This will involve a specially trained mediator who will seek to gain agreement between the parties. In most instances this is a prerequisite before court proceedings can commence if both parties feel that neither the collaborative or mediation approach will work and resort to the third option, which is litigation.
Should they fail to achieve agreement, an application to the court may be made to hear evidence and then a financial order is drafted which is binding on both parties.
Ethical issues when advising a divorcing couple
Existing clients
When existing clients start the divorce process this can give rise to conflicts of interest for financial advisers. It is important, if the adviser has been advising both husband and wife up to then, to remain neutral in the process and avoid taking sides or acting in any way that could breach data protection rules by giving away confidential information.
If approached by a client who is divorcing and who has asked to cash in large sums from existing assets, drawdown or encash pension plans or to move funds offshore, for no apparent reason, it is important to warn clients that hiding assets in anticipation of divorce, or spending funds outside of usual patterns is inadvisable.
S 37 of the Matrimonial Causes Act enables the court to intervene to stop such actions. While this cannot be used until divorce proceedings have begun, any attempt to hide or deliberately destroy assets has consequences.
These include possible contempt proceedings for any professional who assists with this and a judge who will look unfavourably upon the party exercising non disclosure or deliberate asset deprivation.
Acrimonious divorces
The adviser should provide factual information only.
If you wish to offer ongoing planning input to one party, it is best practice to resign as adviser to the other and ask them to appoint someone else.
Should this arise, it is important not to disclose any information you know about the party you no longer act for, to do so would breach data protection rules and client confidentiality.
Financial advisers can assist lawyers in agreeing a financial settlement in a number of ways.
IFAs and collaborative law
Where a couple are seeking a collaborative financial settlement, an IFA can assist in the process by acting as a financial neutral, providing guidance but not advice. They may also add value by providing information on alternative planning scenarios, such as the cost of future house purchase finance, life cover and the best way of sharing any pension benefits and other assets tax efficiently.
