We have agreed our financial settlement - do we need a court Order?

The Divorce, Dissolution and Separation Act 2020 introduced us to the new “No Fault Divorce” process, and greatly simplified the way in which marriages are brought to an end. It is no longer necessary to attribute blame, and divorce is now granted simply on the basis that the marriage has irretrievably broken down.

However, the divorce process does not sever the financial ties between married couples even after the divorce has been finalised unless there is a court Order in place specifically dealing with financial issues.

It is a common misunderstanding that the divorce brings an end to financial claims. This is not the case. Matrimonial finances need to be dealt with separately to the divorce itself. The divorce is simply the process which dissolves the marriage.

Even if you have been able to agree a division of your assets it is important to remember that unless your agreement is recorded in a Court Order which has been signed off by the Court, financial claims remain open.

This means a possible financial claim being brought against you by your former spouse at a later date, and such an application can be issued many years later. The Supreme Court have confirmed that there is no time limit to bring a Financial Order after divorce, (although there are certain limitations that arise if one party has remarried).

Any informal agreement reached between you, even if recorded in writing, is not legally binding per se, and you are always best advised to obtain a Consent Order.

It is important to note, however, that the Judge retains discretion as to whether or not to make the Order. If the judge feels that the agreement reached is unfair then they will refuse to approve it.

What is a Consent Order?

It is an Order made with the agreement of both parties, and can deal with many financial issues arising on divorce such as, what is to happen to the family home, how the assets are to be divided, whether or not a maintenance payment (periodical payment) should be paid from one spouse to the other, if lump sum payments are to be made, what is to happen to pensions etc.

A Consent Order must be approved by the Court to make it legally binding, and if the Court does approve the Order, it is enforceable if one party then reneges upon the agreement. An informal agreement, however, cannot be enforced in this way.

A Consent Order needs to be drafted carefully, not only to ensure that it accurately reflects the financial agreement reached, but also to make sure that it closes off the potential for any future financial claims to be made by one party against the other. On the other hand you may also need to be careful that, in certain circumstances, claims are left open for a period of time.

Even if you have agreed that neither of you will make any financial claim against the other's finances, it is important still to ensure that the Consent Order is drawn up and approved as this serves the purpose of closing off the legal right to make future claims against the other for income, capital, and pension provision. This is referred to as a Clean Break Consent Order, and records the fact that your respective financial claims against the other “stand dismissed”. The effect of this is to sever your financial ties both now and in the future. This includes claims against the other’s estate on death.

When do you submit your Consent Order?

The Court cannot make Orders relating to financial matters until the Conditional Order of Divorce (formerly Decree Nisi) has been pronounced.  

When submitting a Consent Order to the Court, it is supported by a document known as a Statement of Information (D81) which sets out a brief “snapshot” of the parties’ respective financial positions as they stand, and as they will be in the event that the Consent Order is approved. This enables the Judge to apply a series of checks and balances to consider the net effect of the Order that it is invited to make.

If you have reached an agreement and would like to discuss the preparation of a Consent Order and D81 please contact us on 01823 259449 or submit an enquiry via our contact page.