How do you agree a financial settlement in a divorce? What is a Consent Order?

13th December ‘18

What happens if you have both come to the decision there needs to be a divorce and you are able to have a sensible conversation about what should happen to the finances? Does the Court need to get involved at all in your financial settlement?

The simple answer is Yes. It is a widespread myth that once you obtain the final stage of the divorce, the Decree Absolute, your financial claims against each other are automatically dismissed; they are not! One of the best pieces of advice I can give as a Family Lawyer is to make sure that regardless of how amicable the separation has been, you should always get your financial agreement drawn up into a legally binding Consent Order, even if you both agree that neither of you should receive anything from the other party.

A Consent Order is an order approved by the Court, which sets out the terms of the settlement agreed between divorcing couples in relation to their matrimonial finances. A Consent Order usually covers any financial provision to be made by one party to the other, such as maintenance payments, lump sum orders, sale or transfer of property order and any orders in relation to pension sharing.

The advantages of having a Consent Order are that it provides certainty and clarity for both parties and it should also provide finality. Once sealed by the Court, it is a legally enforceable Order which you can both rely on and return to Court if either of you fail to comply with the agreement. One of the most significant advantages of a Consent Order is that it is also in full and final settlement and therefore with the inclusion of a “clean break” clause can end all further financial claims either party has against the other. Therefore, if you were to later receive a substantial inheritance or win the lottery, your ex-partner would not have any interest in your newly acquired funds. Unfortunately, in the absence of there being a Consent Order, even without a significant change in financial circumstances, your ex-partner may be influenced by a friend or a new partner at some later date to apply to the Court for further financial provision.

The case of Wyatt v Vince demonstrates that obtaining a Decree Absolute alone is not sufficient in preventing subsequent financial claims against you. In this case the couple had been divorced for over 20 years and at the time of their divorce neither had any substantial assets and they did not obtain a Consent Order. Mr Vince later went on to establish a green energy company and became a multi-millionaire. As their financial claims were still open, Mrs Wyatt was able to make a successful financial claim against his newly acquired wealth despite being separated for over two decades. This case should provide a clear warning to all divorcing couples that their respective financial claims against each other will remain open until dismissed by a Court Order. She received a lump sum of £300,000 and costs of £325,000.00.

Obtaining a Consent Order does not need to be deemed a hostile step. Once the agreement has been drafted by a Solicitor and signed by both parties (and their legal representatives), it can be lodged with the Court with a short summary of the parties’ financial circumstances for the Judge’s review when reading the agreement. Provided the Judge considers the settlement agreed to be fair and has no queries, the Consent Order can be sealed without a Court Hearing or the parties having to attend Court. The Consent Order should ideally be lodged with the Court as soon as possible after you obtain your Decree Nisi (as the court’s power to approve a consent order only arises when the Decree Nisi has been pronounced) and before you apply for your Decree Absolute.

It is incredibly important that the Consent Order is well drafted and approved by the Court. An agreement that has not been drafted in the correct Consent Order format or been approved and sealed by the Court will not be legally binding on the parties and will leave the door open for either party to apply to the Court for further financial provision.

If you would like any further information about Consent Orders or financial settlements within a divorce, please contact Naheed Taj, Head of Family on [email protected]

This paper is intended to be a brief note for clients and other interested parties. The information is believed to be correct at the date of publication but should not be relied upon as a substitute for professional advice. Please speak to a member of our team.

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