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What is a financial order in divorce proceedings?
- AuthorSam Miles
Upon separating, many married couples assume that the financial arrangements and division of assets will be considered by the court at the same time as the divorce petition. This is not the case however, and so a legally binding financial order may be needed to specify how any monetary assets will be divided. It will also bind you to an agreement that no future claims will be made against your former spouse’s financial assets, for example if they receive a large inheritance or sell their business. Sam Miles, Partner in our Family Law team, explains more about how the application for a financial order works and when you should apply.
Although the divorce process and financial arrangements are closely related, the court will only consider the latter where you have asked it to do so. It is possible, although usually not advisable, for couples to finalise their divorce with no formal provision having been made for the division of their assets.
Do I need a legally binding financial order?
In some instances, separating couples are able to agree the ongoing financial arrangements between themselves without the need to attend family mediation or court at all. However, even in these situations, it is important that any agreement is formalised in an order that has been approved by the court. Without such an order, the agreement will not be legally binding and may not be upheld by the court in the event that one party later seeks a different settlement.
Furthermore, the potential for either party to make a claim against the other will remain until their claims have been formally dismissed by the court or, in most instances, until the party seeking to make a claim has remarried. It is therefore advisable that a financial order be made at the same time as the divorce proceedings in order to prevent any potential claims in the future. This applies even where separating couples have decided that they will each retain only the assets in their sole name or in situations where there are no assets. Without an order being made recording this ‘clean break’, there is a risk that either party could make a claim in the future.
What do I do if we can’t agree on our financial arrangements?
In this event, it is usually best that you attend family mediation to see if that can assist you in reaching an agreement. Before even approaching the courts to reach an agreement, it is required for you to attend a Mediation Information Assessment Meeting (MIAM), which will determine whether family mediation is appropriate for your own situation.
If mediation is not appropriate or, in the rare situation, it has not been successful and arrangements remain in dispute, an application can be made to the court for a judge to determine how the assets should be divided.
When should I apply for a financial order following divorce?
Whether a financial order is imposed by the court or is made after you have reached an agreement, the order can only be approved after the pronouncement of the decree nisi and it will take effect from the pronouncement of the decree absolute. There are instances when a party will be financially prejudiced if the decree absolute is pronounced prior to the approval of a financial order and therefore it is usually advisable to await the making of a final financial order before making the application for the decree absolute.
If you are considering divorce and would appreciate advice on financial arrangements, you can contact Sam Miles on 023 8071 7431 or email email@example.com. Alternatively, for more information on how Family mediation could help you, contact Stacey Robertson on 023 8071 7431 or email firstname.lastname@example.org.
This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice. All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.