The Importance of a Financial Consent Order and Dealing with Divorce Finances
With the new no-fault divorce laws, it is now easier than ever for parties to divorce. Applications for divorce have hit their highest level for over a decade, and lots of separating couples are opting to deal with divorce themselves via the online HMCTS divorce portal. The risk in this is that separating couples may not be seeking the legal advice that they once would have done when commencing divorce proceedings was less accessible. This, coupled with the misconception that divorce also deals with financial matters, means that an increasing number of separating couples may not have adequately dealt with ending the financial claims that they have against each other by virtue of their marriage.
Financial claims remain ongoing until former spouses have put in place what is known as a ‘Consent Order’, which records the financial settlement reached between parties. This is separate from a Decree Absolute or Final Order for divorce.
If there is no financial order in place, this means that your ex-spouse could have a claim on your finances and assets years down the line. This could include but is not limited to, any capital, salary, pension, property owned or even lottery winnings. Therefore, in most cases we would always recommend getting a financial consent order to prevent any future claims by your ex-partner.
Financial matters can be dealt with by way of Court proceedings; however, to attempt to keep matters amicable between parties, the first step is usually to attempt to reach a financial settlement on a voluntary basis without Court proceedings being initiated. The first option is for financial disclosure to be exchanged between parties on a voluntary basis. This consists of both parties getting together their full financial disclosure, so that they are both aware as to the full extent of the matrimonial finances. Either party can raise queries based on the disclosure that the other has provided in the hope that constructive negotiations can then take place to agree on a financial settlement, which would be recorded in a ‘Financial Consent Order’. Alternatively, parties can opt for mediation whereby disclosure is exchanged through a mediation service, and a third-party mediator will assist you both in reaching a financial settlement that is fair for both parties.
Unfortunately, some matters cannot be dealt with in a voluntary manner, and this is where either party may wish to issue financial Court proceedings. Similar to the voluntary process, parties are both required to file their full financial disclosure with each other and the Court in the hope that a settlement can be agreed between the parties in the Court arena. The majority of Court cases end by way of agreement and it is indeed the expectation of the Court that parties will have constructive negotiations to reach a settlement agreed by both parties, rather than being imposed by the Court.
The Court will always consider whether a clean break is possible for your situation, as there are some situations where it is not suitable. This is why it is important to seek legal advice before any proceedings take place to discuss your individual circumstances.
It is important to be aware that divorcing couples can achieve a clean break from each other; however, it is not applicable to any arrangements in relation to your children.
If you would like to discuss any aspect of divorce finances or other related financial matters, or if you require any further information, please do not hesitate to contact our family department, who will be pleased to assist you. You can reach them by calling 01782652300.