“Do I need a court order after my divorce for my finances?”

The introduction of no-fault divorce in 2022 introduced a much-needed change to matrimonial law. As a result of the change in the law, couples no longer need to apportion blame or allege fault in order to commence divorce proceedings.

One of the key aims behind the change to the law was to reduce acrimony between couples, which, in turn, could encourage more divorcing couples to try and reach an agreement between themselves in relation to the finances of the marriage.

However, it is important to remember that former spouses remain financially tied to one another even after the divorce is final. That is unless there is a court order in place that deals specifically with the finances.

Why do you need a court order?

It is a common misconception that, once there is a final order in respect of the divorce, this would extinguish any and all financial claims against each other as well. This is not the case. Matrimonial finances, while linked with the divorce, actually need to be dealt with separately.

Marriage is a joint enterprise, and as such, both parties within a divorce are entitled to make a financial claim against the other in relation to capital, pensions, and income. The vast majority of couples are able to resolve the financial aspect of the divorce by agreement. This may be through direct negotiations, mediation, or via solicitors. In some instances, couples may need to issue court proceedings in order to bring about a resolution; however, court should only ever be considered as a last resort and only after all other alternative avenues have been explored.

Couples should also bear in mind that if an informal agreement is reached (even if it is in writing), it will not be legally binding unless it has been formalised and approved as an order of the court. In order for an agreement to become binding, the agreement must be translated into what is known as a ‘consent order’. The Judge retains discretion over whether to approve the order or not; however, in most instances, the Judge will approve the order—that is, unless the Judge considers the agreement to be manifestly unfair.

Unless a consent order has been approved by the court then the financial claims arising from the marriage can remain ‘open’ indefinitely.  Without the consent order, a financial claim could in fact be issued many years after a divorce has actually been finalised. This fact is actually best illustrated in the case of Wyatt v Vince [2015], where the couple separated and finalised their divorce in 1992 but did not obtain a consent order. At the time, the parties had no money and therefore did not think it was important to get a consent order. Twenty years later, Ms Wyatt applied to the court for financial support from Mr Vince who, in the intervening years, had founded a successful energy company that was then worth £57million. The case proceeded to the Supreme Court who confirmed that there was no time limit to bring a financial order after divorce.

Even when there is little to divide, it is still important to obtain a court order.

What is a consent order?

A consent order is simply the document that records what has been agreed upon between the parties and how the finances are to be separated. A consent order must be approved by the court in order for the agreement to be legally binding and enforceable.

When a consent order has been approved by the court, if one party then later fails to comply with the order, then the other party is then able to apply to court to enforce the terms of the consent order. An informal agreement that is not recorded in a court order cannot offer this protection.

It is therefore extremely important that a consent order be drafted carefully to not only record your financial agreement but also to ensure that neither party will be able to make a financial claim against the other in the future. It is also important to address the practicalities of implementing the order, such as the timings and logistics. These aspects are often overlooked when parties have reached an agreement informally. A consent order provides certainty and finality.

“Do I need a Consent Order if I am amicable with my spouse and we have agreed to not make any claims against each other’s assets?”

Yes!! This is one of the most common questions asked by clients to solicitors. Yes, even if neither party intends to make any financial claims against one another, this should still be recorded in a consent order and approved by the court. The case of Wyatt v Vince illustrates that the people’s situations can change over the years, and what a consent order can offer is what is known as a ‘clean break’.

A ‘clean break’ clause in a consent order confirms that with the exception of what has been recorded in the order itself, all financial claims arising from the marriage are extinguished and those previous lingering financial ties become severed. The ‘clean break’ removes all uncertainty and provides security for both parties when moving forward with their lives.

The family team here at Eldridges boasts extensive expertise when it comes to negotiating and agreeing on financial arrangements, as well as drafting consent orders, and even having orders from overseas divorces mirrored in the jurisdiction of England and Wales.

To find out more, please use the contact us form or call us on 01983 524741 where a member of our team will be able to guide you on the next steps.

Author: Kyle Cooper