By Divorce Solicitor, Phil Thomas
If you don't take steps to sever financial ties with your ex when you get divorced, they could be entitled to claim a share of your pension decades down the line. To avoid this risk, you'll need to put a Clean Break Order in place when you get divorced.
Severing Financial Ties after Divorce
A common myth for divorcing couples is that once the divorce has taken place, the finances are also concluded, and that no future claims can then be made by either ex-spouse against the other. Unfortunately this is not the case. Unless a Court Order has been made, finalising the financial arrangement, then both people's finances will remain wide open for claims to be made by their ex.
There are therefore many documented cases where a couple have divorced years ago and one person has since come into a large amount of wealth. The ex-spouse has then successfully made a claim to receive a share of the other person's assets.
Could My Ex Be Entitled to My Pension?
Pensions are commonly one of the largest assets of a marriage and it has been an increasingly common theme that ex-spouses are seeking to make claims against their former partner's pensions many years after the divorce has taken place.
The reason for this is that often at the time of the divorce pensions were not even being considered, but as the age of retirement comes closer, it becomes more likely that the financially weaker person will begin looking into their pension situation. If they choose to seek legal advice, they could then discover that it is still open to them to make a claim against their former spouse's pension rights.
A common question we are asked by prospective clients is, "Can my ex can make a claim against my pension?" And the honest answer is, "Yes, they can."
How Much of My Pension Could they Claim?
Deciding what level of claim they have will depend on a number of factors. Each person's case is unique and the Court will consider a number of critical factors, such as:
- The age and duration of the marriage
- The time since separation
- The age of any children or dependants
- The financial needs and resources of both individuals
- The conduct of both people
Family Court judges have a wide range of powers when dividing financial assets. Whether the Court will allow your spouse to make a claim against your pension (and the level of the claim if so) will be dependent upon the circumstances of your case. If you would like to discuss your own situation in more detail with a Family Law Solicitor, contact us for free initial advice.
Another common issue that arises is when one person has made contributions towards the pension after the divorce. For example, it may be that you have made a large amount of contributions into your pension since your separation, or you may have taken the pension out after you divorced.
In this situation, a common argument is that your ex's claim should only apply to any contributions made during the marriage. This would mean that any pensions or contributions made after the divorce would be ring-fenced (meaning your ex wouldn't be entitled to a share). This is an argument on which our Divorce Solicitors have had success, as the Courts can be persuaded that post-separation contributions towards pensions and pensions taken out post-separation should be ring fenced. Again, the outcome will all depend upon the circumstances of your individual case.
The Remarriage Trap
Another area that relates to this issue is what's commonly known as the 'remarriage trap'. The remarriage trap is a situation whereby the parties have divorced with no Financial Order in place, meaning that the finances are left wide open. One person then remarries and then decides to make a financial claim against their ex-spouse.
In such cases, the remarriage trap can apply, which means that once a person has remarried they are then barred from making certain financial claims against their ex-spouse. The remarriage trap however has limitations. If the remarried person stated in the divorce proceedings that they wished to make a financial claim but never went ahead with it, then this will result in the financial claims remaining open. So even after they have remarried they are still able to make a financial claim, so the remarriage trap would not apply.
Even in cases where the remarriage trap does apply, this would not protect you from a claim against pensions. The remarriage trap would bar your ex-spouse from making any claim against your assets such as property, savings or income, but the one area that the remarriage trap cannot bar claims being made against is in relation to pensions. Again this is the reason why pensions are so strongly sought after in these cases, because even if one party has remarried and has not made financial claims, the claim against the pension can still be progressed.
Eliminate the Risk of a Pension Claim
The best method of preventing a future claim against a pension is to resolve financial matters by getting a Financial Consent Order. This can be done either during the divorce proceedings or at any time afterwards, and will set out details of the financial settlement that has been reached. In the event that parties do not wish to make a claim against each other, the Consent Order can simply dismiss claims, therefore achieving a clean break between parties.
The advantage of getting a Consent Order is that it will sever financial ties as far as pensions are concerned, and prevent any further claim from being made. Obviously whether this type of Court Order will be applicable to your case will depend on your circumstances – this is something that our Divorce Solicitors can discuss with you and advise you on.