When a marriage or civil partnership ends, dealing with finances can be one of the most challenging aspects of the process. A financial order plays a crucial role in settling these matters, addressing everything from property distribution to pensions. Whether you’re at the beginning of a separation or nearing the final stages of divorce, understanding financial orders is essential to ensure your financial future is protected.

What is a Financial Order?

A financial order is a legal arrangement that outlines how a couple’s finances will be divided following their divorce or dissolution of a civil partnership. This order can cover various aspects, including:

• Property: Decisions on whether to sell or transfer ownership of the family home or any rental properties.
• Income: Arrangements for ongoing financial support, such as periodical payments or enhanced child maintenance.
• Pensions: Dividing retirement savings, which often requires specialist advice.

Many couples may assume they don’t need a financial order because they have few or no significant assets. However, it’s important to consider not just current assets and income but future assets and financial needs as well, especially regarding pensions and income during retirement. Pensions are very complex and often require specialist advice and assistance, which is often overlooked.

The Importance of Addressing Financial Matters

One common misconception is that obtaining a divorce automatically resolves all financial issues. In reality, the divorce process has several components:

1. The Divorce Itself: The legal termination of the marriage or civil partnership.
2. Financial Matters: The division of assets, income, and pensions.
3. Child Arrangements: If applicable, decisions about the care and support of any children.

While the no-fault divorce process has simplified some aspects of ending a marriage, it does not emphasise the importance of addressing financial matters. Without a financial order in place, future claims can still be made against you. For example, if you come into a large sum of money or accrue substantial retirement savings, your former spouse or civil partner could potentially make a claim against these assets during your lifetime —unless you remarry or a financial order is made which dismisses such claims.

Reaching a Financial Agreement

There are two primary ways to reach a financial settlement:

1. By Agreement and Consent: Both parties agree on how to divide their assets and submit this agreement to the court for approval.
2. By Court Order: If an agreement cannot be reached, the court can impose a decision.

Before agreeing to a financial settlement, it’s essential to have a clear understanding of your and your partner’s financial situation. This often involves gathering financial disclosure, either through a brief overview (Form D81) or more within detailed documentation (Form E).

Seeking specific legal advice before making any settlement proposals is crucial. The court will not simply “rubber stamp” any agreement; it will strive to ensure that the settlement is fair and meets both parties’ needs.

The Role of Non-Court Dispute Resolution (NCDR)

As of April 2024, the Family Practice Rules require parties to attempt Non-Court Dispute Resolution (NCDR) before issuing court proceedings. NCDR includes methods like mediation, collaborative law, arbitration, and private court hearings. If the court believes you haven’t reasonably engaged in NCDR, there could be cost consequences, and proceedings may be adjourned to allow for a form of NCDR to take place.

Finalising a Financial Consent Order

Once an agreement is reached, a financial consent order is drafted, signed by both parties, and submitted to the court. This order, along with a joint D81 form (which provides a snapshot of your financial situation), helps the court determine if the agreement is fair.

It is essential to have legal assistance when drafting your financial consent order. Properly drafted documents protect your current and future financial position and prevent any loopholes that could lead to future claims.

How can we help?

At TV Edwards, we offer comprehensive support and advice throughout the financial settlement process. Whether you’re in the early stages of separation or need help finalising an agreement, we’re here to ensure your rights and interests are protected. Our services can range from initial advice and signposting, behind-the-scenes advice during direct negations or mediation to full representation in court.

If you’re dealing with a separation or divorce and need guidance on financial matters, don’t hesitate to contact the family team. We can discuss your options, including various funding arrangements, and ensure that your financial future is secure. Call 020 3440 8000 or email family@tvedwards.com

Disclaimer: The information on the TV Edwards website is for general information only and reflects the position at the date of publication.