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Divorce financial settlement - Is it a done deal?

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The 'ideal' divorce may be one where the divorce financial settlement is agreed quickly and easily.

That might be because there is an understanding that each spouse has kept their finances separate throughout, or it might be that there is little to nothing to share out; both parties might wish to move on without any desire to ask the Court to settle financial claims during the divorce, for any of a number of reasons.

When looking to agree a divorce financial settlement a lot of people will, understandably, wait until there is a fall out before seeking the advice of a family lawyer. Headlines about extremely costly celebrity divorces no doubt contribute to a common lawyer-fear. Not only this but there might be worries that the other spouse would be suspicious of advice being sought, with fear that this would spark battle lines being drawn.

Successfully avoiding a dispute around finances, and the extra fees that might entail, during the divorce can have its undoubted advantages. However, fast-forward to 5, 10 or even 20 years into the future - say one spouse has enjoyed great success and the other is worse off, or perhaps, one spouse has frugally saved their share of money from the divorce whilst the other has spent vast amounts – could an ex-spouse come back and ask for more?

Potentially, yes they can.

Unless there is a Court Order in existence dealing specifically with financial claims, an ex-spouse can make a claim at any time. It doesn’t matter that Decree Absolute may have been granted already. It may not even matter (although sometimes it does) if one or both parties have since remarried.

The case of Vince v Wyatt was well publicised in 2016. It surprised many that an ex-wife could pursue financial claims arising from a marriage which had ended over 20 years previously. The husband had been very successful in his business post-divorce, meaning that there were significant resources for the wife to now claim against whereas at the time of their divorce they had very little between them.

It is important to point out that a Court will look at what the circumstances of the parties are at the time it is being asked to decide on the settlement. Historic circumstances are only a factor to be borne in mind, amongst various others, when determining what the financial settlement ought to be.

We often receive enquiries from clients who had believed a binding financial settlement was formalised years prior, only for them to learn that this was not the case because it was not properly formalised. Sometimes, there is a mistaken belief that if assets are legally owned in their separate sole names there is no need to do anything ‘legal’ to separate them on divorce. Others might have a written agreement, even a formal looking contract, which they discover has no legal force.

The subsequent fallout can be as bad, if not worse, than at the time of the divorce itself.

Under matrimonial law in England and Wales, the only way to ensure that a financial settlement in a divorce is binding on both parties is to have a Court Order saying so.

That is not to say that you would have to go to Court and have a Judge decide; you can agree on the terms of the Court Order between you and then simply ask the Court to approve it - this is known as a Consent Order. Often, with the help of lawyers, this can be done without the need to set foot in Court.

Separation Agreements and Nuptial Agreements can also be drawn up to formalise a financial settlement without any involvement with the Court, for example if there is a desire to delay starting divorce proceedings. Although not completely binding on the Court in any subsequent proceedings as they do not have the status of a Court Order, if such an Agreement is properly arrived at and carefully drawn up (certain procedural requirements would have to be met) it would be heavily influential and is likely to be upheld by the Court. It is essential to obtain advice from a family lawyer on any such documentation, as even the usual contractual formalities will not be sufficient to ensure this type of agreement is effective.

Many family lawyers are specially trained to assist clients in reaching an agreed financial settlement without having to go to Court; we will advise clients to pursue an application to Court only when necessary. The benefit of early advice can be invaluable. It is not a hostile step; it can help to manage expectations and, crucially, can ensure that any agreement which is reached is formalised properly.

We would urge those who are contemplating a divorce to seek advice early on, even if the divorce is amicable, as well-managed negotiations may prevent unnecessary acrimony and a properly documented settlement could save the cost and heartache of it being renegotiated or litigated years down the line.

If you have any queries about this article, please contact Stephanie Douthwaite on 0113 336 3343 or on stephanie.douthwaite@clarionsolicitors.com.

Disclaimer: Anything posted on this blog is for general information only and is not intended to provide legal advice on any general or specific matter. Please refer to our terms and conditions for further information. Please contact the author of the blog if you would like to discuss the issues raised.