When starting a divorce, a client will want to know the financial consequences of a divorce and an understanding of the financial future, post-divorce.
I give early advice on likely settlement options at our first meeting, using the estimate of the family assets I request from the client before that meeting.
However, when we start progressing the divorce and financial negotiations there will need to an exchange of information about financial assets held by both parties.
Everyone involved will need to know what there is available to share before there are decisions made about how to allocate resources.
Phase 1 – financial disclosure
The first task in any financial process is to establish the value of all of the assets. This will include values of properties, pensions, investments, shares held in companies.
It is not possible to work out how to share the assets (Phase 2) until there is clarity on what assets are available to share (Phase 1).
This disclosure will often be done on a Form E, which is court form for disclosure, and requires a set list of financial documentation to be provided to the other party.
Sometimes a party to a divorce refuses to provide this information or provides it in a way which does not disclose the true value of their assets.
Equally, there may simply be a disagreement about the value of an asset. If this is the case then one expert will usually be appointed, for example a surveyor or an accountant, to establish one fixed value of that asset, which will then be used in negotiation.
Legal fees may be spent to establish the value of the assets before any negotiation can take place. If there is full transparency and agreement about the assets available to share, then phase 1 can be dealt with swiftly, and this will save time and fees.
Part of the expertise involved in dealing with a case is knowing when there is enough information available to progress to phase 2. If one party refuses to progress to phase 2 until every penny has been accounted for, the legal costs and time spent on the case become entirely disproportionate. Equally, moving too quickly to phase 2 means that it is much harder to reach an agreement, as there are key pieces of information missing.
If there is already an agreement between the parties about what to do with the finances, the disclosure in phase 1 can be very limited. There will still need to be disclosure for the benefit of the judge who is deciding whether to make your financial agreement into a consent order. This is set out on a joint form called a statement of information.
Phase 2 – negotiation
Once there is clarity about the available assets, there can then be a negotiation about how to share those assets. If parties to a divorce have very different views as to how those assets should be shared, then we will usually start a process to guide the parties towards an agreement.
Cases will often involve more than one process to resolve a dispute. The discussions may take place in mediation with or without solicitors present. They could take place in solicitor communication such as emails or by telephone, or in an in person meeting. Increasingly arbitration is a popular method of resolving a dispute, where a decision maker is agreed upon and helps regulate the process and then makes a decision for the parties. Arbitration and mediation can be used to deal with phase 1 as well.
Court is always available if needed, to deal with both phase 1 and 2. The standard court route is a three step process, and at each step parties are strongly encouraged to reach agreement. It may therefore take 1, 2 or 3 court hearings for the parties to work out how to deal with their financial claims. It is rare that a court is required to make a decision for the parties, rather than them agreeing a decision for themselves through one of these processes.
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