When you go through a divorce or a civil partnership dissolution, it is essential to have a financial order put in place. Without this, you may face financial claims in the future.
Even if you are able to agree on how your finances will be dealt with, it is still important to have the details included in a court order. We take a look at the reasons behind this.
Can You Divorce Without a Financial Settlement?
While it is possible to divorce without a financial settlement, this is never advisable. Marriage and civil partnership include a financial commitment and this aspect does not end with divorce or dissolution.
The only way to end your financial responsibilities to each other is to obtain a financial order sealed by the court.
Why Do You Need a Financial Settlement If You Agree on Finances in Divorce?
Even if you and your former spouse or civil partner are able to agree on financial matters and the splitting of your assets and liabilities, you should still have an order made. There is a risk that if you divorce without a financial order, in the future, circumstances could change, and your former spouse might make a claim against you for financial support.
If you are able to agree between yourselves on how you want to deal with matters, then we can put the details into an order to be approved by the court. This is a much faster process than litigation, so you do not need to worry about lengthy legal proceedings.
Can You Get a Divorce Without a Financial Settlement If You Do Not Have Any Assets?
You may feel that if you do not have any assets, you do not need a financial settlement. However, if you were to become wealthy in the future, your spouse or civil partner could try to claim some of your money.
In the case of Wyatt v Vince [2016], Ms Wyatt and Mr Vince went through a divorce and, having almost no assets, did not put a financial order in place. Mr Vince subsequently started a green energy company, Ecotricity, going from being a new-age traveller to being a successful businessman worth millions.
Some 19 years after their divorce was finalised, Ms Wyatt made a financial claim against Mr Vince. The case reached the Supreme Court and ended in Ms Wyatt receiving the relatively modest sum of £300,000 plus £325,000 towards her legal costs. However, the case emphasised that there is no time limit on applying for a financial settlement after a divorce if this is not dealt with at the time.
How Do I Get a Financial Order on Divorce?
A divorce finance solicitor can represent you in obtaining a financial order. If you are able to agree on the terms with your former spouse or civil partner, then the process involves making full financial disclosure to each other and to the court, having an order drafted by your solicitor and the court going through the paperwork and approving it.
If you cannot agree on how your finances will be split, the next step is usually to at least consider mediation. We can assist you in arranging a Mediation Information and Assessment Meeting or MIAM. This is a meeting with a mediator where the process and its advantages are explained to you.
You can then decide whether to go ahead with mediation. There are also other out-of-court options, including arbitration. These types of alternative methods of dispute resolution can help you avoid court and find a solution without the need for litigation. They are also faster than court and can help avoid conflict. They are particularly helpful if children are involved and you will need to work with your former spouse on an ongoing basis to parent them.
If an agreement cannot be made, then as a last resort, the court can be asked to decide matters and make an order.
What Financial Orders Are Available?
There are a range of financial orders available to the judge, who will look at your circumstances and those of your former spouse and make the order that they consider to be right.
Main divorce financial orders include:
A lump sum order, setting out which assets each party will have and whether either party is to pay money to the other. It can also specify the transfer of property where necessary.
A clean break order. Even if you do not have any assets to split, a clean break order will end your right to make any claims against each other in the future.
A property adjustment order, specifying how any property is to be dealt with on divorce. There are several options. One party could receive the property, with the other receiving a larger share of other assets by way of compensation. Alternatively, if there are no children involved, the property could be sold and the proceeds split. If the property is needed for a family home, then the court can make an order requiring it to be sold when the youngest child reaches 18 and the sale proceeds split at that time.
A pension sharing order, setting out how pensions will be dealt with. It is possible to split a pension where necessary so that a party without a pension will have a pension of their own to draw on when they want to in the future.
A consent order can include a range of financial provisions that have been agreed upon by the parties.
A spousal maintenance order, where one party will pay the other maintenance. The courts prefer that parties in a divorce work towards financial independence wherever possible, so the maintenance may be for a specified period of time to allow someone to retrain or re-enter work.
What Am I Entitled To?
The courts will aim to find a solution that is fair and that meets both parties’ reasonable financial needs. The interests of any children will be prioritised.
How Does the Court Decide How to Split Assets on Divorce?
The starting point for the courts is a 50:50 split. It will take a range of factors into account, as set out in section 25 of the Matrimonial Causes Act 1973:
- The income, earning capacity, property and other financial resources each party has and is likely to have in the foreseeable future
- The financial needs, obligations and responsibilities each party has and is likely to have in the foreseeable future
- The standard of living enjoyed during the marriage
- The parties’ ages and the length of the marriage
- Any physical or mental disability of either party
- The contributions each party has made or is likely to make in the foreseeable future to the family, including looking after the home or caring for children
- The parties’ conduct, where it would be inequitable to disregard this
- The value of any benefit that the parties may lose as a result of the divorce
The court will aim to make a fair division of the assets so that each of you has your needs met. Once your needs have been met, then any remaining assets may be divided in accordance with their origin. For example, assets you acquired together may be split between you equally, while an inheritance received by one party may be awarded to them.
The length of the marriage can also make a difference in the way in which assets are split. If the marriage was only short and no children were involved, the court may allow a party who entered the marriage with substantially more assets to have a larger settlement.
If a marriage is lengthy and the parties are approaching retirement, the court is likely to try and ensure that both have the pension and other provisions for the future that they need.
Can You Get a Divorce Financial Order Without a Solicitor?
You are advised to ask a solicitor to represent you in dealing with a financial order to ensure that your interests are protected and that the division of assets and liabilities you have agreed to is fair. If the court is asked to approve an order that it does not consider equitable, it will not do so.
A solicitor will be able to assist you with the financial disclosure process, which is an essential step, and draft a clear order that sets out exactly what you want to happen. If you ask us to represent you, we will ensure that the agreement you have reached adequately meets your needs. If necessary, we can negotiate on your behalf, while keeping conflict to a minimum.
Further Reading
Guide to high net worth divorce
The meaning of stellar contributions
Contact Our Divorce and Finance Solicitors
If you are facing a divorce or civil partnership dissolution, our expert divorce and finance lawyers can assist you in securing the financial order you need to provide you with security for the future.To speak to one of our expert divorce and finance solicitors, ring us on 0330 173 3980, email us at info@witansolicitors.co.uk or fill in our contact form and we will talk through your situation with you and discuss how we can help.
