When a marriage ends, sorting out the finances can feel more daunting than the divorce itself. A clear, legally binding financial settlement can protect your home, income, pension and long term security. It can also help you move on with confidence, knowing there are no loose ends.
In England and Wales, financial arrangements are not automatically resolved by the divorce. Even if you and your former partner are on good terms, relying on an informal agreement can leave you exposed. The right approach depends on your priorities, the assets involved and whether you can negotiate a solution without the court deciding for you.
Why a binding financial order matters
A financial settlement is normally finalised through a court order, often called a financial remedy order. If you reach agreement, this is usually done by a consent order approved by the court. The key point is that an agreement is not the same as legal protection.
Without a court order, financial claims can remain open. That means either of you could potentially make a claim in the future, even years after the divorce, particularly if circumstances change. A properly drafted order can also include a clean break, which can dismiss future claims for income and capital, where appropriate.
Timing matters too. You can ask the court to approve a draft consent order once you have a conditional order (previously decree nisi). The court cannot approve it before then. It is usually simpler to deal with finances before the final order (previously decree absolute), because delaying can create complications, particularly around pensions.
How the court decides what is fair
If you cannot agree, the court applies the law set out in section 25 of the Matrimonial Causes Act 1973. The judge must consider all the circumstances of the case, with the welfare of any minor child as the first consideration.
Section 25 includes a range of factors, and the court’s focus is on fairness. There is no fixed formula. Outcomes are shaped by the facts, including needs, resources and the practical reality of two households replacing one.
The court will consider, among other things:
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Each person’s income, earning capacity, property and other financial resources
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Each person’s financial needs, obligations and responsibilities
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The standard of living during the marriage
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The ages of the parties and the length of the marriage
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Any physical or mental disability
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Contributions made, including caring for the family and running the home
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Conduct, but only in rare cases where it would be inequitable to ignore it
In many cases, needs are the deciding factor. Where resources are tight, the court prioritises housing and income needs, especially where children are involved. Where assets are more substantial, issues such as sharing and pensions often become central.
It is also important to understand that child maintenance is usually dealt with through the Child Maintenance Service rather than within the divorce financial settlement, although there are limited exceptions in certain situations.
The financial remedy process in practice
Most people want a negotiated settlement, not a courtroom battle. The financial remedy framework supports that, but it also requires proper financial disclosure so that decisions are informed and durable.
A typical route looks like this:
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You gather a full picture of finances, including property, mortgages, savings, debts, pensions, business interests and income
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You exchange formal disclosure, commonly using Form E in contested proceedings
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You explore settlement options through solicitor negotiation, mediation, or other non court dispute resolution
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If you agree, your solicitors draft a consent order for the court to approve
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If you do not agree, the court timetable can include hearings to narrow issues and, if necessary, a final hearing where a judge decides
Before certain family applications, attending a MIAM (a Mediation Information and Assessment Meeting) is often required, unless an exemption applies, for example where there is evidence of domestic abuse. This does not force you to mediate, but it ensures you have information about mediation and other options.
To keep your own planning practical, it helps to separate the legal questions from the day to day ones. These are the areas we usually recommend clients focus on early:
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What are your housing options now and longer term
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What monthly income will you need and where will it come from
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What pensions exist and what is their real value
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What debts are in joint names and who will service them
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What outcome would feel fair and workable in five years, not just today
A good settlement is not only about dividing assets. It is about creating stability. That might involve selling a property, transferring equity, offsetting a pension against a larger share of capital, or agreeing spousal maintenance for a defined period.
How Penerley can help you secure the right outcome
Financial settlements can be complex, particularly where there are pensions, businesses, overseas assets, inheritances, or a big gap in earnings. They can also be emotionally charged, especially when one person feels in the dark about the finances or worried about the future.
At Penerley, we help you take control of the process. We will explain your options in plain English, ensure full and accurate disclosure, and build a strategy focused on what matters most to you. Where agreement is possible, we will work quickly and constructively to secure a robust consent order. Where it is not, we will protect your position through the court process and present your case clearly and persuasively.
If you are separating or already divorced but finances are not legally resolved, do not leave it to chance.
