Getting Finances Sorted in Divorce
15 January 2019
Couples who split amicably or those who don't have any significant assets to speak of at the time may choose to take care of matters between themselves without the help of a professional. While this option does work for some, it's important to be fully aware of the risks and ensure that absolutely everything has been dealt with correctly.
One of the key risks when dealing with a divorce yourself is that financial matters may not be tied up properly. Some divorcing couples could be fooled into thinking that once the Decree Absolute has been received then everything is sorted. However, failure to properly settle financial matters could lead to expensive legal disputes long after the divorce has been finalised.
Settling Financial Matters in Divorce
If you and your spouse don't put a Financial Order in place at the time of your divorce, then this means you're still financially tied to one another. What this means in essence is that one of you could make a successful claim for money from the other in the future, even if a significant amount of time has passed.
While you may think that splitting the money in the joint account and settling your outstanding bills means that everything's dealt with. In reality your ex could lay claim to money that you've acquired even decades after your divorce, or after you die your loved ones could end up fighting for what they believe to be rightly yours.
In one divorce case, a man agreed to make monthly maintenance payments to his ex-wife of £1,100. He sought to reduce these payments 15 years later, but instead his wife successfully claimed an increase to the payments instead. The original agreement was not set out in a Financial Order, so financial matters between the couple were still open-ended.
In another divorce case, a husband and wife didn't deal with their jointly owned property when they got divorced. The husband maintained and let out this property for several decades, spending a considerable amount of money on its upkeep. On his death the Court then had to decide whether the wife was now entitled to the whole property (as the surviving joint owner), whether it should be divided 50/50 between the wife and the husband's Estate, or if the husband's Estate was entitled to a greater proportion.
The Court decided on a 50/50 split. If the husband had died shortly after the divorce it's possible that the Court would have allowed the wife to keep 100% of the property and the husband's family could have received nothing.
Another couple agreed when they got divorced that the wife was entitled to part of the husband's pension. The agreement was never formalised and years passed before the wife actually claimed her entitlement. If her ex-husband had died in the meantime then it's very unlikely that she would have been able to successfully claim her share to his pension.
It's common for financial disputes to arise between divorced couples years after they have gone their separate ways. Some of the most commonly disputed topics include spousal maintenance payments, Pension Sharing Orders and child maintenance.
Get a Clean Break Order
The best way to ensure that financial matters between you and your ex are dealt with properly, and that all financial ties are severed, is to apply to the Court for Clean Break Order at the time of your divorce.
A Clean Break Order is a legal document which sets out exactly what will happen to your matrimonial finances when you get divorced, including joint bank accounts, property, pensions, investments and shares, as well as any other relevant assets. This Order can be granted by the Court and, once issued, will effectively sever the financial ties between you and your ex. This means that neither person would be able to make a financial claim against the other in the future.
For more information see How to Get a Divorce Clean Break Order.