Financial Settlements in Divorce in Ireland

Understanding the Legal Reality of Divorce in Ireland

When we work at anything for a long time, we have a tendency to use jargon or assume knowledge on the part of others who do not share our experience or knowledge. This can be true in the medical profession and undoubtedly in the legal business. So, it always shocks me when someone asks me, “Do we have to go to court?” in the context of a divorce. In my head, the answer is blindingly obvious that the answer is yes.

Whether your assets are modest or substantial, understanding how divorce works financially in Ireland is essential to protecting your future. I consider the question of whether people understood the vows that they were taking at the altar and what the legal ramifications of being married are ie “for better, for worse, for richer, for poorer, in sickness and in health, to love and to cherish; from this day forward until death do us part”. It was from that day forward a commitment to pool your resources until your death. Hence, there is a consequence of a legal right share of a spouse upon the other spouse’s death, ie, ½ or 1/3 (depending on the existence of children). So a multi-billionaire dies a day after the marriage, half his assets are now belonging to his/her spouse, regardless of any will or pre-nuptial agreement. So, to extinguish all the rights that arise from marriage requires a court to dissolve the marriage. Apart from access to the children of the marriage, the financial settlements and orders are the bulk of the work involved in a divorce. These financial settlements, it is hoped, provide a fair division of assets, prevent future claims, and give both parties financial certainty into the future.

What Are Financial Settlements in Divorce?

A Financial settlement in divorce is essentially any court order that deals with property, money in bank accounts, pensions, business’s and existing debts. Again, just to be clear, a Court Order from a judge is binding on whoever receives it and is clear and unequivocal. It means that when there is an order, there is finality. There is no more choices or discretion. There is no automatic 50/50 split in Ireland. The court’s aim is fairness, not equality.

So, for example, a judge issues a warrant to An Garda Síochána to arrest a certain person and bring him before the court. Any Garda who sees this person must arrest this person. They don’t have the discretion to say that the Defendant has to bring the children to school right now, and it’s not convenient. They must obey the order. In the same way, if a financial order says Spouse A should pay Spouse B €60,000, then there is a default that if they do not pay this money, then they will be brought before the judge who has the power to hold the person in contempt in Prison for failing to comply with an order. All these orders are serious and should in my view be agreed to only with expert legal advice.

The Process: Identifying and Valuing Marital Assets

Step 1: The Affidavit of Means

Before any Financial Orders are made, the first step is to identify the marital assets. This is achieved by both parties swearing an affidavit of means, which sets out the assets/liabilities/income/expenditure of each person. It doesn’t matter where the assets or income are located, Timbuktu or Tubercurry. There is the concept of marital and non-marital assets. The bottom line is that the time to make this consideration is at the hearing of the case or at settlement. Yes, there is a fair argument to say that an inherited house I received before my marriage and which a spouse has never resided in is not a marital asset, but this is an argument to be made. Everything is included in the “family’s pot and argued later. It is beyond the scope of this article to say whether inheritances like this are not to be included or whether in the “proper provision” test of fairness, they can be included.

Step 2: The Vouching Process

The next step is the vouching process. This means that one has to supply documentation to evidence everything that you have said in your affidavit of means. So if you have a pension with Irish Life, one needs to just obtain an updated benefit statement. Same with bank accounts. It is often through analysis of these bank statements that other accounts can be identified and/or other sources of income. This can lead to some difficult questions for certain persons when they are being cross-examined in court. Courts have the power to direct what comes before them to the DPP. Equally, if there are large cash components in a person’s income, a judge could refer the matter to the Revenue. The key point people often forget is that a spouse usually is intimately au fait with the other person’s finances in some respect, and the legal teams do take their advice from their clients. In higher value cases, forensic accountants can be employed to value businesses and to analyse the finances of a party to identify any discrepancies. In all cases, property is valued by each party’s Auctioneer, and if not agreed, the respective auctioneers may give evidence. On the flip side of this coin, all mortgage statements, loans, and credit cards are also vouched to provide the court with an accurate picture of the financial position of the couple.

Types of Financial Orders Available

So what financial orders can a court make? Without being exhaustive, there are property adjustment orders ie, transfer/sale of a property. This is fairly simple if there is no mortgage involved ie House A to be sold and the proceeds divided 60%/40% in favour of Spouse A. Different situations require more tailored orders. Spouse A to buy out Spouse B’s interest for the sum of €200,000 within 6 months of the date of this order. In default of this, the house is to be sold with x auctioneer and the proceeds divided 50/50. No two cases are the same, which is why tailored legal advice is so important.

Property Adjustment Orders

Each case is different. This may seem contrary to what I said previously, but a court cannot order a bank to allow you to take over a mortgage. It’s unenforceable. In standard normal cases where there may be one main marital asset, ie, the family home, the first rule of fight club is “go to a financial advisor” and find out if the bank will allow you to take over the mortgage and allow your spouse to be removed from the mortgage. You will need this writing. There is no point in settling a case that one spouse can take over the mortgage if there is no reality to this. It rarely costs anything, but clients are often reluctant to obtain this advice and face the cold reality.

Lump Sum Orders and Maintenance

Other orders are lump sum orders. For example, Spouse A to pay Spouse B €60,000 within 6 weeks. This may be to equalise a position of another party holding on to another property or pension. There can be spousal maintenance or maintenance for the children for a period of time. Spousal maintenance is less common and a key point to remember is that it is taxable and is not for a defined period of time, whereas maintenance for children is not taxable and is only until a child attains the age of 18 or 23 if still in full-time education. Maintenance for the children is, of course, linked to where the children reside for the majority of the time.

Pension Adjustment Orders

Pension Adjustment Orders are orders that compel a pension provider to amend the eventual payment of a pension in certain percentages. For example, one spouse has accumulated a huge pension pot as a civil servant, whereas the other spouse has no pension pot; the pensions could be equalised so that Spouse B will receive 50% of the pension for the amount accumulated during the course of the marriage, ie, not before the marriage and not after the divorce. These orders are quite complex and an actuary is almost always employed to give effect to these orders.

How Courts Decide on Financial Settlements in Divorce

I have discussed it in many other articles as to what the court considers when it decides to make orders relating to finances. Obviously, the court is primarily concerned with what is a proper provision for both spouses going forward, taking into account the needs of the children. The main factors are Income and earning capacity of the spouses, the length of the marriage, the age and health of each spouse, the standard of living during the marriage, and the contributions made by each spouse (including Childcare and homemaking).

High Net Worth Divorces in Ireland

They are rare in Ireland, but there are High net worth divorces. But what makes them different? Firstly, they are heard in the High Court of Ireland when the assets of the couple exceed 3 million. Because of this, they are usually more complex as there are often more complex valuations involved. There are businesses, farms, Overseas assets, trusts, cryptocurrency, and art involved, and these all have to be valued. Private business valuation is a subject that requires its own article, as it is quite a subjective view, but in general, Forensic accountants are engaged for this purpose. In addition, more professionals are utilised, such as actuaries, valuers. Also in the High Court the most esteemed barristers are used in the High Court called Senior Counsel. As you can imagine, all the people make these high-net-worth divorces very expensive.

High net worth divorces tend to be more expensive and take longer to resolve, but with the right team in place, they can still be managed efficiently and with discretion.

The Benefits of Settlement vs Court Proceedings

As with all family law cases, though, there can be big savings in legal costs where a case is settled ie agreed before a court hearing is required. This can be up to a 30% saving, so there is a huge incentive to settle a case. There is a misunderstanding that once proceedings are issued, there can be no agreement after that. This is the opposite of the truth. In virtually all cases, an attempt is made by both legal teams to meet and agree a settlement. All parties know that this is advantageous for a myriad of reasons. It usually means both parties come away not really happy with the outcome, which some people suggest is a sign of a good and fair settlement.

Getting Expert Legal Advice

People need to remember that a good financial settlement in Ireland provides you with security and clarity. To obtain this good settlement, it is vital to obtain expert legal advice from a good family law solicitor, which will make the process smoother and protect your long-term interests. The right legal advice will ensure your settlement is fair, comprehensive, and tailored to your needs. At The Family Practice, we specialise in divorce cases where assets are involved, guiding clients through the process with clarity, strategy, and care.

*The information on this page is for general awareness only and does not constitute legal advice. Family law outcomes depend on individual circumstances and judicial discretion. You should not rely on this content when making decisions and should seek advice from a qualified solicitor about your specific situation.

Contact Us for Expert Family Law Advice

If you are in need of a Family Law Solicitor in Dublin in a divorce where there are assets involved, please contact us at The Family Practice.