The Importance of Getting a Financial Order As Soon As Possible After Separation

When a marriage breaks down irretrievably, most people focus on getting a divorce, rather than sorting out their financial position. However, the divorce process alone does not resolve the financial ties between spouses.

A financial order is a separate, court-approved document that formally divides the matrimonial assets, such as the family home, savings, pensions, and income between you.  Without one, those financial ties remain, sometimes for decades after separation. As such, obtaining a financial order at the earliest opportunity is one of the most important steps you can take to protect your financial future.

A Divorce is Not the End

Many people assume that once a divorce is finalised, their financial relationship with their former spouse is automatically brought to an end. This is a common (and potentially very costly) misconception. Under the law of England and Wales, a Final Order of divorce ends the marriage so that you are no longer legally tied together, but it does not sever the financial claims that each of you have against the other.

In the absence of a financial order, your former spouse retains the legal right to make a financial claim against you at almost any point down the line. This means that assets you have built up or acquired after separation could potentially be drawn into financial remedy proceedings many years after you have separated.

Those claims can encompass a wide range of financial resources, including:

• Capital and Property – such as a share of the former matrimonial home, property, savings, investments or other capital assets accumulated during the marriage.

• Pensions – most likely a portion of one or more pension funds by way of a pension sharing order. Pensions are often the most significant asset in a marriage and are frequently overlooked.

• Spousal Maintenance – income from the higher-earning spouse to support the other party following separation, either for a fixed term or on an ongoing basis.

• Lump Sum Orders – a one-off capital payment from one party to the other, which may be drawn from existing assets or, in certain circumstances, from assets acquired after separation.

The Concept of a Clean Break

A clean break order is a Court Order that formally and permanently severs all financial claims between you.  Once made, neither party can bring any further financial claim against the other, regardless of any change in circumstances in the future.

It provides both parties with certainty, finality, and the freedom to move forward with their financial lives independently.

Where both parties have reached agreement on the division of their finances, that agreement can be formalised by way of a Consent Order. This is a document drafted by solicitors, submitted to the Court, and approved by a judge.

It is important to understand that a written agreement between the parties alone, even if signed by both sides, does not have the same legal standing as a Court Order. Only a Court-sealed Order provides the binding, permanent protection of a clean break.

There is no Fixed Statutory Time Limit

Unlike many other areas of civil law, the right to apply for financial remedy orders does not automatically expire simply because a certain amount of time has passed. A former spouse could, in principle, make a financial claim many years after the divorce was finalised.  The Court retains a wide discretion to hear such applications. This was dramatically illustrated in the case of Wyatt v Vince [2015] UKSC 14, where the Supreme Court allowed a former wife to pursue a financial claim against her ex-husband more than 20 years after they had divorced.

Post-Separation Assets are Not Always Safe

An inheritance, a lottery win, a significant bonus, or the growth of a business venture following separation may, intuitively, feel separate from the marriage, and therefore should be unavailable for any financial claim arising out of a divorce. However, under the law of England and Wales, this does not necessarily ‘ring-fence’ them, or place them beyond the Court’s reach.

Assets accumulated after separation are treated as non-matrimonial. This means that a former spouse is not automatically entitled to a share of them under the sharing principle. However, the Court has consistently held that where matrimonial assets alone are insufficient to meet a party’s reasonable needs (for example, to rehouse themselves or support the children) the Court may “invade” a non-matrimonial or post-separation asset to bridge the gap.

The Supreme Court confirmed this principle in Miller v Miller; McFarlane v McFarlane [2006] UKHL 24. Furthermore, the Court of Appeal in Jones v Jones [2011] EWCA Civ 41 established that any such invasion should go no further than the minimum necessary to meet the unmet need. In short, a delay in applying for a financial order does not mean that a post-separation windfall will be taken in its entirety, but enough to satisfy the parties’ needs.

The ‘Remarriage Trap’

Another critical reason to obtain a financial order promptly is to avoid what is commonly known as the “remarriage trap.”

If you remarry before you have resolved your financial claims with your former spouse, you will lose the right to apply for most capital financial orders under section 28(3) of the Matrimonial Causes Act 1973. This includes orders for a share of the family home, lump sums, or pension sharing. The restriction does not apply to claims for spousal maintenance, but the loss of capital claims can have significant consequences for your financial security.

It is therefore essential to ensure that all financial claims are properly dealt with before remarriage, as failing to do so may permanently bar you from making certain applications to the Court.

How We Can Help

As such, there is significant risk from delaying seeking a financial order, whether you are seeking to remarry, or have accumulated significant assets following separation.  If you have recently separated, or if you divorced some time ago without obtaining a financial order, you should seek specialist family law advice as a matter of priority.

At Farleys, our specialist family law team can advise you on your options, help you negotiate a fair settlement, and ensure that any agreement is properly formalised by way of a consent order or, where necessary, through contested court proceedings. Do not leave your financial future to chance. Get in touch today by calling 01254 606008, get in touch by email, or use the online chat below.