Divorced couples are leaving themselves exposed to the risk of future financial claims from their ex-spouses by not formally finalising financial settlements, warns our Family & Matrimonial team.

Those who apply for a divorce online are often not aware that this will only end the marriage – a divorce does not end the financial links between a couple says Kate Booth, Head of Family and Matrimonial.

“If, after a divorce you go on to earn good money and build a decent nest egg, or if you win the lottery or make a substantial sum on the sale of a house, as the law stands your ex has every right legally to make a claim against you unless you obtained a financial clean break.

This is even more of a risk if illness or accident has left your ex out of pocket or unable to work and where the court considers they need financial provision.

We advise couples with no joint assets to still formally cut all financial ties.

We would still advise people to ensure they have a clean break from their ex at the point of divorce in the form of a Consent Order. They don’t need to go to court for this – it can be submitted for a judge to approve on paper.

Couples who are avoiding solicitors’ fees to save money, for example in the case of amicable spouses who decide to organise their divorce and assets themselves, could end up paying more in the long run.

We’ve had clients approaching us for help when their ex-spouse has come back to make a claim on the former family home. In the time they’ve been separated the client may have carried on paying the mortgage and the property has increased in value, so their ex may feel they have nothing to lose by making a claim.

We have also advised clients who agreed when they separated that one would keep the house while the other retained their pension.

While this may suit at the time of separation, the person who has agreed to keep the house must factor in that they will also need an income after they retire.

This won’t matter so much if the couple is in their 20s or 30s and they still have time ahead to build up their own pension, but if they’re older it’s something they need to think about. If one person focused on raising the children while their partner was the breadwinner, they may have limited – if any – pension of their own.

When deciding how the assets should be shared, it is important to look at the how their needs can be met when they retire.

This is something both parties need to think about.”

For further advice on the above, or for any other family or matrimonial law related matter, please contact our expert team who will be happy to assist.

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When advising clients in this respect we are guided by factors set out in Section 25 of the Matrimonial Causes Act 1973 – as is the Court.  The parties’ needs and ensuring fairness are important when looking at a division of the matrimonial assets and liabilities – taking into account all of the circumstances of the case. Children under the age of 18 are a priority also and their housing needs are important when making decisions about financial settlement. 

Whilst coming to an agreement about the division of matrimonial finances is important, it is also equally important to ensure that the agreement is reflected in a  document known as a Consent Order. This should be signed by both parties and approved by the Court to make it legally binding. 

Additionally, when providing the Consent Order to the Court for consideration, a further document known as a Statement of Information is required to give background detail about the parties’ assets and the circumstances behind  the decision making.  The statement of information will require disclosure of the parties’ assets in very broad terms to give the Court the background information that it requires to consider whether the agreement is fair taking into account all of the circumstances of each individual case.  

Even if there are no assets or liabilities to consider, it is advisable to have a clean break Consent Order to show there will be no further claims one against the other either now or in the future as to any capital or indeed as to any income. 

A Consent Order can deal with the transfer of property, payment of lump sums, a Pension Sharing Order (where one party shares their pension with the other party), spousal maintenance and also critically whether there is a clean break between the parties or whether there is an ongoing duty to pay spousal maintenance which can be set at a level of joint lives or a term of time such as years. 

Parties may sometimes not be aware that where there are children, there is an ongoing obligation to pay child maintenance regardless of whether there is a clean break in the divorce.  Where there is dispute about child maintenance, then the parties’ recourse is to make an application to the Child Maintenance Service to assess how much maintenance should be paid.

Samantha Chater in our Family Law team has found that those clients who can try and negotiate settlement between the two of them via mediation or with the assistance of one of our solicitors in the Family Department can expect to keep their costs to a minimum as it is always advisable to negotiate and try and settle where possible. 

For further advice and support please contact our friendly Family Law Team, we have four local offices covering the Coventry, Warwickshire and beyond.

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Kate Booth, Head of our Family & Matrimonial department warns clients to be aware that an agreed financial settlement may not be as final as they might hope. 

A recent Family Court case has once again highlighted the dangers of failing to take legal advice when dividing assets on divorce.  Here, the couple had agreed their financial split when they divorced 30 years ago, even signing a Deed of Separation. However, they failed to obtain a Consent Order – the court’s approval to their agreement.  This left them without a clean break.  Although they initially remained on good terms, disagreement arose years later.  Without a clean break order, the parties still have the right to make financial applications against each other into the future.

Kate say’s

“It is always essential for clients to deal with their financial arrangements formally on divorce – even if there are not many assets.  Often, when agreement is reached, spouses might be happy to proceed on a less formal footing, but this can store up problems for the future.  Circumstances may change, asset values may alter. If the court has not made a clean break, financial claims can remain open indefinitely.

Every couple’s situation is different, we provide personalised advice to ensure that clients can protect what is important to them and their family.”

If you require advice on the above, or any other family or matrimonial related matter, please do not hesitate to contact our friendly, understanding team.

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