Overview of Divorce Financial Orders
Divorce does not automatically divide a couple’s finances. Property, savings, investments, pensions, debts and maintenance may all need to be considered separately from the process of ending the marriage.
A financial order can provide a legally recognised framework for dealing with financial matters following divorce. Depending on the circumstances, an agreement may be recorded through a consent order, or the court may be asked to determine the financial issues where agreement cannot be reached.
At SWM Solicitors, we advise clients on divorce financial matters and help them understand the options for reaching and formalising a financial settlement.
What is a divorce financial order?
A financial order is an order made by the court dealing with financial matters arising from a marriage or civil partnership.
The issues that may be addressed include property, pensions, savings, investments, lump-sum payments and ongoing maintenance. The precise order required depends on the financial circumstances and the needs of the parties and any children.
Where the parties agree on their financial arrangements, a consent order can be submitted to the court for approval. Where they cannot agree, a financial remedy application may be required and the court can determine the outcome.
What can a financial order cover?
Financial arrangements following divorce can involve considerably more than deciding who keeps the family home.
A settlement may need to consider:
- The matrimonial home and other property
- Mortgage liabilities
- Savings and investments
- Business interests
- Private and workplace pensions
- Debts and liabilities
- Lump-sum payments
- Spousal maintenance
- Other financial resources
Pensions can be particularly important because their value and long-term significance may not be obvious from the outset. A financial settlement may therefore require careful consideration of pension arrangements rather than focusing only on property and savings.
Consent orders
Where spouses have reached an agreement, a consent order can be used to ask the court to approve the agreed financial arrangements.
A consent order can provide greater certainty by recording the agreed financial settlement in a legally binding court order. Reaching an agreement between the parties does not, by itself, make the arrangement legally binding, so formalising the agreement through a consent order can help provide clarity and finality.
A properly drafted order can also deal with future financial claims. Depending on the circumstances, this may include a clean-break provision intended to end ongoing financial ties between the former spouses.
The terms need to be appropriate for the individual circumstances. A settlement that is suitable for one family may not be suitable for another.
When spouses cannot agree
If financial negotiations do not result in an agreement, either party may need to apply to the court for a financial order.
Financial remedy proceedings can involve several stages. These may include an initial appointment, a Financial Dispute Resolution hearing and, if the dispute remains unresolved, a final hearing at which the judge determines the financial issues.
The court will consider the financial circumstances and needs of the parties and any children. Relevant factors can include income, earning capacity, property, financial resources, needs, responsibilities, standard of living and the role each person has played in caring for the family.
Financial disclosure
Financial proceedings require accurate information about the parties’ financial circumstances.
This can involve evidence concerning income, property, mortgages, pensions, savings, investments, debts and living expenses. In contested financial proceedings, financial disclosure is an important part of establishing the information the court needs to consider.
Failure to provide accurate and complete financial information can have serious consequences. The court must be able to assess the available resources and the parties’ respective needs before making appropriate orders.
Mediation and negotiation
Court proceedings are not always necessary.
Where both parties are willing to engage constructively, negotiations or mediation may help resolve financial issues without a final contested hearing.
Mediation can assist separating couples in discussing issues such as property, pensions, savings and other financial arrangements. However, mediation is not suitable for every situation, particularly where there are concerns about domestic abuse, significant imbalance between the parties or other circumstances affecting the ability to negotiate safely and fairly.
Where an agreement is reached, legal advice remains important to ensure that the settlement is properly documented and that its legal effect is understood.
Clean break orders
A clean break can be an important consideration in financial settlements.
A clean break is designed to bring financial ties between former spouses to an end, where this is appropriate. It can prevent future financial claims from remaining open indefinitely.
However, a clean break is not automatically appropriate in every case. The court must consider the circumstances and whether the proposed arrangements properly address the needs of the parties and any children.
Timing of financial orders
Financial matters should be considered alongside the divorce rather than treated as an issue that can always be dealt with later without consequence.
Financial matters should generally be addressed at the appropriate stage of the divorce process, often after the conditional order and before the final order. Obtaining a final order before financial arrangements have been properly considered can have important legal and financial consequences, particularly where pensions and other long-term assets are involved.
The appropriate timing will depend on the circumstances of the case.
How SWM Solicitors can assist
SWM Solicitors can advise on financial arrangements arising from divorce and help you understand the legal implications of proposed settlements.
We can assist with negotiations, review financial information, advise on settlement proposals and prepare the appropriate documentation where an agreement is reached. Where court proceedings are necessary, we can advise on the financial remedy process and represent your interests through the relevant stages.
Our advice takes into account the wider financial position rather than focusing on a single asset. This is particularly important where a settlement involves property, pensions, business interests or ongoing maintenance.