“It looks like a clean break!” While one might commonly hear those words whilst flat-out on a hospital gurney, it is also very common to hear this from your solicitor when talking about your financial settlement.
What is a 'clean break'?
A ‘clean break’ in financial terms is about dividing your assets and once this is done there are no other ongoing financial ties between you. Neither partner has to pay the other any further monies, except for childcare.
Whilst trying not to bore with the actual law; the Matrimonial Causes Act 1973 makes it plain that the court must look at bringing your financial claims to an end at the earliest possible opportunity. That’s the starting point. Question - can there be a clean break in your case? If not, how much are you looking at paying and for how long?
Will a 'clean break' work for me?
For some couples a clean break is not realistic because one partner requires ongoing financial support from the other. Payments can be made for years and sometimes for life. You can imagine the sort of concerns which arise, particularly for the one paying the monies each month – is it fair?
A recent case at the Court of Appeal put the importance of a 'clean break' into sharp focus. The court was able to order Graham Mills to raise the monthly maintenance payments to his wife nearly 15 years after the initial settlement, despite having paid a lump-sum of £230,000 and regular instalments of £1,100.
The court found that, despite his ex-wife's 'unwise' investments, because she was unable to meet her 'basic needs', Mr Mills was still liable to provide adequate financial support.
Setting a precedent
In 2015 the Court of Appeal made a decision about these payments and effectively said that they cannot be “a meal ticket for life”.
The case involved a couple who separated in 2006, Mr. & Mrs Wright. Mr Wright was a race-horse surgeon. They had a home that was worth £1.3 million which they were told to sell and divide the money. Mrs Wright received a £450,000.00 mortgage-free house with stabling for horses. Mr Wright was ordered to pay a total of £75,000.00 per year for maintenance and school fees and within this Mrs Wright received £33,200.00 per year as maintenance for herself. So Mr Wright was paying for his children and also for his wife.
Mr Wright became worried about his financial position after his retirement at 65. He was probably concerned about being able to afford what he had to pay. Once an order is in place it has to be paid. He wanted the amount to be reduced. He was successful. The court ordered that payments to Mrs Wright should be brought to an end and tailed off over a five year period leading up to Mr Wright’s retirement. The judge told Mrs Wright that there was no good reason for her not to seek work following the separation. Basically, she needed to look at helping herself.
Mrs Wright was understandably unhappy with the decision and took her case further. She appealed. A Court of Appeal judge told her that divorcees with children aged over seven should work for a living. She should “just get on with it,” and look for a job like a number of other women with children. Mrs Wright lost her case.
That decision was the latest in a line of decisions where judges have given clear indication about maintenance and voiced an expectation that the one receiving the money may be expected to get back into the workplace after separation. And even parents with young children in school and certainly older children are expected to do what they can to achieve financial independence - whether that is by gaining employment or increasing working hours. Whilst you cannot be forced into the workplace, your partner is unlikely to be held financially responsible for you.
A clean break is very likely to be achieved for short marriages and younger couples and for older couples and longer marriages where needs can be met from their assets.
Many couples want to agree their financial arrangements between themselves – which is a positive. However, get your agreement recognised – whether by court order if you are divorcing or a written agreement if you aren’t. An order is legally binding and will give you certainty.
The financial claims that you have during your marriage and even after you are divorced, remain open and ongoing unless and until you have a financial settlement order from the court. These two very important words (clean break) bring to an end all financial claims, in the future and even on your death. No more financial responsibilities.
Don't rely on a verbal agreement
Unfortunately, I do see situations where couples have had a verbal agreement, divided their assets and moved on, only to find that months and sometimes years later, the ex-spouse stakes a claim on their assets. They can do this because there is nothing preventing it. This opens up all the issues that they thought they had put to bed and in some cases ends up with more money being paid out. Don’t rely on a verbal agreement and get your clean break recognised by the courts!
By family and divorce solicitor, Mandy Rimmer