation) is appropriate.
Secured periodical payments to a party to the marriage or to/for a child of the family:
This is not a particularly common order.
It is similar to a simple periodical payments order, but there is an order that a secure capital fund is provided from which payments can be made.
A common example of such an order is where payments are secured against a property owned by the party making the payment.
The main benefit of such an order to the party receiving the payment is that they are protected if the party ordered to pay disappears, dies or becomes insolvent.
An application to vary may similarly be made to the court.
Secured periodical payments can also run for a specified term or until death or remarriage of the receiving party – with the court being required to consider the appropriateness of a clean break order.
It is important to mention that the Child Maintenance Service is the authority for child maintenance payments, save in certain specific circumstances. It does however remain open to parties to agree a sum of child maintenance, which can then be recorded into a Consent Order.
On the anniversary of the Order, it is open to either party to apply to the CMS to undertake a review.
Capital Orders:
Lump sum to be paid to a party to the marriage or to/for a child of the family.
A lump sum is an amount paid, and, with limited exception, is intended to be a final order to conclude matters.
Common examples of when a lump sum is used include for the purchase of property; as a way of capitalising maintenance (paying a single upfront sum in respect of maintenance rather than regular periodical payments); or compensating a party for handing over control of a jointly run business.
Transfer of Property Order (Property Adjustment Order):
Transfer of Property orders transfer property, such as the family home, from one party to the marriage to the other party or to/for the benefit of a child of the family.
The transfer can take place immediately or may be made subject to a charge in favour of the person transferring the property.
The charge will usually be realisable on a specified date or the occurrence of a specific event, for example upon the youngest child of the family reaching 18.
At this time, the non-resident party will be entitled to receive payment of either a specified amount or a percentage value of the property.
In such cases the sale or re-mortgage of the property may be the only way to release the payment on the “trigger” event.
Whilst the family home is perhaps the most common type of property transferred, it can be any type of property which either or both parties hold an interest in.
The court also has power to make the less commonplace settlement of property orders (which create trusts) and orders varying the effect of any pre or post nuptial settlement.
Order for Sale
An order for sale can only be made where there is:
(a) A secured periodical payments order; or
(b) A lump sum order; or
(c) A property adjustment order.
The sale is ordered to allow the capital generated to be used to facilitate one of these orders.
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