When a marriage breaks down, most couples focus on finalising the legal divorce itself. However, it is equally crucial to deal with the financial separation formally. In England and Wales, this can only be done by obtaining a Court approved Financial Order. In the absence of such an Order, divorcing couples may face serious financial and legal risks at any point in the future. Below, we explore what a financial order is, how it works, and why it is vital to have one in place.
What Is a Financial Order?
A Financial Order is a legal document prepared by a solicitor and approved by the Court which sets out how matrimonial assets will be divided upon separation such as property, pensions, savings and debts as well as set out the terms for payments such as a lump sum and spousal maintenance.
Parties must have reached the Conditional Order stage, in the divorce process, before being able to submit a Financial Order to the Court for approval.
The Benefits of a Financial Order
1. Legal Finality and Security
The divorce itself does not prevent either party from making a financial claim against each other now or at any point in the future. A Financial Order including a clean break provision, closes the door on future claims meaning that neither spouse can return to Court and seek a share of any assets acquired after the divorce.
2. Protection of Your Future Assets
Obtaining a Financial Order protects assets received or gained in the future such as an inheritance, starting a profitable business venture or even a win on the lottery. Having a Financial Order in place prevents your former partner from seeking a share of any new assets acquired post-divorce.
3. Enforceability
A court-approved Financial Order is legally binding and enforceable. Should your ex-spouse fail to abide by its terms, perhaps by not transferring assets or paying maintenance, the Financial Order can be enforced by making a further application to the Court. Informal agreements, verbal or written, such as agreements reached via mediation are not enforceable, leaving you with no protection if the other party reneges on the agreement reached.
4. Clarity and Less Conflict
Once the Financial Order is sealed by the Court, both parties know exactly what is to happen with their assets and such certainty helps avoid confusion, reduces the likelihood of future disputes and makes it easier for each party to move on.
The Risks of Skipping a Financial Order
Future Claims
There is no time limit on when an ex-spouse can make a financial claim meaning that one party could return years after a divorce seeking additional assets or maintenance. Famous cases in the UK, such as Wyatt v Vince, illustrate that a former partner can sue for a share of wealth accumulated long after the relationship ended if no final settlement was in place. When you marry, you create a legal and financial tie with one another and a financial tie will remain in place indefinitely without a sealed Financial Order.
Lack of Enforcement
If you do not have a court-approved Financial Order and your ex-spouse refuses to honour an informal agreement made, a party will need to engage in Court proceedings which can be lengthy, costly, and stressful.
Ongoing Financial Entanglement
Failure to have a sealed Financial Order in place will leave you forever financially tied to your ex-spouse. For example, you might remain liable for joint debts or mortgages if they are never formally dealt with and your ex-spouse is able to re-open the issue of your financial separation at any point in the future.
Clean Break: The Ideal Goal
A clean break is always the preferred outcome in financial settlements. This means that once the agreed financial arrangements (such as the transfer of property, payment of a lump sum, or other one-off payments) have been fulfilled, neither party can make further financial claims against the other in the future, in life and in death.
While clean breaks are not always suitable, particularly where ongoing spousal maintenance payments are required, they are highly encouraged where possible. Many couples can agree on a clean break if their financial situation allows them to divide assets fairly at the time of separation.
The key benefit is that it allows both parties to become financially independent and get on with their lives without the worry of unexpected future claims.
In short, a clean break offers financial clarity, peace of mind, and true closure. It is something to seriously consider and discuss with your solicitor when arranging your financial settlement.
Get the support you need
Securing a Financial Order is vital for anyone going through a divorce in England and Wales. It is not just about dividing assets you have today; it is about preventing future disputes, safeguarding earnings or wealth you may acquire later, and ensuring that both parties can move on with certainty. Even if you believe you have very little or no assets or have already reached an informal agreement with your ex-partner, it is still important to obtain a legally binding Financial Order to provide you with peace of mind.
If you would like tailored advice on obtaining a Financial Order and want to ensure your financial settlement is handled properly, get in touch with our Family Law Team at Dudden Law by emailing family@duddenlaw.co.uk and we’ll be happy to guide you through the process.
Written by
Stacy Bruce
Family Solicitor
