Do I need a financial order on divorce? We will explain the advantages in this blog.
Once I am divorced, do I have a financial clean break?
The short answer is ‘no’.
Not only in our line of work but also in every-day lives, we often find that people think that their financial claims against their spouse come to an end once their divorce is finalised. This misconception can of course be clarified when that person takes specialist legal advice regarding their separation, however worryingly, it seems to be a common assumption in the wider public and many are choosing not to obtain legal advice.
Now that divorce petitions can be dealt with online, some individuals are choosing to deal with the divorce aspect of their separation without taking legal advice. However, family lawyers are becoming increasingly worried that the financial element of the separation is going to be missed by many.
But firstly, what finances are we referring to?
- Properties – owned jointly or in one persons’ sole name
- Savings – regardless of whether they are in cash or in the bank
- Shares and investments
- Chattels/ items – jewellery, vehicles, artwork etc
- Bonus schemes/ work benefits
- Income/ maintenance
- Potentially inheritance
The list is endless.
Often, younger or financially modest couples may argue that they ‘haven’t got anything to divide’. However, we tend to find that certain assets such as pensions get overlooked.
What is a Financial Order?
Parties who are separating should always take legal advice about obtaining a financial order. A financial order is a binding order that stipulates exactly how the matrimonial finances are going to be divided post-divorce. For example, if the family home or other properties are going to be sold, it will set out when they should be placed on the market for sale and in what order the proceeds will be divided. The final order can also regulate spousal maintenance, pension sharing orders, payments of lump sums etc.
We thought it would be helpful to set out the main reasons why you should look to obtain a financial order, whether that can be achieved by agreement with your ex-spouse or imposed by the court, if a court application needs to be made.
Example case – Wyatt v Vince
Under the current legislation, either party can make a claim against the other for some level of financial provision, regardless of the total value of the matrimonial assets. Without a financial court order, these financial claims remain ‘live’, which means that even if they have been divorced for a long time, they could potentially still make a claim against their ex-spouse many years later.
One key recent example of this situation is the case of Wyatt v Vince which concluded in 2016.
In this case, the parties married on 18 December 1981 and separated some 3 years later. They had one child together and the wife had a child from a previous relationship. The parties did not start the divorce proceedings straight away; their decree absolute was not pronounced until 26 October 1992. At the time of the divorce, no final financial order was made.
The husband had a green energy business which started to take off in the late 1990s, however the parties remained very much separated and the wife went on to have two further children with another person.
In 2011, the wife made an application to court for the husband to pay her a lump sum as well as interim payments to cover her legal fees. The husband disputed this, and matters proceeded to the Supreme Court in 2015, where the court found that the wife’s application could not be struck out. At the time, the husband’s wealth was estimated to be around £107,000,000.
Eventually, in 2016, the parties were able to reach an agreement. The agreed order provided for a lump sum payment of £300,000 from the husband to the wife. In addition, the wife received a payment for her legal fees in the sum of £325,000.
So how do I prevent as situation such as that in Wyatt v Vince?
The above case is perhaps one of the more widely reported cases of this nature, however that was due to the length of time between the separation and the claim being made and also the value of the claim itself given the extent of the husband’s wealth.
It is not to say that these cases are few and far between and, it is likely that cases like this will only increase.
The only way to bring an end to financial claims following a divorce is to obtain a financial order (explained above) which is approved by the court. This order can either be agreed between the parties and submitted by consent, or the court can make an order following an application from one or both of the parties.
What if I have a pre-nup/ post-nup/ separation agreement?
It is very important to note that pre and post-nuptial agreements and/ or separation agreements do not bring an end to financial claims post-divorce.
Subject to their validity, they can be considered by the court alongside any draft financial order but under current legislation in England and Wales, they are not legally binding.
If you have entered into such an agreement with your partner and you are considering getting divorced, then it is vital that you make a copy available to your solicitor as soon as possible. See our blog on prenuptial agreements here.
Does death bring an end to financial claims?
If your former spouse passes away without you having resolved your financial matters by way of a final order, your claims may still be valid. However, in this scenario, the claim would be made against that deceased person’s estate if you can argue that the Will or intestacy rules did not leave you with reasonable financial provision.
In this scenario, we would strongly urge you to seek advice both from a specialist family law solicitor but also a contentious probate solicitor too.
As a side point, it is always very important to review your Will if you are getting divorced (or you should consider making a Will if you do not have one). You should make sure that your Will is in order and you have sought advice on how best to limit/ avoid any claim against your estate.
If you are concerned about any of the issues raised above or anything else regarding divorce, financial or children matters arising from separation, you can contact us by email to firstname.lastname@example.org or WhatsApp on 07725 115219.
Alternatively, if you are able to call us then we would be more than happy to discuss matters with you over the telephone on 01625 544650.