Final split: Divorced people could get into trouble with financial claims from exes in the future unless a financial settlement is made
Estranged couples risk a costly financial battle years later if they don’t make a “clean break” deal when they divorce, lawyers warn.
New no-fault DIY divorces have made breaking up easier and faster, but unless couples also reach a formal financial settlement, they are exposed to future claims from their exes.
“If you get divorced, the marriage between you will only end. It doesn’t end your financial ties,” says Kate Booth, head of family and marriage at Brindley Twist Tafft & James.
Couples can now divorce within six months of the initial application, even if one partner opposes it, and the process is largely online – including filing divorce papers by email.
Financial settlements are still handled in a separate and parallel process that can continue after the divorce is final.
But critics predict that the new emphasis on haste could leave many ex-spouses worse off and risk overlooking pensions, which may be their greatest joint financial asset besides the family home.
> How to arrive at a financial arrangement and what it costs: Find out below
Booth says those filing for divorce online under the new rules should make sure they have a clean break with their ex in the form of a “warrant of consent” at the time of the divorce.
She points out a number of scenarios in which people could get into trouble with financial claims from their ex in the future.
– People who make their fortunes months, years or even decades after breaking up with their spouses
“If you start making good money later in life and build a really decent nest egg, or if you win the lottery or make a significant amount of money selling a house, your ex-wife or husband has all the rights. have the legal right to bring a claim against you,” says Booth.
How to split pensions in a divorce
There are three main options when dealing with pensions in a divorce:
– sharing based on a clean break in a pension distribution order;
– one partner reserves part of the income that will be paid to an ex-spouse after retirement;
– Offsetting their value against other assets.
A free jargon-busting guide launched by a legal charity helps couples split one of their most prized possessions.
> Read a This is Money guide to splitting pensions
– Couples who do not have joint property to split at the time of divorce
According to Booth, even in this situation it is worth formally cutting off all financial ties.
“We still advise people to make sure they have a clean break with their ex in the form of a consent statement at the time of divorce.
“You don’t have to go to court for a consent order — you take it to a judge to look at it and the judge will decide if it’s fair before it’s approved.”
– Couples who separate amicably and decide to arrange their divorce and assets themselves in order to save on lawyers’ fees
“We’ve had clients approach us for help saying their ex-spouses have come back to file a claim in the former matrimonial home,” says Booth.
“In the time they’ve broken up, the client may have continued to pay the mortgage and the property may have increased in value, so of course their ex may feel they have nothing to lose by filing a claim.” serve.’
– People who don’t think about the income they will need later
‘We have also had clients with us who are divorced from their partner and who have agreed that they will keep the house and their partner their pension.
While this may be appropriate at the time of divorce, the person who has agreed to keep the home should keep in mind that they will need an income even after retirement.
‘It doesn’t really matter if the couple is in their twenties or thirties and still has time to build up their pension.
“But when they’re older, it’s something they have to think about — for example, a woman in her 50s, who received a lower income while her husband was the main breadwinner and she focused on raising the kids, may not have pension of her own.
“When deciding on settlements, courts don’t just look at the current situation, they look at the necessities of life of the parties involved to check whether their needs can be met when they are older. Both parties have to think about that.’
The courts will consider whether the provisions in the consent order are fair and not there to simply label the agreement
Stephanie Kyriacou, family associate at law firm Shakespeare Martineau, says: “Many couples going through a do-it-yourself divorce fall into the trap of thinking that the divorce date – or the final verdict – is the end.
“In reality, without proper protection, financial claims can be made many years later.”
She adds: “The groundbreaking Wyatt v Vince case, where the ex-wife of the multimillionaire wind farm magnate filed a successful financial claim 20 years after the divorce, should be a cautionary tale for anyone thinking of doing it themselves.
“While timeframes will be considered, the ex-wife’s successful claim demonstrates that the courts can and will award settlements on their own long after the divorce.”
How do permission commands work?
“A consent statement is a document that records the agreement reached between spouses on financial matters and the division of assets,” says Booth. “The content will vary depending on the circumstances of the individual family.”
She says they can cover the payment of lump sum payments, the sale or transfer of property, the payment of alimony and the sharing of pensions.
“Ideally, they should also include a clean break at the earliest opportunity to prevent future claims.”
Kyriacou says consent orders essentially record how couples decided to split their financial assets.
“Consent decisions are usually documents prepared by a lawyer,” she says. “The courts will consider whether the terms of the consent order are fair and not there to simply enforce the agreement.”
She adds that there are several routes of varying complexity that couples can take to obtain a consent order, depending on their relationship and how they want to proceed.
“The simpler method involves agreeing how they want to split their financial assets and then notifying a lawyer, who will draft the consent order.”
How long does it take to get a consent order?
“The time frame will depend on the complexity and cooperation of the other spouse,” says Booth. “If it’s simple, this can be solved in a few weeks.”
She explains that once the “conditional disposition” in the divorce — formerly called “decree nisi” — is made, the statement of consent can be submitted to the court for approval by a judge.
If they cannot agree on a “clean break” arrangement, divorcing couples may have to undergo financial disclosure through lawyers or attend mediation
Booth says the judge must be satisfied that the terms of the consent order are fair, and that once approved, it will be binding and can only be changed in very limited circumstances.
Kyriacou says: ‘The length of the process depends on how quickly an agreement can be reached. If both parties agree, things can move relatively quickly. Starting legal proceedings naturally leads to delays and can mean a much longer process.’
What if a couple can’t agree?
“Without an agreement, divorcing couples may have to undergo financial disclosure through attorneys or attend mediation to reach a settlement that satisfies all parties,” says Kyriacou.
If no agreement can be reached, either party is free to file a financial application with the court. Whatever decision the court takes on the division of the assets is binding.’
How much is it?
‘The costs of having a lawyer draw up a consent decision depend strongly on the complexity of the case,’ says Kyriacou.
‘The simplest cases can cost between £500 and £2,000 depending on the company and lawyer chosen. If financial disclosure and specific legal advice are required, costs will increase.”
Booth says, “Costs will vary depending on what the consent order is intended to cover, individual family circumstances, and geographic differences in attorney fees.”
Do you need a lawyer?
“Anyone can technically draft a consent order, but it is highly recommended that it be done by an attorney or attorney,” says Kyriacou.
“It is a very complex legal document and it is unlikely that many people fully understand the clauses necessary to completely separate financial claims between the parties to prevent future financial claims.”
Booth says she would always recommend that an attorney be instructed to make sure the terms of the agreement are appropriate, that the warrant is properly drafted to be enforceable, and that it provides the necessary protection.
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