Financial settlements in divorce – What do you need to know?

Divorce can be an emotional and stressful experience and one of the most significant issues in a divorce is the division of assets and liabilities, which is known as a financial settlement.

In this article, we will explore the legal considerations involved in financial settlements in divorce cases in England.

What is a financial settlement?

A financial settlement is an agreement that determines how assets and liabilities are divided between spouses following a divorce.

This can include everything from the family home and bank accounts to pensions and investments.

The settlement should be fair and reasonable for both parties and meet their needs, and ideally, it should be reached through negotiation or mediation, rather than litigation.

The legal framework for financial settlements

Financial settlements in divorce cases are governed by a set of legal principles known as the “section 25 factors,” which are outlined in the Matrimonial Causes Act 1973. These factors include:

  • The income, earning capacity, property, and other financial resources that each spouse has or is likely to have in the foreseeable future.
  • The financial needs, obligations, and responsibilities that each spouse has or is likely to have in the foreseeable future.
  • The standard of living that the spouses enjoyed during the marriage.
  • The age of each spouse and the duration of the marriage.
  • The contributions that each spouse has made or is likely to make to the welfare of the family, including contributions made by looking after the home or caring for children.
  • The needs of any children of the marriage.

When considering a financial settlement, the court will take these factors and more into account and determine a fair and reasonable outcome for both parties.

It has recently been announced that this legislation is to be reviewed. It should be noted that the statute is 50 years old.

Negotiating a financial settlement

It’s worth noting that in the vast majority of cases, financial settlements are negotiated between the parties rather than being imposed by the court.

This can be done through mediation, collaborative law, or direct negotiation between the parties and their solicitors.

To negotiate a settlement, both parties will need to provide full disclosure of their financial circumstances, including income, assets, liabilities, and outgoings.

This will help ensure that both parties have a clear understanding of the financial picture and can negotiate in good faith.

It’s important to remember that the goal of the negotiation is to reach a settlement that is fair and reasonable for both parties and meets their needs rather than trying to “win” the negotiation.

This can be difficult, especially in cases where there is a high degree of conflict or resentment between the parties, but it’s important to keep the long-term aims in mind.

Financial settlements are an important part of the divorce process and should ensure that both parties receive a fair and reasonable share of the assets and debts accumulated during the marriage.

It’s important to work with an experienced family law solicitor to negotiate a settlement that works for both parties and is in line with the section 25 factors.

With the right guidance and support, it’s possible to navigate the financial aspects of divorce and move on to a positive and fulfilling future.

For help and advice with family and relationship matters, please get in touch with Alison Green, Head of our Family and Relationship Team at Mackrell.Solicitors on +44 (0) 20 7240 0521 or at

The following two tabs change content below.
Alison Green
Alison has more than 25 years’ experience assisting clients with Family and Relationship matters. Her expertise covers matrimonial work, including divorce and the associated financial and children issues; pre and post-nuptial agreements; co-habitation disputes; civil partnership agreements and the breakdown of civil partnerships.