When a marriage breaks down, it can be the hardest thing. In addition to the emotional trauma that both parties will have to endure when the relationship turns sour, there’s the disentanglement of assets. When two lives that have been intertwined, often for decades, how on Earth is it possible to achieve a fair and equitable split?
The question of who gets what is usually the most contentious part of divorce proceedings. And yet, in order to be able to move on with your respective lives, it is desirable to come to an agreement for financial settlement between the two parties.
If no agreement can be reached, the matter will have to be decided by the Courts – necessitating extra time and expense, and with no guarantee of what the outcome will be. For everyone’s sake, it’s usually best to try and reach an agreement without the all-round bruising experience of going to Court.
Financial agreements between the divorcing parties can cover a wide range of issues, including
- Spousal maintenance
- Child maintenance
- Division of capital such as savings and investments
- A change of property including the (former) matrimonial home and any other property
- Division of proceeds of property sold
- Sharing of pension schemes
- Inheritance issues
- Business interests
How final are financial agreements?
Here’s a true story that’s worth learning important lessons from.
In 2002, Glen Briers, owner of clothing brand Lambretta, and his wife Nicola divorced after 18 years of marriage and three children. They made a verbal agreement that secured Nicola Briers a mortgage free home, as well as regular maintenance for herself and her children. Mr Briers kept his business which at the time was worth around £1 million.
However, as no Financial Clean Break Order was ever put in place, Mrs Briers was able to go back to Court some 10 years later, following a change in her personal circumstances, and claim an additional slice of her ex-husband’s fortune that had grown to around £30 million in the meantime. Much to Mr Briers’ incredulity, she was awarded £2.7 million. The case is now in the Court of Appeal.
How did Mr Briers end up in this situation? He made the mistake of not putting a final, legally binding Consent Order or Clean Break Order in place that would have protected him from further claims against his assets and livelihood, guaranteeing a clean break divorce. Instead, Mr and Mrs Briers chose to make an agreement between themselves when they divorced.
Consent Order / Financial Clean Break Order
A Consent Order or Financial Clean Break Order is a court ordered financial settlement that is final. It ends all monetary claims between the ex-spouses, except when it comes to child maintenance. Once the Order is made, the Courts cannot deal with any future claims made by either party.
A Consent Order is a legally binding document that confirms what the divorcing parties have agreed between them. The document is final once it has been approved by a Judge and sealed with the Court’s stamp.
The document will give both parties the certainty of a ‘clean break’, separating all assets between them once and for all and providing secure financial autonomy for both, going forward.
When is a clean break not suitable?
There are, of course, situations when a clean break may not be the right solution. One such set of circumstances would be where one or both parties may not be left with sufficient financial resources to each set up a new home.
What’s more, when the earning power of one party is considerably lower than that of the other, a clean break may only be achievable if sufficient capital sums or assets can be transferred so that the weaker party can meet (usually) her needs. If this is not possible, then maintenance may need to be paid for a defined period of time, or even indefinitely. Often, this is the scenario when one party is a stay-at-home parent.
Courts will look at each financial divorce settlement on an individual basis. While the interests of any children are always put first, the goal of any settlement is to reach a final financial separation between the divorcing parties wherever possible.
How to obtain a clean break
If the circumstances of your particular divorce allow it, the only way to safeguard against any future claims against you by your former spouse is to obtain a Clean Break Order. Otherwise, you will be laying yourself open to the risk, however remote, of a claim for financial provision including maintenance and lump sum orders from your ex husband or wife.
Once the details of any financial settlement between you have been agreed, a Clean Break Order is not difficult to put in place. Submitted to Court and approved by a Judge, a Clean Break Order can save you considerable uncertainty and legal expense in times to come.