A Financial Order is a legally binding document which formally addresses and sets out how matrimonial assets and liabilities are to be dealt with between parties in the event of a divorce. Exactly how this is divided will depend upon your circumstances.
Do I need a Financial Order if there are no assets?
Yes, regardless of whether there are no or limited assets, without a legally binding Financial Order both parties maintain the right to make a claim which can potentially have unexpected devastating consequences.
A Financial Order should be considered, even if spouses are amicable and have made an informal agreement to never make a claim against each other.
What happens if I don’t get a Financial Order?
Without having a final Financial Order, your financial ties are not severed which means your ex-spouse can potentially make a financial claim against your property, pension and/or future windfalls.
Landmark case of Wyatt v Vince
The case of Wyatt v Vince (2015) is the landmark case in family law which demonstrates the devastating consequences of what failing to obtain a Financial Order can look like.
- Divorce was pronounced in 1992
- A final Financial Order was never made
- Nearly two decades after the divorce, Ms Wyatt brought a financial claim under the Matrimonial Causes Act 1973 after Mr Vince became a multi-millionaire.
The Supreme Court granted Ms Wyatt’s appeal against that order, allowing her to pursue her claim.
The delay in bringing a claim will however be a significant consideration.
What can be included in a Financial Order?
A Financial Order determines how financial matters arising from the breakdown of the marriage are to be dealt with.
They can include:-
- Property division:- This can set out how property or properties will be divided and can specifically address the sale of a property or properties and the division of proceeds or the transfer of a title of property over to the other spouse. For instance, this can be the family marital home or any land that is owned.
- Savings and investments:- bank accounts, shares, and bonds.
- Debts: mortgages, loans, credit card bills. This will outline the individual responsibilities of both parties and how they will be managed and financially settled.
- Maintenance payments:- this can include financial support such as spousal maintenance or in certain circumstances child maintenance payments that will be made to ensure the needs of both parties and any dependant children of the marriage are met.
- Pensions: (private and state pensions) will be addressed and the order will include how they will be divided, if appropriate.
Common types of Financial Court Orders
You can apply for a final Financial Order to be approved by the Court by consent. This is most commonly used when an agreement is reached between the parties with regard to asset division.
Alternatively, a final Financial Order will be made by the Court at the end of financial remedy proceedings.
Orders which can be made:-
- A Lump Sum Order which is a payment which is often used to balance out the division of other assets.
- Transfer or Sale of Properties.
- Periodical Payments are payments that provide a party with a regular form of income.
- Pension Sharing Order which provides for division of pension assets.
When should I apply for a Financial Order?
If there is no agreement, you can apply to the Court for a Financial Order at any time after a divorce application has been issued. If the financial settlement has been agreed, you can send it to the court for approval any time after the conditional divorce order has been made.
Our best advice is to get a Financial Order during the divorce process. In doing so, this legally guarantees financial certainty for both parties.
If you are divorced and do not have a Financial Order in place, it is not too late to obtain an Order as not having this could potentially cause issues in the future. Your former spouse is entitled to make a financial claim regardless of the amount of time passed since divorcing.
If this does happen to you; your assets including inheritances, the fruits of business success and increases in value of property and pensions will be valued at the same time the claim is made and not at their value when the marriage broke down.
It has also been reported recently that the introduction of No-Fault divorce has meant that less couples are obtaining final Financial Orders to protect them in the future.
Agreeing or drafting a final Financial Order can become complex and generally requires the assistance of a legal professional to ensure your legal rights are protected and any agreement reached is watertight.
Contact us
Seeking legal advice and speaking with a divorce solicitor can help you gain more clarity when deciding on the order that is best suited to you and will advise you on what is a fair settlement.
If you require further advice, contact one of our family lawyers today.