Financial Settlements in Divorce and Separation
In Scotland, the division of financial assets during divorce or separation is governed by the Family Law (Scotland) Act 1985, which provides a fair and structured framework to resolve financial disputes. At Rooney Family Law, we are committed to helping you navigate these complex matters, ensuring that your financial settlement aligns with your rights and needs.
Key Principles of Financial Provision in Scotland
The court’s approach to financial settlements is guided by the principles set out in Section 9 of the Family Law (Scotland) Act 1985:
Fair Sharing of Matrimonial Property
• Matrimonial property is typically divided equally between the parties, unless special circumstances justify an unequal split.
• Matrimonial property includes assets acquired during the marriage or civil partnership and up to the date of separation, such as the family home, savings, pensions, and investments.
Economic Advantage and Disadvantage
• Compensation may be awarded where one party has derived an economic advantage (e.g., career advancement) from the contributions of the other, or where one party has suffered an economic disadvantage (e.g., sacrificing a career to raise children).
Financial Support for Adjusting Post-Separation
• Where one spouse faces significant financial hardship after separation, short-term financial support may be awarded to help them adjust.
Fair Distribution of Childcare Costs
• The financial settlement should ensure that any arrangements for children are adequately supported.
Avoiding Undue Hardship
• The settlement aims to avoid leaving either party in financial hardship.
What Is Matrimonial Property?
Under Scottish law, matrimonial property includes:
• The Family Home and Contents: Property purchased for use during the marriage.
• Pensions: The portion of pensions accrued during the marriage is considered matrimonial property and subject to division.
• Savings and Investments: Assets acquired jointly or individually during the marriage.
• Vehicles and Other Assets: Cars, boats, or other valuable items acquired during the marriage.
Exclusions from Matrimonial Property:
• Property owned before the marriage, unless it was used as the family home.
• Inheritances or gifts received by one party, unless specifically shared.
• Assets acquired after the date of separation.
Methods of Financial Settlement
Negotiated Agreements
Couples are encouraged to negotiate a financial settlement through solicitors or mediation. A Minute of Agreement can formalise the arrangement, which is legally binding and avoids the need for court intervention.
Court Action
If an agreement cannot be reached, either party can apply to the court for financial provision. The court will consider:
• The needs of both parties.
• The welfare of any children under 16.
• The principles of the Family Law (Scotland) Act 1985.
Division of Assets in Special Circumstances
In some cases, the court may depart from an equal division of assets due to special circumstances, such as:
• Source of Funds: If one party contributed significantly more to the purchase of matrimonial property.
• Post-Separation Contributions: If one party continued paying the mortgage or other expenses after separation.
• Economic Disadvantage: Where one spouse has sacrificed career prospects for the benefit of the family.
• Business Assets: Complexities arise if one or both parties own a business. The court will consider its valuation and impact on both parties.
• Pensions and Financial Settlements
Pensions often represent a significant portion of matrimonial property. In Scotland, the portion of a pension accrued during the marriage is subject to division. This is calculated using the Cash Equivalent Transfer Value (CETV).
Pension Sharing Orders
The court may issue a Pension Sharing Order, allowing the non-pension-holder to receive a share of the CETV. This share can be transferred into a pension scheme of their choice.
Offsetting
Instead of dividing pensions, the value of the pension may be offset against other assets, such as the family home.
Spousal Maintenance
Spousal maintenance, or aliment, is less common in Scotland than in other jurisdictions. It may be awarded in limited circumstances to provide financial support during and immediately after separation. Aliment is typically a short-term measure and is replaced by a financial settlement once finalised.
Child Maintenance
Child maintenance ensures that both parents contribute to their child’s upbringing. The amount is usually calculated based on the paying parent’s income, in line with the Child Maintenance Service (CMS) guidelines.
Agreements vs. CMS
Parents can agree on maintenance arrangements privately, but if disputes arise, the CMS can step in to assess and enforce payments.
Case Law Examples
Jacques v Jacques (1997 SC (HL) 20)
• Issue: Whether an equal division of assets was fair despite the husband’s greater financial contributions.
• Outcome: The court upheld an equal division, reaffirming that the starting point for matrimonial property is equality, regardless of individual contributions.
• Significance: Highlights the importance of fairness and the presumption of equal sharing.
Little v Little (1990 SLT 785)
• Issue: Division of assets where the wife sacrificed her career to support the family.
• Outcome: The court awarded her a greater share of the matrimonial property, recognising her economic disadvantage.
• Significance: Demonstrates how courts account for non-financial contributions.
Wallis v Wallis (1993 SC (HL) 49)
• Issue: Whether the value of the family home should be calculated at the time of separation or the time of divorce.
• Outcome: The court ruled that the valuation should reflect the time of divorce, ensuring a fairer distribution.
• Significance: Established important guidance on property valuation.
Cahill v Cahill (1998 SLT 1290)
• Issue: Treatment of post-separation contributions to joint debts.
• Outcome: The court considered the husband’s payments towards the mortgage after separation and adjusted the settlement accordingly.
• Significance: Highlights how post-separation financial contributions can affect division.
Resolving Financial Disputes
Mediation
Mediation offers a structured environment to discuss and resolve financial disputes with the help of a neutral mediator.
Collaborative Law
A non-adversarial approach where both parties and their solicitors work together to reach an agreement.
Court Action
If negotiations fail, court action may be necessary. While this process can be time-consuming, it ensures a legally binding resolution.
How Rooney Family Law Can Help
At Rooney Family Law, we provide expert guidance through every stage of financial settlement, including:
• Advising on your rights and obligations under Scottish law.
• Negotiating fair and practical settlements.
• Representing you in court, if necessary.
• Assisting with complex matters such as business valuations and pension sharing.
Our team is dedicated to securing the best possible outcome for you, ensuring that your financial future is protected.
Contact Us
If you are facing financial disputes during a divorce or separation, contact Rooney Family Law today on 0800 779 7848 ordrop us a massage via our contact form. We are here to provide expert advice and representation tailored to your unique circumstances.