Financial negotiations

Mediation is a non-confrontational approach to resolving financial issues arising out of the breakdown of a marriage or relationship. It is based upon discussions that take place between the parties and their mediator in a series of meetings aimed at avoiding taking any court proceedings, and setting out to achieve a fair and mutually acceptable solution.

The parties agree to be respectful co-operative and truthful and work together to find amicable solutions. There will be a series of meetings between the parties and their mediation during which information is exchanged and negotiations take place. In mediation the parties are encouraged to find creative and individual solutions tailored to their particular circumstances.

Couples come to mediation for assistance in deciding how their assets will be divided on a separation or divorce. They take into consideration all the circumstances of their life together and their needs for the future. They give particular thought to the following matters:

  • The property and other financial resources that they own jointly or individually
  • The income and earning ability that each has now or will have in the future
  • The needs and financial responsibilities each has now or will have in the future
  • Their ages and any physical or mental disabilities
  • The length of the marriage/partnership and contributions each party has made to it
  • Responsibility for looking after the home or caring for children or wider family
  • Any pension benefit that might be lost as a result of becoming divorced.

    Many of the guidelines included here relate also to civil partnerships. Much of the law on the end of a civil partnership is the same as on the end of a marriage, but some of the legal terms are different. The family justice system aims to give men and women equal rights. Either party can be required to pay maintenance to the other, or can be the main carer of children.

    Couples using those guidelines may decide to sell or transfer property or pay each other lump sums or make maintenance payments for a fixed period or indefinitely.

    Couples also consider whether it is possible to achieve a financial clean break between them which means that they would have no long term dependency on each other. However this is only possible in those cases where there are assets available to satisfy the long term housing and income needs of both spouses.

    The overall aim is to achieve fairness and to give each party an equal start on the road to independent living after divorce.

    The interests of children often play a decisive part in the distribution of the marital assets. There may be a justifiable unequal division of assets between the parents to give priority to housing the children and making proper provision for the person caring for them.

    More remote financial interests such as benefits under trusts or pensions or inheritances expected in the very near future can also be relevant and discussed.

    Other resources for discussion may include current and likely future earnings and in some cases potential support from a third party. Even if one party has no immediate plans to obtain employment they may discuss in mediation whether to take steps to increase their ability to earn for example by undertaking some training. Alternatively they may consider increasing their hours from a present part time job to full time employment when they have fewer family commitments.

    When maintenance it to be paid by one party to the other, the mediation discussions consider whether it is appropriate to set a limit on the number of years for which those payments be made. The alternative is to make the maintenance order until the wife remarries or sometimes until a wife cohabits in a permanent relationship rather than remarrying.

    Maintenance orders are always liable to be reviewed by the Court at the request of one of the parties who may apply for an increase or a reduction in the amount to be paid on the basis of a change in their circumstances.

    It is possible in mediation to identify a range of possible outcomes, and suggest one that will achieve fairness to both parties. After mediation the parties and their lawyers will consider if they have managed to reach an agreement without having to go to court being aware of the costs which would inevitably fall on both parties if it was taken to a full hearing. Once an agreement has been reached the lawyers then draw up a settlement agreement which is usually submitted to the Court for approval and made into an order within the divorce proceedings.

    The mediation process ensures that the parties remain empowered and participating at every stage. They each have their own legal advisor throughout the process. They can avoid the potentially hostile and stressful and expensive court proceedings, and can make their own decisions to avoid the uncertainty of having an outcome imposed upon them by the Court and subject to the Courts timetable. This process can help to preserve family relationships in the future.

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