I’ve Reached A Financial Agreement In My Divorce – What Should I Do Next?

Deciding how to divide assets during a divorce can be an emotional and stressful process for many and so when an agreement is eventually reached, it can feel like a weight has been lifted – but before you start looking ahead and planning your future, it is important to make sure you formally record the agreement you have reached.

There is a common misconception that once a divorce has been finalised the financial ties between the former spouses are automatically severed however this is not the case – even if a financial agreement has been reached.

Jack English, Family Law Solicitor at our Beeston office, explains what you should do after reaching a financial agreement during divorce proceedings.

What is a Consent Order?

An agreement will not become legally binding until it is formally recorded in a Financial Order and approved by the Court. Provided you and your ex are agreed upon all matters, a Financial Order can be lodged with the Court by consent (also known as a Consent Order) setting out the agreed division of assets. A Consent Order can provide for the payment of spousal maintenance but it is becoming increasingly common for separating couples to be asking the Court to make “clean break” Orders. A clean break Order severs all financial ties between you and dismisses any financial claims you may be able to bring against each other during your lifetimes. This clean break also applies on death so that no claims can be made against estates.

How do I apply for a Consent Order?

When the Consent Order has been agreed and signed by the parties it is lodged with the Court together with a Statement of Information (also known as a D81), a Pension Sharing Annex (if the agreement reached provides for the sharing of pension assets), a copy of the Conditional Divorce Order and payment of the relevant Court fee.

The D81 provides the judge with a clear overview of the parties’ respective capital assets, liabilities and income before and after implementation of the proposed financial settlement. This information assists the judge in determining whether the agreement reached is fair and reasonable in the circumstances.

If the judge is satisfied on the basis of the papers before them, they will approve and seal the Consent Order at which point it becomes a Final Financial Order which is legally binding and enforceable. This is not a rubber-stamping exercise and the judge could raise questions or request further information or action to be taken if the agreement does not appear to be fair and reasonable on the face of it or if the paperwork is lacking in some way.  The judge may even ask the parties to attend Court to explain and address any queries that have arisen and although this may not happen often it is important to remember that ultimately the decision rests with the judge.

In cases of significant concern e.g. if the agreement is wholly unfair then the judge has the discretion to refuse to grant the Order in the terms sought and may stipulate what further work needs to be attended to which may include mediation, further disclosure or an unrepresented party being encouraged to obtain legal advice. Obtaining legal advice therefore at an early stage in the process can help avoid such issues.

At what stage of the divorce should I apply for a Consent Order?

It is not possible to lodge a Consent Order application with the Court until the divorce has reached the Conditional Order stage which generally is at the 20-week mark in the divorce process. However, if a financial agreement has been reached before the Conditional Order is made the Consent Order application can still be drafted, agreed and signed in advance. This means it can then be lodged with the Court at the earliest opportunity once the Conditional Order has been granted.

A Consent Order application can still be lodged after the divorce has been finalised however the grant of the Final Order of divorce can potentially, depending on the circumstances, have financial implications for one or both of the parties.  It is important to consider therefore whether it is wise to wait until the Consent Order has been approved and sealed by the Court before finalising the divorce.

What if I decide not to get a Financial Order?

In the absence of a Final Financial Order the possible financial claims between you and your ex-spouse will remain open. There is no time limit in which an application must be made meaning your ex-spouse could potentially bring a claim against your assets (including property, inheritance, pensions and business interests) at any point in the future but also against your estate in the event of your death.

It is also important to note that any agreement reached on an informal basis and not recorded in a Financial Order will not be legally enforceable should your ex-spouse renege on the terms of your agreement.

Matters can also become complicated when one or both of the parties go on to remarry. If a party remarries before having obtained a Financial Order they could lose the right to bring certain claims against their ex-spouse, potentially producing an unfair financial settlement. This is commonly referred to as “the remarriage trap”. This issue can be complex, and it is therefore crucial that parties who find themselves in this situation seek specialist legal advice at the earliest opportunity.

In summary, obtaining a Financial Order is an essential part of the divorce process which allows you to move on with certainty and peace of mind.

How can we help?

Our Family Law team have extensive experience in guiding clients through this process. We can help you avoid unnecessary stress and delays by:

• Advising whether the agreement reached is fair and reasonable
• Ensuring the documentation is drafted correctly and protects your interests
• Lodging the application with the Court
• Considering with you whether you would be financially disadvantaged by concluding the divorce proceedings before obtaining the Final Financial Order
• Advising and assisting you with enforcement action should your ex-partner fail to comply with the Order

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.