In part two of Holland Family Law’s ‘making sense of legal divorce terms’ series, we explain some of the terminology used when it comes to sorting out your finances in the midst of a divorce. If you’re unsure of any legal terms to do with finances during the divorce process, refer to our glossary.
Finances and assets are often hotly disputed during a divorce. However, provided that both parties are upfront about their financial situation, plans can be made to divide things fairly. Any financial plan must account for the matter going before a judge in Court. Here’s an explanation of the terms you can expect to come across when finances are discussed.
Divorce terms used for financial arrangements
- Application for a Financial Order: If either party fails to provide full disclosure of their financial circumstances, or parties cannot agree a suitable settlement, a Financial Order application can be filed with the Court, with a view to resolving financial disputes.An Application for a Financial Order will require both parties to comply with a set timetable and attend Court.
- Child Maintenance: A share of a parent’s income paid to a former spouse as a contribution towards the welfare of a child or children.
- Maintenance pending suit: A share of a spouse’s income paid to a former spouse during the divorce proceedings (before Decree Absolute) to assist with their household outgoings.
- Periodical payments (or spousal maintenance): Regular payments made by one former spouse to another to assist them with their future outgoings.
- Lump sum: A capital payment typically made to a spouse.
- Property Adjustment Order: An order instructing a husband or wife to transfer property to their former spouse. A Property Adjustment Order can apply to any personal property including cars or furniture, but is typically applied to a house or land.
- Order for Sale: An order instructing a divorcing couple to sell their property, with funds from the sale divided in shares as specified by the Court.
- Pension Sharing Order: An order instructing that a pension fund should be divided in percentages as specified by the Court, resulting in the creation of a new pension fund in favour of the recipient.
- Clean Break: A financial arrangement that is agreed by both parties or ordered by the Court, which means that a husband or wife will make no further financial claims against each other for capital or maintenance payments etc.
- Undertaking: A promise made by either party of a divorcing couple to the Court, for example, to pay off a mortgage. If an undertaking is breached, a person may be held in contempt of Court and given a fine or be sent to prison.
- Consent Order: An order made by the Court, which can combine all of the orders explained above, legally binding the terms agreed by both parties – provided that the Court is satisfied that the terms agreed are reasonable for both parties and any children.
- Disclosure: Regardless of whether an agreement has been reached or not concerning finances, both parties should provide full disclosure of their income, assets and liabilities, the value of which must be agreed or proved. Full disclosure is given in the form of a Form E financial statement.
- Form A: Is a form filed that officially starts the Application for a Financial Order, which then results in the Court setting a timetable. This form will also be used by a Respondent (for dismissal purposes) when the parties agree a settlement and a Consent Order is filed with the Court.
- Form E: The form used to formally disclose all assets and income for each party.