Financial Settlements after divorce

Financial settlements are an important part of the divorce process. Your financial commitments to your ex-partner can continue long after you’ve legally divorced. So, it’s important to know how to secure your financial rights and stop financial claims in the future from your ex-spouse.

Do I have to reach a financial settlement before I divorce?

In short: no.

The most important thing to stress is that if you’ve already divorced without reaching a financial settlement, it’s not too late.

While it’s usually advised you reach a financial settlement and get a financial order from court at the time of divorce, you can still do this after you’re divorced.

But you should seek out financial separation from your partner as quickly as possible after the decree absolute. Without it, your ex-spouse my make a claim against you in the future.

 

Decree Nisi and Decree Absolute

A Decree Nisi is a court order given when it sees no reason why a divorce can’t go ahead.

If your spouse doesn’t agree to the divorce, you can still apply for a Decree nisi. You’ll have to go to a court hearing where a judge will decide whether you should be granted a Decree Nisi.

A Decree Absolute is a court’s final order which legally ends a marriage.

You’ll need to wait for 43 days (6 weeks and a day) after you’ve received a Decree Nisi before you can apply for a Decree Absolute. This document means that you and your ex-partner are free to remarry.

Crucially, a Decree Absolute doesn’t end your financial obligations to your ex-spouse. Unless you have a financial order in place, financial obligations to your spouse don’t technically end after divorce.

 

Financial Orders: Can you divorce without a financial order?

You might agree with your partner to separate financially. But unless you have a court order, this can come back to bite you.

Without a court order like a Clean Break Order or a Consent Order, your ex-spouse could still claim money against you.

So, while you can get divorced without a financial order, it’s best not to in practice.
Take a famous case: ‘Wyatt vs Vince 2016’.

Mr Vince and Ms Wyatt had divorced 19 years before, though the relationship had broken down 31 years ago.

They didn’t get a financial order, so their financial obligations to each other never officially ended.

After their divorce, Mr Vince started building up a business - a business which is now worth tens of millions.

In 2016, Ms Wyatt claimed money against Mr Vince, which she was able to do because there was no financial order in place.

This resulted in Mr Vince having to pay out £300,000 to his ex-wife 19 years after their divorce.  Although this is a rare example, it stresses the importance of seeking a financial order.

 

Clean Break

A Divorce Clean Break Order severs all financial ties with your ex-partner.

Even if you don’t have any assets that need severing at the time of the divorce, it’s still worth getting a Clean Break Order.

This ensures you are legally and financially separated. Your ex-spouse won’t be able to make any financial claims against you in the future.

A court will always push for a clean break if there are no children in the marriage.

 

Consent Order

A Divorce Consent Order details the assets you currently own.

It also formally shows the court how these assets will be divided. This include your savings, pensions, and other assets you own such as property.

A Consent Order ensures that your ex-spouse can’t make any financial claims against you in the future. But it’s not necessarily a ‘clean break’. It’s simply an agreement on how to split your finances as a divorcing couple.

A Consent Order also includes things like Deferred Clean Breaks.

A Deferred Clean Break is when a court rules that a clean break will happen only after a certain event takes place. These events include things like your children finishing school or an ex-spouse finding employment.

 

Are Clean Breaks and Consent Orders always possible?

While Clean Breaks are desirable, they’re not always possible.

You or your ex-partner may need to pay spousal maintenance or child maintenance to ensure you both cope financially after the divorce, as well to make any children financially secure.

Spousal maintenance, however, can also be paid in a lump sum as part of a Clean Break. This means that if you don’t have any children at the time of divorce, a Clean Break could still be a good option for you.

Child maintenance payments can’t be paid in a lump sum.

 

Do I need to go to court to get a financial order?

Technically, you’ll need to apply to the courts to get a financial order. But this doesn’t mean you have to physically go to court.

If you and your ex-partner can come to an amicable agreement, this can often be the easiest and cheapest option.

You can do this on your own, through mediation, or collaborative law. However, it’s often best to hire a divorce solicitor.

After you’ve come to an agreement, you’ll need to apply to the court with a Consent Order, detailing what your plan for a financial break is.

The court will then consider whether the Consent Order is fair for both parties. If it is, they will issue the order reflecting the couple’s demands, either a Clean Break Order or otherwise.

 

Financial Remedy

If you and your partner can’t agree on a financial settlement, you’ll need to physically go to court.

This process is called Financial Remedy and deals with all aspects of the financial settlement. You’ll need to fill in two important forms during this process:

 

Form A: This form starts your application to the court for financial remedy. When issued, this starts the process of the courts requesting full disclosure of your finances. It also sets in motion a preliminary direction hearing, ‘the First Appointment’. The form will ask you if you have attended mediation, as the law requires you to have attended at least one mediation session before going to court.


Form E: A required financial statement signed by you and exchanged with your spouse before the First Appointment. This is a very detailed form. The courts, however, need to know your entire financial situation before they make any decision on how finances should be split.

 

Should I reach a financial settlement before or after divorce?

Financial matters of the divorce are different from the divorce itself. This means that the court will rarely consider the reasons for the divorce (e.g. adultery) when coming to a decision on financial matters.

Solicitors will usually advise a client to sort their finances before applying for a Decree Absolute. This is generally so that couples can have a real ‘clean break’ after a divorce without still wrangling over financial issues. The court can also then process the divorce papers and the financial separation at the same time.

Sometimes though, sorting out financial arrangements in the heat of divorce has unforeseen consequences. It may sometimes be easier to take a step back and look at your finances once you have divorced.

It’s always worth speaking to your solicitor before making financial decisions.

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Adam Rivers

Adam creates supportive, easy to read guides for The Law Superstore. He specialises in family law, helping people through divorce, child custody arrangements, and other relationship issues.