Civil Partnership Financial Arrangements

Upon the breakdown of a Civil Partnership each of you must consider the financial arrangements which should be made as a result of the breakdown in your relationship.

Each civil partner has a financial claim against the other as a result of their civil partnership and those claims are set out in the Civil Partnership Act 2004. Even after the dissolution of a Civil Partnership the claims will remain live until they are dismissed by the Court. It is important therefore to obtain an Order from the Court which not only sets out how the finances will be dealt with but in addition provides for a ‘Clean Break’. The terms of an order can be agreed voluntarily through the process of mediation or collaborative law or by way of an application to the Court.

The Civil Partnership Act 2004 sets out the factors that a Court will consider when it is being asked to decide upon the treatment of Civil Partnership assets. These factors include;

1. Each parties earning capacity, property and other financial resources both now and in the future
2. Each party’s financial needs, obligations and responsibilities now and in the future
3. The standard of living enjoyed before the breakdown of the Civil Partnership
4. The age of each party and the duration of the Civil Partnership
5. Any physical or mental disability suffered by either party
6. Any contributions made by either party to the welfare of the family either now or in the future to include any contributions made by looking after the home or caring for the family.
7. The conduct of each party if it would be unfair to disregard it.

The factors listed above will therefore inform any negotiations outside of Court.

What Orders can the Court make?

There is no set formula that the Court will use in order to make a decision about how the finances should be divided or shared. The Court will take into account the factors listed above but will ultimately use its discretion, taking into account all of the circumstances of the case, to come to a decision. The Court can make any of the following orders;

1. Periodical Payments – these are payments made by one party to the other usually on a monthly basis. Those payments maybe for the joint lives of the parties or for a set period of time. The party receiving the payments will usually be the lower earner and the payments are made to address a gap in that person’s income and outgoings. The financial resources of the paying party are of course taken into account and such an order will only be made in circumstances where the paying party can afford to make the monthly payments
2. Property adjustment order – the Court can transfer property from one party to the other thereby changing the legal ownership of the property. This can relate to the former family home or other property owned by the parties. The Court can also order that a property is sold and the proceeds of the sale divided between the parties in appropriate shares. In addition the Court can also delay the sale of a property preserving the home for one party and the children.
3. Lump sum payment – this is very simply an order providing for one party to pay to another a lump sum of cash.
4. Pension Orders – the Court can order that one party’s pension is shared under a Pension Sharing Order. This is more likely in cases where the pension assets form a large proportion or occasionally the largest proportion of the finances of the Civil Partnership. A percentage of one pension  is paid into a new pension fund or the existing pension fund of the other party. There are also orders referred to as Pension Attachment Orders or Earmarking Orders. These orders provide for a percentage of one party’s pension benefits when in payment to be made available to the other party. This percentage can also apply to any lump sum payment that is payable on retirement. In reality Pension Attachment Orders are rare because the Order does not come into effect until the paying party has reached retirement. The Orders are not secure because the paying party may die before retirement and the receiving party therefore loses their benefit to the pension payment.

There is not a great deal of case law on how the Courts will deal with the division of assets upon the breakdown of a civil partnership, so it is an area that will undoubtedly develop as we see more and more civil partnerships breaking down.