Divorce Financial Orders Explained
In England and Wales, a Financial Order is a Court Order that sets out the financial arrangements between you and your ex-partner after a divorce. A Decree Absolute will bring your marriage to a legal end, but a Financial Order will create a legally binding agreement settling your finances.
There is not one Financial Order that can do everything which is why there are many different types of Financial Orders which we explain below. The one that suits you will depend entirely on your individual circumstances.
To obtain a Financial Order, you need to make an application to the Court. It’s important that you make sure that you get specialist legal advice from a Divorce Solicitor. They can give you advice on which Financial Order would suit you, can help you make the Court application and can make sure that you get the best possible outcome.
For initial advice get in touch with our Divorce Solicitors.
Different Types of Financial Orders
These are some of the key Financial Orders:
- Consent Order
- Clean Break Order
- Lump-Sum Order
- Maintenance Order
- Pension Sharing Order
- Property Adjustment Order
Here’s some more information about each of these Financial Orders so you can see which ones may best suit you and your situation.
A Consent Order is a Court Order that sets out the financial agreement between you and your partner after a divorce. This will finalise how your assets and debts should be divided. A Consent Order will make the agreement legally binding and enforceable by the Court.
In some cases, couples can decide how their finances will be divided by themselves but most couples need someone else there to help them work through the issues. This can be achieved with negotiations through Mediation, a Divorce Solicitor or a Judge.
The Judge will only grant a Consent Order if the agreement is fair and reasonable to both people. The Consent Order will contain a ‘clean break’ clause - this clause ends the financial commitments that exist between you and your former partner meaning that your former partner cannot make any financial claim against you in the future.
If an agreement cannot be reached, then you will have to go Court where a Judge will decide on your behalf.
Clean Break Order
A Clean Break Order is similar to a Consent Order in that it severs the financial obligations between you and your former partner. A Clean Break Order is used where there are no matrimonial assets to divide, but you still want to cut the financial ties between you.
If you get a divorce and you don’t get a Consent Order or a Clean Break Order, you may still be bound by financial obligations between you and your former partner. In real terms, this means that if your former partner doesn’t remarry, they could demand money from you in the future if you come into an inheritance, become very successful or win the lottery.
A Lump Sum Order is where one person will pay to the other a lump sum of money. This is often ordered by the Court where one person will keep something in return for their payment, such as the family home. In this instance, the property would be transferred into their name and a lump sum would be paid to the other person for their share of the value of the property.
A Maintenance Order instructs how much maintenance will be paid and for how long. Spousal maintenance is usually paid to the person who is financially weaker.
The amount of spousal maintenance will depend on the overall circumstances of both parties. This includes considering their wealth, their needs and the length of their marriage. After considering these factors, the Court may decide that no spousal maintenance is needed.
Maintenance will usually be paid on a monthly basis. The Court has a duty to dismiss the financial obligations between the parties as soon as possible. In some circumstances, the Court may order maintenance for a short period to allow one person to become financially independent. In other cases, where a former partner has been out of work for many years, the Court may order maintenance on a lifelong basis, known as ‘joint lives’ maintenance.
Maintenance Orders can also be ordered on an interim basis whilst the divorce is being finalised, this is known as Maintenance Pending Suit.
Pension Sharing Order
Pensions can be one of the biggest assets in a marriage and when a couple gets divorced, a Pension Sharing Order divides up any pensions they both have.
Pension Sharing means when one, or both parties has a pension, these will be treated as shared and split accordingly. For more information see Pension Sharing Orders Explained.
Property Adjustment Order
A Property Adjustment Order sets out what should happen to the property, usually the family home. The options include:
- Transferring the home from one partner to the other
- Selling the home and splitting the proceeds
- Delaying the sale of the home until a certain trigger event such as the children leaving home.
You can see that there are lots of options when it comes to Financial Orders. The best option you have is get legal advice from a specialist Divorce Solicitor so that you get the best possible outcome.
For initial legal advice call our Family Law and Divorce Solicitors
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