A Financial Order in divorce is a legally binding document that outlines the financial arrangements between the parties involved in a divorce. It is important to obtain a Financial Order to ensure that all financial matters are properly addressed and resolved as part of the financial settlement in divorce.
Without a Financial Order, there is no legal obligation for either party to fulfil any financial obligations towards the other. This means that even if you have reached a verbal agreement or have a written agreement, it is not legally enforceable without a Financial Order.
A Financial Order protects your financial interests by ensuring that all assets and debts are properly divided between the parties. This includes any property, savings, investments, pensions, and other assets that were acquired during the marriage.
A Financial Order also helps to avoid future disputes or misunderstandings between the parties. By clearly outlining the financial obligations of each party, there is less room for confusion or disagreement in the future. For example, a Financial Order may include provisions for child support or spousal maintenance, ensuring that both parties understand their financial responsibilities towards each other, and any children involved.
The Types of Financial Order in Divorce
There are several types of Financial Orders that can be obtained in England and Wales, depending on the specific circumstances of the case.
The Consent Order
A Consent Order is a legally binding document that outlines the financial arrangements agreed upon by both parties in a divorce. It is used when the parties have reached an agreement on how to divide their assets and any financial obligations towards each other.
The Consent Order is typically drafted by solicitors and includes details such as the division of property, savings, investments, pensions, and any other assets acquired during the marriage. It may also include provisions for child support or spousal maintenance.
Once the Consent Order is drafted, it needs to be submitted to the Court for approval. A judge will review the order to ensure that it is fair and reasonable. If the judge approves the Consent Order, it becomes legally binding, and both parties are required to fulfil their financial obligations as outlined in the order.
The Clean Break Order
A Clean Break Order is a type of financial order that can be obtained in England and Wales during a divorce. It can be an independent order or included as a clause in the Consent Order.
As with the Consent Order It is a legally binding document that outlines the financial arrangements between the parties involved in the divorce however it differs from the Consent Order because it has the aim of achieving a clean break.
The main purpose of a Clean Break Order is to sever the financial ties between the parties, ensuring that neither party has any ongoing financial obligations towards the other. This means that once the Clean Break Order is approved by the Court, both parties are free to move on with their lives without any financial entanglements or fear of future claims.
Pension Sharing Order
A Pension Sharing Order allows for the transfer of a portion of one party’s pension to the other party. This can be done by either creating a new pension arrangement for the receiving party or by adjusting the existing pension arrangement of the party who is transferring the pension.
Lump Sum Order
A Lump Sum Order is typically used when the parties have not reached an agreement on how to divide their assets and any financial obligations towards each other. It allows the Court to make a decision regarding the payment of a lump sum of money from one party to the other.
Spousal Maintenance Order
Spousal maintenance is a type of ongoing financial support that one party may be required to pay to the other party after a divorce or separation. It is typically used when one spouse requires financial assistance to meet their reasonable needs after the end of the marriage.
Spousal maintenance is usually awarded when there is a significant difference in income or earning capacity between the parties, or if one party has been financially dependent on the other during the marriage. The purpose of spousal maintenance is to provide financial support to the receiving party and help them maintain a similar standard of living as they had during the marriage.
The amount and duration of spousal maintenance payments can vary depending on various factors, such as the length of the marriage, the financial needs of the receiving party, the ability of the paying party to provide support, and any other relevant circumstances. The terms of spousal maintenance are often determined by the Court or agreed upon by both parties in a divorce settlement.
It is important to note that spousal maintenance is different from child support, which is a separate financial obligation to support the children involved in the divorce or separation.
Child Maintenance Order
Financial Arrangements for Children are normally assessed, arranged and monitored by the Child Maintenance Service. A Child Maintenance Order is used instead of the Child Maintenance Service (CMS) in certain circumstances.
- Agreement. If the couple agree on the terms of their ongoing child support this can be formalised in a child maintenance order without the need of involvement from the CMS.
- Complex Finances: Child Maintenance Order may be used when there are complex financial arrangements or assets involved that require a more detailed assessment and determination of child maintenance payments.
- Jurisdiction: If the child or one of the parents is not habitually resident in the UK, the CMS will not have jurisdiction and therefore the Court is able to make orders for child maintenance.
- Maximum CMS Assessment: Where there has been a maximum CMS assessment, the Court can make an order to “top up” the child maintenance.
- Education and Disability: A Child Maintenance Order can be made in relation to educational expenses or costs associated with a disability.
Step Down Order
A Step-Down Order is a type of financial order that can be made by the Court during a divorce or separation in England and Wales. It is a legally binding document that outlines the gradual reduction of spousal maintenance payments over time.
In a Step-Down Order, the Court may decide to reduce the amount of spousal maintenance payments at specified intervals. This is often done to provide financial support to the receiving party during the transition period after the divorce or separation, while also encouraging them to become financially independent.
The Step-Down Order typically includes provisions for the reduction of spousal maintenance payments, such as specifying the percentage or amount that will be reduced at each interval. It may also outline any conditions or criteria that need to be met for the reduction to take effect.
It is important to note that the terms of a Step-Down Order can vary depending on the specific circumstances of the case. It is advisable to seek legal advice to understand the implications and requirements of a Step-Down Order in your particular situation.
Interim Maintenance Order
An Interim Maintenance Order is a type of financial order that can be made by the Court during divorce or separation proceedings in England and Wales. It is a temporary order that provides financial support to one party until a final financial settlement is reached.
The purpose of an Interim Maintenance Order is to ensure that both parties have sufficient financial resources to meet their immediate needs during the divorce or separation process. It may include provisions for the payment of living expenses, mortgage or rent payments, and other necessary costs.
The Court will consider various factors when making an Interim Maintenance Order, including the financial needs and resources of each party, the standard of living during the marriage, and any other relevant circumstances. The aim is to provide a fair and reasonable level of financial support until a final financial settlement can be reached.
The Property Adjustment Order
A Property Adjustment Order is used when the parties have not reached an agreement on how to divide their property and assets. It allows the Court to make decisions regarding the ownership and distribution of property, including the family home and any other property assets acquired during the marriage.
In a Mesher Order, the Court may decide to postpone the sale of the family home until a specific event occurs, such as the youngest child reaching a certain age or completing education. This allows the primary caregiver to continue living in the property with the children until the specified event triggers the sale.
The Martin Order is also in relation to property, but allows a former spouse to live in matrimonial property for life or remarriage and is not dependent on a trigger event.
The Martin and Mesher Orders can be complex and are generally used when there is a wide gap between the earning capacity of the parties.
How to Obtain a Financial Order
Obtaining a Financial Order in England and Wales involves several steps, which we will outline below.
Step 1: Disclosure of Financial Information
The first step in obtaining a Financial Order is to disclose all financial information to the other party. The disclosure is often done via the Form E and includes details of all assets, debts, income, and expenses. Both parties are required to provide full and frank disclosure of their financial situation, and any attempts to hide assets or provide false information can have serious consequences.
Step 2: Negotiation and Agreement
Once all financial information has been disclosed, the parties can negotiate and come to an agreement on how to divide their assets and any financial obligations towards each other. This can be done through direct discussions, mediation, or with the help of solicitors.
If an agreement is reached, it is important to have it drafted into a legally binding document, such as a Consent Order, which can then be submitted to the Court for approval.
Step 3: Court Application
If the parties are unable to reach an agreement, or if one party is not willing to disclose their financial information, then an application to the Court may be necessary. This involves filling out a financial order application form and submitting it to the Court, along with a fee.
The Court will then schedule a hearing where both parties will have the opportunity to present their case and provide evidence to support their position. The Court will then make a decision on how to divide the assets and any financial obligations towards each other.
Step 4: Approval and Implementation
If an agreement is reached or the Court makes a decision, the Financial Order will need to be approved by a judge. This can be done by submitting a Consent Order or a draft order to the Court for approval.
Once the Financial Order has been approved, it becomes legally binding and both parties are required to fulfil their financial obligations as outlined in the order.
Seek Legal Advice
Negotiating a financial settlement in divorce can be stressful and complex so, to ensure you get the best outcome possible, it’s crucial to take seek legal advice and guidance. The family law and divorce solicitors at Tyrer Roxburgh can help.