Separating out money and property is an area that most couples have to face when their relationship breaks up. For some it may be quite simple and agreement reached quickly but for others there can be differences and disagreement over what should happen. Stress and conflict can arise at the time of immediate separation or later, for example as part of a divorce when financial arrangements are to be finalised. If you are intending an agreement to be a divorce settlement of finances you will need to demonstrate to the court that decisions have been reached properly and are fair.
Broadly there three ways to reaching decisions about finance and property
- Working something out directly between you perhaps using self-help guides like “Which Guide to Divorce” or “Divorce for Dummies” and the One Parent Families (Helpdesk) and Advice Now websites
- Engaging a solicitor to negotiate on your behalf
- Using mediation
Why come to mediation?
You may want to approach the problem in a fair-minded way but are uncertain how to do this. You may have tried to sit down together and work out a solution but one or both became upset or angry. You may be reluctant to hand over the whole matter to your respective solicitors, perhaps because of costs or fear that this will increase conflict.
If you come to mediation you will work together and be encouraged to solve problems in a co-operative rather then confrontational way and find something that both of you can recognise as fair.
What happens at mediation?
The sorts of things people discuss include
- what will happen to the family home
- housing needs for both
- how to manage respective budgets
- what about child support
- should there be spousal support
- how to divide assets
- what to do about pensions
- how to meet debts
- how to share possessions
The mediator conducts the meetings and guides you through a series of stages whereby you first put together all the financial information that will be required
- income and likely expenditure for each of you in the future in your separate lives
- details and value of all property, savings, investments and any other capital assets in which either of you has an interest
- details and value of any pensions either of you have
- details of any loans or debts for which either of you are liable
The mediator then drafts a schedule called an “Open Statement of Financial Information” which should be a full and true picture of your finances and property backed up by documentary evidence of the values stated.
N.B. You should note that this part of the process is called financial disclosure and is what is termed “open” information; that means that it can be used outside of the mediation, for example if you were unable to reach an agreed decision and wanted solicitors to act on your behalf and/or a court to adjudicate. This can be really useful as it is information that will be required by the courts and your advising solicitors and saves expensive solicitor time in collating.
Some people complete financial disclosure through their solicitors and then enter mediation in order to reach an agreement thus saving expensive litigation time.
Next, using this schedule, your mediator helps you to explore different possibilities and to weigh up the practicalities and preferences. This can take more than one session and your mediator will send you a written summary of each meeting including any preparation work agreed to be done before the next meeting. The mediator helps you focus on the task in hand and will be easing situations that might otherwise become heated. Solicitors are not part of these discussions and negotiations but you can consult with them between meetings for legal advice showing them the summaries and schedule if you wish. Discussions and proposals, however, are “without prejudice” and privileged; this means that they cannot be used outside of the mediation process in any court proceedings nor are they legally binding.
When you have reached an agreed set of proposals your mediator sets them out in a document called the “Memorandum of Understanding”. Bear in mind that this is still not a legally binding document. This together with the “Open Statement of Financial Information” should be taken to your solicitors for legal advice and to be translated into a legally binding agreement. If either of you have second thoughts at this point you can return to mediation for further discussion but otherwise it should not take long for your solicitors to draw up the agreement from those documents.
We always advise following mediation on financial issues that you both should have legal advice and a legally binding agreement be drawn up. This means that there is clarity and where possible closure on agreements.
What if we cannot agree?
Not everybody makes it to the end and agrees a Memorandum for a variety of reasons. Either one or both of you can choose to opt out of mediation; occasionally your mediator may decide that a mediated outcome is not possible. There can be difficult matters to discuss and agree face to face and for some negotiations through solicitors might be preferable. Your mediator will want to encourage and support you both to complete the process if at all possible but will respect any decision not to continue. If you have agreed interim or part proposals these can be outlined and any financial disclosure information produced which can save a lot of time in reaching a final settlement.