Financial Orders 1

Question 1

What section of the MCA 1973 outlines the court’s power to make financial orders during divorce?

Answer 1

s22 to 24B of the MCA 1973

Question 2

What types of Income Orders are available under the MCA 1973?

Answer 2

• Orders for maintenance pending suit (interim maintenance)
• Periodical payments orders (final maintenance)

Question 3

When can an application for an income order for maintenance pending suit be made?

Answer 3

On or after the filing of the divorce petition

Question 4

What is the criterion for granting an order for maintenance pending suit?

Answer 4

Reasonableness

Question 5

What factors are considered to determine reasonableness in maintenance orders?

Answer 5

• Needs
• Resources
• Marital standard of living

Question 6

When do Periodical Payments Orders take effect?

Answer 6

Upon granting of a final order

Question 7

What is a Lump Sum Order in the context of capital orders?

Answer 7

An order for one spouse to pay a cash lump sum to the other spouse or a child of the family

Question 8

What is a Duxbury fund?

Answer 8

A lump sum used to capitalise maintenance, providing income over a number of years

Question 9

What is the purpose of a Property Adjustment Order?

Answer 9

To deal with property rights in matrimonial proceedings

Question 10

What can a court order in a Property Adjustment Order?

Answer 10

• Transfer of property
• Settlement of property
• Vary a nuptial agreement

Question 11

What is the Clean Break Principle under s25A(1) MCA 1973?

Answer 11

The court’s duty to consider whether a settlement should end financial interdependence

Question 12

True or False: Parties can apply for a financial order after remarriage.

Answer 12

False

Question 13

What are the three main ways pensions are dealt with on divorce?

Answer 13

• Pension off-setting
• Pension attachments
• Pension sharing

Question 14

What is the disadvantage of Pension Off-setting?

Answer 14

Valuing pension rights at the time of divorce can lead to unfairness

Question 15

What happens in a pension attachment?

Answer 15

A portion of a pension is earmarked for the other spouse and paid upon retirement

Question 16

When do orders for sale take effect?

Answer 16

Upon granting of a final order

Question 17

What is an example of a common reason for a Lump Sum Order?

Answer 17

Providing a fund for rehousing one or both parties

Question 18

Fill in the blank: A spouse may be in urgent need of money before a final order, allowing them to apply for _______.

Answer 18

maintenance pending suit

Question 19

What is the typical time frame for a pension sharing order to take effect?

Answer 19

The later of the granting of a final order or 28 days after the making of a pension sharing order

Question 20

What can happen to an unsecured periodical payment order upon the death of the paying spouse?

Answer 20

It terminates

Question 21

What is a common outcome for families with significant assets regarding Lump Sum Orders?

Answer 21

Facilitate a clean break and dismiss a claim for periodical payments

Question 22

What happens if a child is still in full-time education after their 17th birthday regarding maintenance?

Answer 22

Maintenance may continue until they are 18

Question 23

What is a pension attachment?

Answer 23

Payments from Spouse A’s pension are redirected to Spouse B.

The court can direct pension scheme trustees to pay some or all of Spouse A’s pension or any lump sum benefit to Spouse B.

Question 24

What does the court have the power to direct regarding pension schemes?

Answer 24

The court can direct:
* Pay some or all of Spouse A’s pension to Spouse B (s25B)
* Pay any lump sum benefit (annuity) that is payable on retirement to Spouse B (s25C)

These directives are part of the financial arrangements upon divorce.

Question 25

When is the attachment of pension payments typically deferred?

Answer 25

The attachment is normally deferred until the member spouse retires or dies. ## Footnote The other spouse has no control over the money until that time.

Question 26

What is the implication of a pension attachment on financial independence?

Answer 26

It is contrary to a clean break, as the spouse retains a degree of financial dependency on the payments made from the pension.

Question 27

What is a pension sharing order?

Answer 27

The pension benefits are split at the time of the divorce. ## Footnote This involves transferring a specified proportion of one spouse’s pension rights to a separate pension arrangement for the other spouse.

Question 28

What happens to the transferor's pension in a pension sharing order?

Answer 28

The transferor loses a specified percentage of their pension, referred to as the ‘pension debit’. ## Footnote The transferee gains a ‘pension credit’ equal to that amount.

Question 29

What is the primary aim of splitting pensions in a divorce?

Answer 29

To equalise the level of income in retirement that the parties will receive from their respective pensions.

Question 30

What is the Cash Equivalent Transfer Value (CETV) of a pension?

Answer 30

An estimate by the pension provider of the current cash value of the member’s benefits. ## Footnote CETV does not necessarily reflect the level of income that the pension will generate on retirement.

Question 31

Can a court make both a pension sharing order and a pension attachment for the same pension arrangement?

Answer 31

No, it is not possible to make both a pension sharing order and a pension attachment in relation to the same pension arrangement.

Question 32

What factors make valuing pension rights difficult?

Answer 32

The value of a pension fund can change over time, and several factors influence this value: * Performance of investments * Level of risk involved * Type of pension scheme ## Footnote Defined contribution schemes are based on accumulated contributions, while defined benefit schemes are calculated based on salary and tenure.

Question 33

What are the two types of pension schemes?

Answer 33

* Defined contribution scheme * Defined benefit scheme ## Footnote Defined contribution schemes are common in the private sector, while defined benefit schemes are often found in the public sector.

Question 34

What is the significance of the Cash Equivalent Transfer Value (CETV) over time?

Answer 34

The CETV will not necessarily reflect the value of those benefits on retirement and can diverge significantly over time.

Question 35

What should solicitors consider when valuing a pension?

Answer 35

Solicitors should consider obtaining a valuation from an expert to accurately determine the value of a pension in each case.

Question 36

What is the main statutory provision that guides financial orders in divorce proceedings?

Answer 36

s25 MCA 1973 ## Footnote This section outlines the factors the court must consider when making financial orders.

Question 37

What overarching consideration must the court have when making financial provisions?

Answer 37

All of the circumstances of the case ## Footnote This includes the welfare of children and the specific financial needs of the parties.

Question 38

What is the 'clean break principle' in financial orders?

Answer 38

A settlement that ends the parties’ financial interdependence and responsibilities towards each other ## Footnote Achieved under s25A(1) MCA 1973, but not obligatory.

Question 39

What must the court prioritize when making financial provisions for children?

Answer 39

The welfare of any minor children of the family ## Footnote This is the first consideration as per s25(1) MCA 1973.

Question 40

List the eight factors the court must consider under s25(2) MCA 1973 when making a financial order for a spouse.

Answer 40

* Financial resources * Financial needs * Standard of living during the marriage * The parties’ ages * Duration of the marriage * Disability * Contributions to the welfare of the family * Conduct

Question 41

What does the court consider under the factor of 'financial resources'?

Answer 41

Income, earning capacity, property, and other financial resources of each party ## Footnote This includes current income from all sources and future earning potential.

Question 42

What is included in the definition of 'income' for the purpose of financial orders?

Answer 42

* Earnings from employment * Rent * Interest * Dividends * Fringe benefits * Income from a spouse’s new partner

Question 43

True or False: The court must distinguish between 'matrimonial' and 'non-matrimonial' assets when dividing property.

Answer 43

False ## Footnote The court draws no distinction as per s25 MCA 1973, focusing on fairness.

Question 44

What does 'financial needs' encompass according to s25(2)(b) MCA 1973?

Answer 44

The financial needs, obligations, and responsibilities of each party ## Footnote This can include essential expenses and legal obligations.

Question 45

What is the relevance of the 'standard of living' factor in financial orders?

Answer 45

The standard of living enjoyed by the family before the breakdown of the marriage ## Footnote Courts aim to ensure that the reduction in standard of living is shared equally.

Question 46

What factors related to age and duration of marriage does the court consider?

Answer 46

* Age of each party * Duration of the marriage ## Footnote This affects earning capacity and financial provision needs.

Question 47

What impact does disability have on financial orders?

Answer 47

It can affect earning capacity and increase the need for care or treatment ## Footnote Disabilities may lead to special considerations in financial settlements.

Question 48

What types of contributions does the court consider when evaluating contributions to the family?

Answer 48

* Financial contributions * Non-financial contributions ## Footnote Contributions include homemaking and caring for the family.

Question 49

Fill in the blank: The court must consider any physical or mental _______ of either of the parties to the marriage.

Answer 49

disability

Question 50

What does 'conduct' refer to in the context of financial orders?

Answer 50

The behavior of each party that may be inequitable to disregard ## Footnote This can influence the court's decisions on financial provisions.

Question 51

What is the significance of 'potential financial loss' in financial order considerations?

Answer 51

Any benefit lost due to the dissolution or annulment of the marriage ## Footnote This factor helps assess the future financial impact on the parties.

Question 52

What types of contributions can be recognized in a marriage?

Answer 52

Contributions can be financial or non-financial. ## Footnote A spouse who cares for the home and family contributes as much as the spouse who works outside the home.

Question 53

Is it necessary for a spouse to demonstrate a 'proprietary interest' in financial settlements?

Answer 53

No, it is not necessary for a spouse to demonstrate a 'proprietary interest'. ## Footnote The court focuses on how assets should be shared to achieve fairness.

Question 54

What are 'special contributions' in the context of asset division?

Answer 54

'Special contributions' refer to exceptional contributions made by one spouse to the couple's assets, justifying a departure from equality. ## Footnote An example is a significant invention that brings wealth.

Question 55

What criteria must be met to consider a 'special contribution'?

Answer 55

To consider a 'special contribution', there must be: * Wholly exceptional circumstances * A disparity in contributions that is inequitable to disregard * An individual with exceptional qualities deserving special treatment.

Question 56

What are 'negative contributions' in family law?

Answer 56

'Negative contributions' refer to actions that detract from the marriage, such as engaging in an adulterous affair. ## Footnote The court may take these into account when making financial awards.

Question 57

Under what circumstances does the court consider the conduct of each party?

Answer 57

The court considers conduct if it would be inequitable to disregard it. ## Footnote This includes serious personal misconduct or financial misconduct.

Question 58

What types of personal misconduct may be considered by the court?

Answer 58

Types of personal misconduct include: * Attempted murder * Rape * Deceiving a spouse about parentage * Neglecting home responsibilities * Hiring hitmen. ## Footnote Routine disagreements or infidelity are generally not considered.

Question 59

What is meant by 'dissipation of assets'?

Answer 59

'Dissipation of assets' refers to the frittering away of matrimonial assets that would otherwise be available for distribution. ## Footnote The court may 'add back' these assets for fair distribution.

Question 60

What is the significance of non-disclosure in financial proceedings?

Answer 60

Non-disclosure may lead the court to draw adverse inferences and make awards based on estimated wealth. ## Footnote This occurs if a party fails to provide full and frank disclosure of financial means.

Question 61

What must the court consider regarding potential financial loss due to divorce?

Answer 61

The court must consider any benefits a party may lose due to the dissolution of the marriage, such as pension rights or life insurance shares. ## Footnote This includes potential inheritances in certain cases.

Question 62

What is the 'Yardstick of Equality' in financial settlements?

Answer 62

The 'Yardstick of Equality' states that financial provisions should not solely focus on reasonable needs but also consider non-financial contributions. ## Footnote Any award must be checked against this principle.

Question 63

What are the three core principles from Miller v Miller; McFarlane v McFarlane regarding financial orders?

Answer 63

The three core principles are: * Needs * Compensation * Sharing.

Question 64

What factors are included under 'needs' in financial settlements?

Answer 64

The court considers: * Income and capital needs of the parties * Standard of living during marriage * Resources for transitioning to financial independence.

Question 65

What does the principle of 'compensation' entail in financial settlements?

Answer 65

Compensation addresses losses suffered due to the relationship, aiming to redress economic disparities caused by the marriage. ## Footnote This often relates to sacrifices made for the family.

Question 66

What does the principle of 'sharing' dictate in asset distribution?

Answer 66

The principle of 'sharing' dictates that spouses should equally share the fruits of the matrimonial partnership, typically a 50:50 distribution unless there is a good reason to deviate. ## Footnote Fairness requires equal sharing of assets.

Question 67

What factors must the court consider when making orders for children?

Answer 67

The court considers: * Financial needs of the child * Income and resources of the child * Physical or mental disability * Expected education or training * Relevant factors from s25(2).

Question 68

What additional factors are considered for step-children in financial orders?

Answer 68

The court considers: * Responsibility assumed for the child's maintenance * Extent and duration of that responsibility * Knowledge that the child was not their own.