How to navigate financial settlements during divorce

Divorce can be a challenging and emotionally taxing experience for all parties involved. As well as the emotional strain, there’s also financial considerations that need to be addressed in order to ensure a fair division of both parties’ assets.

Navigating financial settlements during divorce can be complex, but with the right guidance and knowledge, couples can come to agreements that are mutually beneficial.

It is important to understand the process, so in this blog, we’ll discuss some issues and pitfalls, share guidance on how to get the best outcome and provide insight into the process behind each step during divorce proceedings.

Get an experienced solicitor: The first step in navigating financial settlements during divorce is to make sure you have an experienced and competent family law solicitor. They can provide invaluable guidance and representation throughout the divorce process, especially when it comes to negotiating financial settlements.

A solicitor can help you understand your rights and obligations, as well as help you navigate complex financial issues such as asset division, child support, and maintenance.

Make sure to do your research. Choose a solicitor who specialises in divorce law. Check that they have a proven track record of success in negotiating financial settlements.

Compile a list of assets and liabilities: In order to negotiate a fair financial settlement, it’s important to have a complete understanding of your financial situation. This includes compiling a list of all assets and liabilities that are jointly owned by you and your spouse.

Assets are things you own like property, investments, retirement accounts, vehicles etc. together with any business interests you have in your sole name, partnership, limited company etc. In addition, your solicitor will advise you how to obtain the value of any pensions you may have as these will also be considered.

Liabilities are debts you owe like mortgages, credit card debt, and loans.

Having a comprehensive list of assets and liabilities will help ensure that all assets are accounted for and fairly divided during the settlement negotiations.

Don’t assume that there will be a 50/50 split – the division will be based on who any children will live with, each party’s financial needs, earning capacity and their contribution to the marriage.

Work out your financial needs and priorities: Before entering into financial settlement negotiations, it’s important to understand what your future housing needs are, what your living expenses and outgoings are or will be in the future and any other financial needs and priorities are. This includes considering your living expenses, future financial goals, and any outstanding debts that need to be addressed.

By having a clear understanding of your financial needs and priorities, you can work with your solicitor to negotiate a settlement that meets your financial goals and provides for both your short-term and long-term financial security.

Don’t forget to consider the tax implications of financial settlements: When negotiating financial settlements during divorce, it’s also important to consider the tax implications of various settlement options. For example, the division of assets such as retirement accounts or investments may have tax consequences that need to be taken into account.

Working with an independent financial advisor or tax professional can help you understand the tax implications of different settlement options and ensure that you’re making informed decisions that are in your best financial interests.

Explore alternative dispute resolution options: While some divorces may require litigation to resolve financial disputes, many couples are able to reach amicable settlement agreements through alternative dispute resolution methods such as mediation or collaborative law.

These alternative options can be less costly and less stressful than traditional litigation. They can also help couples reach mutually acceptable financial settlements that address the needs and interests of both parties.

Navigating financial settlements during divorce can be a complicated and emotionally fraught process, but with the right guidance and planning, couples can reach agreements that are fair and equitable.

Appointing an experienced divorce solicitor and bearing this advice in mind, you can be confident of a fair outcome and ensure a smooth transition to your post-divorce financial future.

Our Head of the Family and Matrimonial Department, Caroline Gregg, has over 20 years’ experience and specialises in divorce and family law. If you need advice, want to start divorce proceedings or want to know more about mediation, get in touch.