Do I have to reach a financial settlement before I divorce?
In short: no.
The most important thing to stress is that if you’ve already divorced without reaching a financial settlement, it’s not too late.
While it’s usually advised that you reach a financial settlement and get a financial order from the court at the time of divorce, you can still do this after you’re divorced.
But you should seek financial separation from your partner as quickly as possible after the final order. Without it, your ex-spouse may make a claim against you in the future.
Conditional Order and Final Order
The conditional order and the final order are the two court orders that make up a divorce.
Remember that you’re still legally married when you receive the conditional order. It simply means that the court sees no reason why your divorce should not go ahead.
A final order is the court order that legally ends a marriage.
You’ll need to wait 43 days, which is 6 weeks and 1 day, after receiving a conditional order before you can apply for a final order. This document means that you and your ex-partner are free to remarry.
Crucially, a final order does not end your financial obligations to your ex-spouse. Unless you have a financial order in place, your financial obligations do not technically end after divorce.
Financial Orders: Can you divorce without a financial order?
You might agree with your partner to separate financially. But unless you have a court order, this can come back to bite you.
Without a court order like a Clean Break Order or a Consent Order, your ex-spouse could still claim money from you.
So, while you can get divorced without a financial order, it’s best not to in practice.
Take the famous case of Wyatt vs Vince in 2016.
Mr Vince and Ms Wyatt had divorced 19 years earlier, though the relationship had broken down 31 years before.
They didn’t get a financial order, so their financial obligations to each other never officially ended.
After their divorce, Mr Vince built up a business that became worth tens of millions.
In 2016, Ms Wyatt claimed money against Mr Vince, which she was able to do because there was no financial order in place.
This resulted in Mr Vince having to pay out £300,000 to his ex-wife 19 years after their divorce. Although this is a rare example, it highlights the importance of seeking a financial order.
Clean Break
A divorce Clean Break Order severs all financial ties with your ex-partner.
Even if you don’t have any assets that need dividing at the time of the divorce, it’s still worth getting a Clean Break Order.
This ensures that you are legally and financially separated. Your ex-spouse will not be able to make any financial claims against you in the future.
A court will always push for a clean break if there are no children in the marriage.
Consent Order
A divorce Consent Order details the assets you currently own.
It also formally shows the court how these assets will be divided. This includes your savings, pensions, and other assets you own, such as property.
A Consent Order ensures that your ex-spouse cannot make any financial claims against you in the future. But it is not necessarily a clean break. It is simply an agreement on how to split your finances as a divorcing couple.
A Consent Order can also include things like deferred clean breaks.
A deferred clean break is when a court rules that a clean break will happen only after a certain event takes place. These events might include your children finishing school or an ex-spouse finding employment.
Are Clean Breaks and Consent Orders always possible?
While clean breaks are desirable, they’re not always possible.
You or your ex-partner may need to pay spousal maintenance or child maintenance to ensure that you both cope financially after the divorce and that any children remain financially secure.
Spousal maintenance, however, can also be paid in a lump sum as part of a clean break. This means that if you don’t have any children at the time of divorce, a clean break could still be a good option for you.
Child maintenance payments cannot be paid in a lump sum.
Do I need to go to court to get a financial order?
Technically, you’ll need to apply to the court to get a financial order. But this doesn’t mean you have to physically go to court.
If you and your ex-partner can come to an amicable agreement, this can often be the easiest and cheapest option.
You can do this on your own, through mediation, or through collaborative law. However, it’s often best to hire a divorce solicitor.
After you’ve come to an agreement, you’ll need to apply to the court with a Consent Order, detailing your plan for a financial break.
The court will then consider whether the Consent Order is fair for both parties. If it is, they will issue the order reflecting the couple’s agreement, whether that is a Clean Break Order or another arrangement.
Financial Remedy
If you and your partner can’t agree on a financial settlement, you’ll need to physically go to court.
This process is called Financial Remedy and deals with all aspects of the financial settlement. You’ll need to fill in two important forms during this process:
Form A: This form starts your application to the court for financial remedy. Once issued, it begins the process of the court requesting full disclosure of your finances. It also sets in motion a preliminary directions hearing called the First Appointment. The form will ask whether you have attended mediation, as the law requires you to have attended at least one mediation session before going to court.
Form E: A required financial statement signed by you and exchanged with your spouse before the First Appointment. This is a very detailed form. The court needs to understand your full financial situation before making any decision on how finances should be divided.
Should I reach a financial settlement before or after divorce?
The financial aspects of divorce are separate from the divorce itself. This means that the court will rarely consider the reasons for the divorce, such as adultery, when making a decision on financial matters.
Solicitors will usually advise a client to sort out finances before applying for a final order. This is generally so that couples can have a real clean break after divorce, without continuing to argue over financial issues. The court can then process the divorce papers and the financial separation at the same time.
Sometimes, though, sorting out financial arrangements in the middle of a divorce can have unforeseen consequences. It may be easier to take a step back and look at your finances once you have divorced.
It’s always worth speaking to your solicitor before making financial decisions.
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