When couples divorce, it is important for an application to be made to the court for a final Financial Order. A Financial Order is a legally binding document which formally addresses and sets out how matrimonial assets and liabilities are to be dealt with between parties in the event of divorce. This document provides clarity and legal protection for both spouses so that they can move on into their future without the possibility of a claim being made against them.
Regardless of whether there are no or limited assets, a Financial Order should be considered, even if spouses are amicable and have made an informal agreement to never make a claim against each other. Without a legally binding Financial Order, either party continue to have a right to make a claim which can potentially have devastating consequences.
What is a Financial Order?
A Financial Order can be reached by agreement which still requires approval from the Court. This will specify how assets, income and pensions will be divided. If you and your spouse have formally reached a divorce settlement, you can ask the court to make a Financial Order. It is true that if you do not have a Financial Order either you or your ex-spouse can make a claim against each other despite the amount of time that has elapsed since the decree absolute/ final order was granted.
The only situation where this is not possible is if you were the Respondent in the divorce application and you have remarried.
The case of Wyatt v Vince (2015) highlights the importance of securing a Financial Order on divorce and demonstrates the potential consequences in the absence of a financial order. Ms Wyatt and Mr Vince met in 1981 and married the same year. Mr Vince was 19 and Ms Wyatt was 21 and already a mother to a young daughter. At the time of the marriage, the couple lived as new age travellers and had little to no money. In 1983, Mr Vince moved out and their divorce was pronounced in 1992. During the divorce, Mr Vince was not asked nor expected to pay any maintenance as it was accepted that he had no money to do so.
And then came the year of 1996, this is the year Mr Vince founded a wind energy business which became worth around £57 million. When Ms Wyatt discovered the fortune of her ex-spouse’s business in 2011, many years after their marriage broke down a £1.9million financial claim was lodged by Ms Wyatt to be paid by way of a lump sum payment.
The Court of Appeal initially dismissed Ms Wyatt’s claim on the basis it had ‘no real prospect of success’ and was ‘an abuse of process’ therefore deeming this sufficient to block her claim however, the Supreme Court later granted Ms Wyatt’s appeal against that order, allowing her to pursue her claim.
This case shows that financial claims can be made even many years after divorce if they are not dealt with properly at the time of divorce. We therefore recommend that you to get a financial order in place. Our family solicitors can guide you as to the best way forward into your new future.
Types of Financial Orders
In the event of divorce, it is important to obtain a final Financial Order setting out how assets, liabilities and pensions are to be divided. Exactly how this is divided on the breakdown of your marriage will depend on your circumstances. We recommend you seek legal advice with a divorce solicitor who will advise you on what is a fair settlement.
A final Financial Order can be summited to the Court for approval with the consent of both parties. In the alternative that if financial issues cannot be resolved by negotiation then either of you can make an application to Court for Financial relief.
Depending on your circumstances our divorce solicitors can advise and guide you through the process.
What can be included in a Financial Order?
A Financial Order determines how financial matters are to be dealt with.
They can include:-
- Property division:- This can set out how property or properties will be divided and can specifically address the sale of a property or properties and the division of proceeds or the transfer of a title of property over to the other spouse. For instance, this can be the family marital home or any land that is owned.
- Savings and investments:- bank accounts, shares, bonds and pensions
- Debts: mortgages, loans, credit card bills. This will outline the individual responsibilities of both parties and how they will be managed and financially settled.
- Maintenance payments:- this can include financial support such as spousal maintenance or in certain circumstances child maintenance payments that will be made to ensure the needs are met of both parties and any dependant children of the marriage.
- Pensions: (private and state pensions) will be addressed and the order will include how they will be divided.
Common types of Financial Court Orders
Seeking legal advice and speaking with a divorce solicitor can help you gain more clarity when deciding on the order that is best suited to you as a couple.
You can apply for a final financial order to be approved by the Court by consent. This is most commonly used when an agreement can be reached with regard to asset division. Alternatively, a final financial order will be made by the Court at the end of financial relief proceedings.
Orders can include provision for:-
- A Lump Sum Order which is a payment which is often used to balance out the division of other assets.
- Transfer of Sale of Properties.
- Periodical Payments are payments that provide a party with a regular form of income. An example of this is typically spousal or in certain circumstances child maintenance.
- Pension Sharing Order:- this states how much of the pension each spouse is entitled to receive in order to equalise pension provision.
When should I apply for a Financial Order?
There is no specified time when to apply for a Financial Order. You can apply to the Court for a financial order at any time after a conditional order has been pronounced in the divorce application or any time after that. Our best advice is to get a Financial Order during the divorce process. In doing so, this legally guarantees financial certainty for both parties once the divorce is finalised, enabling the both of you to move on into the future with no financial ties to one another.
If you are divorced and have not got a Financial Order in place it is not too late to get a financial settlement in place after you are divorced as not having this could potentially cause issues for you in the future as your former spouse is entitled to claim money and assets from you regardless of the amount of time passed since divorcing.
If this does happen to you; your assets including inheritances, the fruits of business success and increases in value of property and pensions will be valued at the same time the claim is made and not at their value when the marriage broke down.
It is commonly believed that it is costly when it comes to Financial Orders so they are often overlooked which leaves spouses unprotected and can be a huge mistake. It has also been reported recently that the increase of No-Fault divorces has meant that more couples are not obtaining final financial orders to protect them in the future. In almost every case however the costs will be less than the benefits you gain from the making of such an Order.
The process of applying to the courts can become complex and generally requires the assistance of a legal professional to ensure your legal rights are protected and any agreement reached is watertight.
Contact us
For any advice on financial orders on divorce, contact one of our family lawyers today.