How to Protect Your Assets after Divorce
27 August 2019
When you get divorced, it is important to consider severing the financial ties between you and your spouse. You may have already discussed this with your spouse or you may have already divided the matrimonial money and property between you. But without a formal agreement in place, either you or your spouse could make a claim in the future for financial provision.
It is therefore important you and your spouse achieve a "clean break" following your divorce, by putting a Financial Order in place.
Where Do I Start?
A Financial Order can stipulate what happens to the matrimonial assets and debts after divorce. This will usually apply once the Decree Absolute has been pronounced, and the marriage has legally ended.
A Financial Order can include, but is not limited to:
- Transferring property
- Equalising your pension pots
- Paying a lump sum, or making regular payments to your spouse, or a child of the family, for a set period of time
This type of Court Order is known as a Consent Order, and Family or Divorce Lawyer will be able to help you with this. Your Family Solicitor will discuss with you in detail what should happen to the matrimonial assets and debts. They will then draft the Consent Order on your behalf and advise you of the terms, so you are clear of your obligations under the Order.
In most cases, it is not necessary for the couple to attend Court to put a Consent Order in place. The Court generally reviews the agreement and considers whether it is fair and reasonable in the circumstances for each of the people involved. This applies regardless of whether they have legal representation, although a Consent Order drafted by a Divorce Solicitor could be more likely to meet the Court's criteria than one made without professional guidance.
As the name implies, a Consent Order requires the consent of both people. It's not possible to put a Consent Order in place if the couple doesn't agree. If the couple disagree, then this can lead to drawn out negotiations, and ultimately an application to the Court for a different type of Financial Order may be required. The Court will then decide how the marital assets should be divided.
This type of Court Order can be costly and more time consuming than a Consent Order. But nevertheless, at the end of the process when the Financial Order is in place, you can be assured that your spouse will not be able to make a financial claim against you in the future.
We Don't Have Any Assets to Divide - Do I Still Need a Financial Order?
Yes, it's still important to get a Financial Order even if you don't have any assets. Whilst you may not have anything to divide now, what if you acquire money in the future? You could run a successful business, receive inheritance or even win the lottery!
Without a Financial Order in place, you risk your spouse making a claim for financial provision in the future. And they could be entitled to a share of assets that you've acquired since the marriage ended, even if you have been separated for many years. By this time, you could have significantly more to lose.
It is recommended therefore that you put a Financial Order in place when you get divorced. This way, you can prevent your spouse from making a claim for financial provision in the future and sever the financial ties between you.
You may enter into a new relationship in the future and you may also wish to protect your assets moving forward. Cohabitation Agreements and Pre-nuptial Agreements are useful tools to protect your and your new partner's finances. You can use these documents to set out what property you and your new partner have and what is to happen to that property in the event of the relationship breaking down.
Discuss your available options with one of our Family Solicitors, who can provide you with further information about these agreements and explain exactly how they work.