Divorce can be a complicated process, especially when it comes to dividing assets and finances. At the end of negotiations for a financial settlement in divorce there can be various outcomes one of which is the Clean Break Order.
What is a Financial Order?
Before looking at the specifics of a Clean Break Order we need to explain the overall concept of a Financial Order in divorce. A Financial Order in divorce is a legal document that outlines the financial arrangements between the divorcing couple. It covers various aspects such as the division of assets, spousal maintenance, arrangements for children and aims to ensure that both parties are treated fairly and that their financial needs are met after the divorce. Before officially sealing a Financial Order the Court will review the proposed Financial Order to ensure that it is fair and reasonable for both parties. Types of Financial Order include a Consent Order, Maintenance Order, Child Maintenance Order, Property Adjustment Order, a Pension Sharing Order and the Clean Break Order.
What is a Clean Break Order?
It is a type of divorce settlement where both parties agree to end their marriage and sever all financial ties and obligations to each other in the future. It is suitable when both parties are financially independent and do not require ongoing financial support from each other. With a Clean Break Order, both individuals can move on with their lives without any financial obligations or concerns about future claims from their ex-spouse as neither party will have to make regular payments to the other for spousal maintenance. In addition, other potential windfalls such as an inheritance or lottery win are protected from future claims.
On the other hand, other types of divorce settlements may involve ongoing financial support obligations. For example, in a Periodical Payment Order, one party may be required to make regular payments to the other for a specified period of time. This is often the case when one party has a higher income or financial resources, and the other party requires financial support to maintain their standard of living.
Every Divorce Requires a Clean Break or Consent Order
It’s important to note that when a couple divorce that ends the marriage however it does not sever the financial relationship. A sealed Court Order, in the form of a Consent Order or Clean Break Order, is required to formalise the financial settlement. Without the Court Order both parties leave themself exposed to future financial claims. A Clean Break Order can be issued independently from a Consent Order or can be included as a clause of the Consent Order.
Consent Order Versus the Clean Break Order
A Consent Order and a Clean Break Order are both legal documents that can be used to finalise financial arrangements during a divorce. However, there are some key differences between the two:
- Purpose: A Consent Order is a legal document that sets out the financial arrangements agreed upon by both parties during a divorce. It covers various aspects such as property division, spousal maintenance, child support, and pension sharing. A Clean Break Order specifically focuses on severing all financial ties and obligations between the parties involved. The Clean Break Order is suitable for divorcing couples who have no assets to divide but want to be protected from future claims.
- Financial Obligations: In a Consent Order, there may be ongoing financial obligations, such as spousal maintenance, child support, or pension sharing. These obligations can last for a specified period of time or until certain conditions are met. In contrast, a Clean Break Order aims to eliminate any ongoing financial obligations between the parties.
- Future Claims: A Consent Order may protect both parties from future financial claims. However, a Clean Break Order provides a more comprehensive protection against future claims. It ensures that neither party can make any further financial claims against the other in the future, even if there are changes in their financial circumstances.
A Clean Break Order is typically decided by the divorcing couple themselves, with the assistance of their respective family law solicitor. It is important for both parties to consider their financial circumstances and future needs before deciding if a Clean Break Order is appropriate. The court may also review the proposed Order to ensure that it is fair and reasonable for both parties. However, it is ultimately up to the divorcing couple to agree on the terms.
The Court Will Need to Approve the Order
A court decides if an Order is fair and reasonable by considering various factors. These factors may include the financial circumstances of both parties, their future needs, and the overall division of assets. Using information provided on the Form E, the court aims to ensure that both parties are treated fairly and that their financial needs are met after the divorce. It is important for the divorcing couple to provide all relevant financial information and present their case to the court. The court may also review the proposed Order to ensure that it is in line with legal requirements and does not leave either party at a significant disadvantage. Ultimately, the decision is made by the court based on the specific circumstances of the case.
It’s important to note that a Clean Break Order primarily focuses on financial matters and does not directly address child-related issues. Child custody, visitation rights and child support are typically addressed separately in a Child Arrangements Order or Child Maintenance Order.
However, it is possible for a Clean Break Order to include provisions related to child support if both parties agree to it. For example, the Clean Break Order can specify that child support payments will be made directly to the custodial parent or through a child maintenance service. This can provide clarity and ensure that both parties understand their financial responsibilities towards their children.
A Clean Break Order in divorce has several advantages. Here are some of them:
- Financial Independence: The Order allows both parties to sever all financial ties and obligations to each other in the future. This means that they can become financially independent and move on with their lives without any ongoing financial support or concerns about future claims from their ex-spouse.
- Protection from Future Claims: Both parties are protected from future financial claims. This means that neither party can make any further financial claims against the other in the future, even if there are changes in their financial circumstances. This provides a more comprehensive protection compared to other types of divorce settlements.
- Certainty and Finality: It provides certainty and finality in terms of financial arrangements. Once the Clean Break Order is approved by the court, both parties can have peace of mind knowing that their financial obligations to each other have been resolved and there will be no future financial surprises.
- Flexibility: It allows divorcing couples to have flexibility in their financial arrangements. They can agree on the terms of the Clean Break Order based on their specific circumstances and financial needs. This flexibility can help in reaching a fair and reasonable financial settlement that works for both parties.
- Protecting Windfalls: Any potential windfalls such as an inheritance or lottery win are protected from future claims. This means that both parties can keep any unexpected financial gains without having to share them with their ex-spouse.
The Potential Disadvantages of the Clean Break Order
A Clean Break Order in divorce has several advantages. However, there are also some potential disadvantages to consider. Here are a few:
- Limited Financial Support: Both parties sever all financial ties and obligations to each other in the future. This means that there will be no ongoing financial support, such as spousal maintenance or child support, even if one party is in need. If one party is financially dependent on the other, a Clean Break Order may not be the best option as it does not provide for ongoing financial assistance.
- Inflexibility: While a Clean Break Order allows for flexibility in reaching a financial settlement, once it is approved by the Court, it becomes legally binding. This means that any changes in financial circumstances or needs of either party cannot be easily addressed. If there is a significant change in circumstances, such as loss of employment or health issues, it may be difficult to modify the Order to accommodate these changes.
- Potential for Future Disputes: Although the Order aims to eliminate any future financial claims, there is still a possibility of disputes arising. If there are any assets or financial matters that were not properly addressed or disclosed on the Form E or during the divorce proceedings, it may lead to disagreements and potential legal battles in the future.
What are the different types of Clean Break Order?
There are different types of Clean Break Order that can be issued depending on the specific circumstances of the divorcing couple. Here are some of the different types of clean break orders:
- Lump Sum Payment: This type of Clean Break Order involves one party making a one-time lump sum payment to the other party to sever all financial ties. The lump sum payment can be based on the value of assets or other financial considerations.
- Property Transfer: In this type of clean break order, one party transfers ownership of a property to the other party as a way to sever all financial ties. This can be done by transferring the property title or by selling the property and dividing the proceeds.
- Pension Sharing: If one party has a pension, a Clean Break Order can include provisions for pension sharing. This means that a portion of one party’s pension is transferred to the other party to sever all financial ties.
- Maintenance Payment: In some cases, a Clean Break Order may include provisions for one party to make a one-time maintenance payment to the other party. This payment is meant to provide financial support and help the receiving party become financially independent.
The Immediate and Deferred Clean Break Order
An Immediate Clean Break Order is a type of Order where all financial ties and obligations between the divorcing couple are severed immediately upon the approval of the order by the Court. This means that both parties are no longer financially dependent on each other and there will be no ongoing financial support or claims in the future.
On the other hand, a Deferred Clean Break Order is a type of Order where the financial ties and obligations between the divorcing couple are severed at a later date, usually after a specific event or milestone has occurred. This event or milestone could be the sale of a property, the attainment of a certain age of children involved, or the completion of a specific period of time.
Is a Clean Break Order essential?
For most people, obtaining a Clean Break Order is highly advisable. This offers protection against any future financial claims by your former partner. Predicting one’s financial condition in the long term, such as in a span of five, ten, or twenty years, is not feasible, so safeguarding oneself is prudent.
The instances in which a clean break order might not be desirable are when ongoing spousal maintenance needs to be provided. Even under such circumstances, it may still be feasible to secure a deferred Order if the spousal support is only required for a fixed period (e.g., until your children become independent).
When can you receive a Clean Break Order?
A Clean Break Order is obtainable once you have received a Conditional Order for divorce.
How Can Tyrer Roxburgh Help?
If you are thinking of divorce or have started proceedings and need to know if a Clean Break Order is possible for your and your former spouse, please get in touch. We offer an initial fixed fee consultation where you can discuss your all your options and potential next steps.