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Welcome to In Brief, the podcast by THP Solicitors. Today I have Richard Rodway from our Divorce & Family team to discuss why divorcing couples, or those looking to dissolve their civil partnership, ought to make an application to the Court for a Financial Order to formally address their finances. If they don’t, they could leave themselves highly vulnerable to unexpected future financial claims, even years later.

Thank you for joining us, Richard. Shall we start by explaining what a Financial Order is?

If you commence divorce proceedings and go through the process over the next 6+ months you end up with a Final Divorce Order, or a Degree Absolute as it used to be known. And that’s all you have achieved – a divorce.

Without doing something more you don’t actually sever financial ties between you and your ex-spouse or civil partner, and the problem with that is, among other things, unless they remarry your ex can bring financial claims against you in the future, potentially years into the future. What may or may not be appropriate by way of financial settlement then, or is capable of being agreed then, may not be the same as what is appropriate/ capable of being agreed now.

People’s circumstances change, particularly their financial circumstances, as well as their motivations and mindsets. So, when you divorce it is important, as well as dealing with the divorce or dissolution of your civil partnership, you deal with outstanding financial matters between you by securing a Financial Order, also known as a Consent Order, where you are agreed.

Under a separate online process, and where matters are agreed no one has to go to Court, you can upload your draft Consent Order with a resume of your respective financial circumstances. The Judge will sense check that the deal is not unfair, and if they are not unhappy with it, they will approve and make the order.

And then that’s it. The agreement binds. There’s’ no coming back from that.

Similarly, if you can’t agree financial matters, you can apply to the Court for a District Judge to ultimately determine the settlement and make a Financial Remedy Order. Where matters can’t be settled it will culminate in Court hearings that you have to attend, but it normally doesn’t get that far. It’s open to both of you to agree things at any point and it’s normally in both parties’ interest to agree something without incurring the time, cost and risk that comes with Court proceedings.

Courts can make provision for a variety of things in Financial Orders e.g., lump sum payments, Property Orders (selling property or transferring it to one of the parties), pension sharing orders and maintenance. But where you agree on things, you can be far more creative as to the terms and still put it into a Court Order in a form that the Court is happy to make.

So, where do you think this misconception has come from that people do not need to take this next step of obtaining a financial order to sever financial ties between them?

Well, I think there are some cases where people do not consider that they are particularly wealthy, that their finances are limited or that they don’t have any financial assets to speak of, so they don’t think it is something they need to do.

That’s a common misconception – remember if you just get divorced and nothing more, your financial circumstances can change and yet your ex-partners’ claims against you can remain live.

You could inherit in the future, you could win the lottery, your career could take off, and that could expose you to a future claim, particularly if your ex-spouse or partner can demonstrate a need for financial help.

There have been cases where applications have been successfully made years after a divorce. You risk having to share assets that were built up following the divorce. Without that Financial Order setting out how things are dealt with now, there will be nothing to stop your ex-spouse or partner, particularly if they are in a weaker financial position, from making an application to the Court.

I think some people feel they can make an informal arrangement between themselves but essentially you are saying that won’t be recognised in law?

Well, this is it – absolutely. That’s another reason why people don’t make a Financial Order, they think “We’re agreed. Why do we need to involve the Court?”, but that is the point. Your informal agreement isn’t worth the paper it’s written on, or not written on in some cases. Unless you have something signed off by a Judge it’s always open to people bringing a claim and asking the Court to do something different.

Presumably, if your divorce is amicable, that is actually helpful in the process of seeking Financial Order?

Yes, if you are agreed, then why not make sure that your agreement is binding and enforceable? You just upload it to the Court, no one has to attend Court, it’s simply an online exercise, the Judge will look at it and consider it. It may not be what the Judge would have done left to their own volition but if it’s not unfair, they will seal the order and that’s it. Both of you will have certainty and security for the future.

So, in a nutshell, divorcing couples need to remember that securing a divorce alone only really ends a marriage – financial matters are completely separate.

They are linked, but absolutely. You can go through a divorce and all you achieve is divorce. You need to do something more in terms of process to ensure your finances are signed off once and for all.

Thank you, Richard. If want to find out more about the divorce process and how our Divorce & Family team can help, please visit www.thpsolicitors.co.uk/divorce-and-family-law where you can also find Richard’s contact details.

You can listen to our full podcast series here