Divorce Is Easy.
Financial Settlement Is the Difficult Part.
Why more couples are delaying financial settlement — and whether Private FDR could provide a quicker solution.
For many couples, getting divorced is no longer the most difficult part of separating.
The legal process for obtaining a divorce has become considerably simpler, with applications capable of being dealt with online. The much harder question is often how two people can afford to separate financially.
With the continuing cost of living pressures, mortgage rates, housing costs and the general economic climate, we are increasingly seeing couples who have decided to separate but remain living together because neither party can realistically afford to establish a separate home.
The £600,000 house problem.
On paper, a £600,000 family home may appear to provide substantial financial security.
But when a couple separates and the equity is divided equally, that does not necessarily mean either person can simply go out and buy another £300,000 home.
There may be a mortgage to repay, transaction costs, stamp duty, legal fees and the practical costs of establishing a new household. More importantly, the borrowing capacity that was available to a couple on two incomes may simply not be available to either person individuall
The result is a difficult reality:-
A family home that was affordable when two people were living together may no longer be affordable to either person once they separate. This is one reason why some couples are choosing to remain living together for longer, sometimes despite having effectively separated as a couple.
Complex finances make settlement even harder………….
The situation becomes more complicated where the family has accumulated significant assets during the marriage.
It is not unusual for a case to involve:
Pensions in particular can be one of the most difficult aspects of a financial settlement. Their value is not always reflected simply by looking at the current fund value, and different pension arrangements can provide very different benefits in retirement. The more complicated the financial picture, the more important it becomes that both parties obtain appropriate legal and, where necessary, financial advice before reaching an agreement. The problem with waiting for a court hearing…………… Where agreement cannot be reached, an application to the Family Court may ultimately be necessary. However, court proceedings can take considerable time. Depending upon the circumstances and the court involved, parties may face a significant wait before their case even reaches the first stage. During that period:
For some families, waiting months — or potentially a year or more — for a final hearing is simply not an attractive option.
There is, however, an alternative worth considering.
What is a Private FDR?
A Private Financial Dispute Resolution (Private FDR) is an alternative way of trying to resolve financial proceedings without waiting for a final hearing before a Family Court judge.
The parties jointly appoint an experienced family lawyer, often a retired or serving judge or senior barrister, to act as the Private FDR judge.
The judge considers the financial circumstances of the case and provides an indication of the likely outcome if the matter were to proceed to a final hearing.
The parties and their lawyers can then use that indication as a basis for negotiation.
The important distinction is that the Private FDR judge is there specifically to focus on the financial dispute. The parties are not waiting for a court listing in the ordinary way.
What happens at a Private FDR?
The process will vary depending upon the case and the person appointed, but typically:
1. The financial information is prepared
The parties exchange the necessary financial information and documents so that the dispute can be properly evaluated.
2. Each party’s legal team prepares the case.
The solicitors and/or barristers identify the areas of disagreement and set out the respective positions.
3. A Private FDR hearing takes place.
The judge will consider the papers and hear submissions from the parties’ representatives.
Unlike a conventional court timetable, the parties can usually arrange the Private FDR on a date that suits the case and the availability of the judge.
4. The judge provides an indication
The Private FDR judge gives an informed indication of how they consider the dispute might be resolved.
This is not normally a binding judgment.
Instead, it gives both parties an independent assessment of their respective positions.
5. Negotiations continue
The parties then have an opportunity to negotiate with the benefit of knowing how an experienced family judge has viewed the case.
In many cases, this can provide the catalyst for settlement.
Why consider Private FDR?
There are several potential advantages.
Speed and Flexibility
The process can be tailored to the circumstances of the case.
The parties can agree the date, the person appointed and the procedure to be followed.
A Private FDR can often be arranged considerably sooner than waiting for a final court hearing.
For couples who have already separated, that can mean achieving financial certainty much sooner.
Privacy
The process takes place privately rather than as part of an ordinary court hearing.
A judge’s independent view
One of the biggest advantages can be obtaining an independent assessment from an experienced family law judge.
Sometimes parties become entrenched in their respective positions. Each person may genuinely believe that their case is stronger than the other’s.
An independent evaluation can help both sides reassess their position.
Potentially lower overall costs
A Private FDR does involve an additional cost because the parties jointly pay the appointed judge.
However, that cost needs to be considered against the potential cost of lengthy court proceedings, repeated hearings, additional legal work and the financial uncertainty and costs of a final hearing.
A settlement reached earlier can sometimes save considerable costs overall.
Is Private FDR suitable for every case?
No
Private FDR is not appropriate in every situation, and it is important to take legal advice before deciding whether it is suitable.
It tends to work particularly well where
There may also be cases where a court hearing is necessary, particularly where there are unresolved factual issues or other circumstances requiring judicial determination.
The real objective: financial certainty
For many separating couples, the objective is not simply to obtain a divorce
It is to reach a point where both parties know:
Where will I live?
What will I have?
What will I owe?
Can I afford my mortgage?
What happens to the family business?
What happens to our pensions?
How much will I have available for my future?
The longer financial proceedings continue, the longer those questions can remain unanswered.
With the current pressures on housing and household finances, delaying settlement may not necessarily make the situation easier.
For some couples, an early negotiated settlement whether through mediation, solicitor negotiation, collaborative law or Private FDR — may provide a more practical route to financial certainty than waiting for a final court hearing.
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