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Financial Order following divorce – Why it’s important.

Date Added 31.01.23

When a couple obtains a divorce, it is imperative that they also make an application to the Court for a Financial Order to formally address their finances. This is regardless of whether there are limited, or there are no matrimonial assets at the time of the divorce, or if the divorce is amicable and the couple has reached an informal financial agreement between themselves. This is why it is crucial to understand what each party is entitled to.

Why?

The finalisation of a divorce alone by obtaining a decree absolute or divorce final order does not sever financial ties between former spouses or civil partners, it simply ends the legal relationship between them. This means that if no financial settlement has been reached and approved by the court by way of a consent order or an order imposed by the court, then their financial claims against each other remain open.  This leaves parties vulnerable if circumstances change in the future, even if they had every intention of adhering to any informal agreement reached. One party may make significant financial gains down the line, whilst the other may suffer from ill health and find themselves unable to work. Without a Financial Order setting out how finances are to be dealt with, there would be nothing to stop the party who finds themselves in a poor financial position, from making an application to the Court for financial provision against the other.

There is generally no time limit to making such a claim for financial provision and it is not uncommon for claims to be made years (even decades) following a divorce. This can, understandably, come as a shock, particularly if it was felt that matters had been settled at the time of divorce. It also potentially places any assets built up following the divorce at risk of division between the parties on the basis of needs.

The only exception is if a party re-marries without first making an application to the court for financial matters to be resolved, then their financial claims are ended against the former spouse. The spouse who has not re-married can, however, still make financial claims against their former spouse who has remarried.

The only way to regulate or sever financial ties and avoid future conflict following a divorce is to obtain a Final Financial Order.

How?

An application for a Financial Order can only be made once divorce\dissolution proceedings have been commenced.  In most cases, it is advised that an application for a Final Order for divorce is only made once parties have concluded a financial settlement and a Financial Order has been obtained, especially where pensions are involved.

The court can make provisions for a variety of financial orders. This includes lump sum payments, property adjustment orders to include the sale of the property, pension provisions such as pension sharing orders and maintenance for a spouse.  Ordinarily, child maintenance is now dealt with by the Child Maintenance Service, but there are limited circumstances when the court can make orders in relation to child maintenance. The court can also specify whether either party is able to make further claims against the other in the future (for example if spousal maintenance is payable) or alternatively stipulate that no further claims can be made which is known as a ‘clean break’.  A clean break can apply whilst parties’ are alive and also prevent any claims against the other parties’ estate when they die.

Parties are encouraged to come to an agreement in relation to splitting their finances as amicably as possible. If this is not possible, solicitors or mediators can help in reaching an agreement and if this is not successful, the matter can be referred to the Court to determine.

Consent Orders

Once an agreement has been reached between the parties, a Consent Order will be drafted to formally record the terms of the agreement. The Consent Order is a legal document and there are specific regulations as to how it should be drafted. Once it is in a final format and has been approved by both parties it is filed with the court, together with a document that summarises both parties’ financial position called a Statement of Information for a consent order, for a Judge to consider.

The Court has a duty to ensure that any agreement reached is fair and reasonable and that consideration has been given to all of the circumstances and the needs of the parties involved including any children of the family. If the Court is not satisfied with the terms of the agreement it will ask parties to go back and re-negotiate. The Judge will not automatically ‘rubber stamp’ any agreement that is reached.  They have to be satisfied it is within the boundaries of a fair and reasonable settlement.

Once an agreement is approved by the Judge, the Order will be ‘sealed’ and this then becomes legally binding on the parties and the terms will be enforceable through the court.

Contested Proceedings

If the parties are not able to agree matters, then an application can be made to court, asking the Judge to impose a settlement on them. This is what is called ‘contested financial proceedings’. Whilst the majority of cases do settle along the way, if the matter progresses to a final hearing, the parties will have to give evidence under oath and be cross-examined on what they say. Thereafter the Judge will impose a Final Financial Order on them.

Separating married couples must therefore remember that securing a divorce alone only ends a marriage.  Finalising financial matters is an entirely separate matter. Obtaining a Final Financial Order dealing with financial matters is essential following a divorce. It provides clarity but more importantly, it provides security and protection from any unexpected future financial claims once a divorce has been finalised.

If you would like to put a Financial Order in place…Talk to Tollers and our highly experienced Family team will guide you through the process.

More about our finance on breakdown services can be found here.

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