Do I need a Court order regulating finances on divorce?

Thursday, August 8th, 2019

Family & Divorce Law Department

You are divorcing and have reached an agreement with your spouse about how your assets should be divided.  Is it okay just to walk away, or do you need a Clean Break Order?

What is a Clean Break Order?

You should be aware that even after you are divorced you can remain tied to each other financially for years to come, should one of you make a claim against the other.

A Clean Break Order is essentially an order made, often at the time of divorce, which dismisses future claims for financial remedies and thereby prevents a husband and/or wife from making financial claims of any kind at any stage in the future.

There are 3 elements to a clean break:

  • Income – dismissing each other’s claims to income;
  • Capital – dismissing each other’s claims to assets/pensions; and
  • Death – dismissing a claim against each other’s estate on death.

Where a Periodical Payments Order (i.e. a Maintenance Order) is made for a set term, the court will generally order a clean break at the end of the term, provided it is satisfied that the receiving party shoud be self-sufficient at the end of that term. If there are children under the age of 18 then the court may consider it appropriate to delay the clean break on income and on death for the primary carer until the youngest child reaches the age of 18 or finishes full time secondary or tertiary education.

Such orders can be made either:

  1. By consent (by way of a ‘Consent Order’) – which is when the Court is asked to approve an agreed Order dismissing financial claims between the parties.

Reaching an agreement in this way will hopefully allow you to avoid court hearings altogether. A solicitor will write and present the agreement reached (which is reflected in a Consent Order) on your behalf. The Consent Order will be considered by a Judge for approval, and at the same time the court will consider a separate document known as a Statement of Information, which sets out the headline figures and the basis upon which the agreement has been reached. If the court accepts the terms as being suitable and fair, you can finalise the matter without the delays and the significant costs that often result from legal disputes.

Or:

  1. By the court – if the parties cannot agree, then either of them can apply to the court for a judge to determine whether or not a clean break order should be made. However this is a costly process.

 

Why are Clean Break Orders Important?

The common and mistaken belief is that financial claims die when Decree Absolute (the final decree in divorce) is issued by the Court, but this is not the case. If a Clean Break order has not been made, either party can ask the Court for financial orders to be made against the other, even years after they have divorced (if for example one party comes into a lot of money, wins the lottery, or inherits a large sum of money).

The case of Vince v Wyatt [2015] emphasised the importance of Clean Break orders. In this particular case, no financial order was made at the time of divorce, and the wife successfully persuaded the Supreme Court, some 20 years after she had separated from the husband, that she had a financial claim against him for a large lump sum payment.

 

Conclusion

Stories of one party trying to revisit finances a number of years following divorce are all too common. The ex-wife of a Hollywood actor recently tried to claim a share of money that the actor had earned following their divorce. Similarly, the ex-wife of a man who won the lottery just four months after his divorce sought to claim a share of the same.

 

Clean break orders made by consent are a way for a divorcing couple to divide the marital assets fairly and to part ways for good, usually offering a simpler and more peaceful solution than court proceedings. Such orders allow the parties both security and finality and should be considered even where a divorce has been amicable. It is far easier to overturn an informal agreement than a legally binding financial order and so in order to ensure your peace of mind, a Clean Break Order is certainly an investment worth making!

Our solicitors at Hanne & Co can advise whether a clean break order is appropriate for you. To speak to one of the team please contact us on 0207 228 0017 or info@hanne.co.uk.  We offer a fixed fee consultation for £250 -£350 + VAT.