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Divorce is not just an emotional process but also a financial one. Ensuring that financial matters are settled fairly is a key part of finalising a divorce, and this is done through a financial order. A financial order is a legally binding agreement that determines how assets, property, pensions, incomes and financial responsibilities are divided between former spouses. Without a financial order, even after divorce is finalised, financial ties may remain, leaving the door open for future claims, even many years later.
Understanding how financial orders work, what they cover, and how to apply for one is crucial for anyone going through a divorce. This guide explores everything you need to know about financial orders in divorce, from the types of orders available to the process of securing a fair settlement.
A financial order is a legal document issued by a court that sets out the financial settlement between divorcing spouses. It can include arrangements for property division, pensions, spousal maintenance, and other financial matters. Without a financial order, financial ties remain, meaning that either spouse could make a financial claim against the other in the future, even years after the divorce has been finalised.
A financial order provides certainty and security by ensuring that both parties are legally bound by the agreed financial settlement. Even if a couple reaches an informal agreement about finances, this will not be legally enforceable unless approved by the court in the form of a financial order.
Many people assume that once a divorce is finalised, all financial ties between spouses are automatically severed. This is not the case. Without a financial order in place, either spouse can make a financial claim against the other, even long after the divorce has been finalised. This can include claims on future earnings, pensions, inheritances, or other assets acquired after the marriage has ended.
A financial order provides legal protection by ensuring that financial matters are settled fairly and conclusively. It sets out exactly what each party is entitled to and prevents either spouse from making further claims in the future. This is particularly important for those who expect to acquire significant assets, such as property or inheritance, after the divorce.
One does not need the assistance of a financial order in order to finalise a divorce, but not having an order means ex-spouses will have financial ties to each other. This means either party can make claims in the future, even years after the divorce takes place. Having a financial order imposes a legally binding settlement which provides certainty while protecting one’s assets, income, and prospects of future financial stability.
There are several different types of financial orders (some of which are detailed below) that a court can issue, depending on the circumstances of the divorcing couple. Each type of order serves a different purpose and covers different aspects of financial settlement.
You can either have a Financial Order via consent referred to as a Financial Consent Order or when the court determines the terms. Either way the order is a legally binding document between divorcing couples that outlines the terms of financial settlement they have reached with regard to their finances. In other words, the order is a document that specifies how assets like property, pensions, savings, and investments will be divided between the parties.
Without a Financial Order, an agreement remains informal and is not enforceable by law. A Financial Order will often include one or more than one of the specific capital or income orders below. A Financial Order will include the provision for a clean break unless there is payments of spousal maintenance.
A clean break order is designed to sever all financial ties between spouses, ensuring that neither party can make any future financial claims against the other. This is often used in cases where there are no ongoing financial commitments, such as spousal maintenance or pension sharing. A clean break order provides finality and allows both parties to move on independently.
A pension sharing order deals specifically with the division of pensions. Pensions are often one of the most valuable assets in a marriage, and a pension sharing order ensures that they are divided fairly. The order allows a percentage of one spouse’s pension to be transferred to the other, providing financial security for both parties in the future.
A periodical payment order requires one spouse to make regular payments to the other to provide financial support after divorce. This is usually granted in cases where there is a significant income disparity between the spouses, or where one spouse gave up work to support the family during the marriage. The amount and duration of spousal maintenance payments vary depending on individual circumstances.
A property adjustment order determines what happens to the family home and any other property owned by the couple or by one of the parties. It may order the transfer of property ownership, sale of the property, or specify living arrangements for a certain period. This type of order ensures that both parties receive a fair share of the property assets.
A lump sum order requires one spouse to make a one-off payment to the other as part of the financial settlement. This may be used to compensate for the division of assets, buy out a spouse’s share of property, or settle outstanding financial claims.
Yes, you can legally divorce without a financial order, but doing so leaves financial ties between ex-spouses intact. Without a legally binding settlement, either party could make financial claims against the other in the future, even years after the divorce. This lack of clarity can lead to ongoing disputes and financial uncertainty, making it essential to obtain a financial order to protect both parties.
If the terms of financial settlement are agreed, then specific documents need to be prepared and then lodged on the online divorce portal.
The first is a document setting out the exact terms of the Order you are asking the court to make – this is the Financial Consent Order – this will include all the terms agreed and unless there is to be spousal maintenance it will include a clean break order.
The second is a document that gives an overview of your personal and financial circumstances. This is called a Statement of Information for a Financial Remedy Order, or a D81 Form for short. You can see examples for the D81 Form on the internet. Once the Consent Application is signed by you both and you have fully completed the D81 Form, they can be sent to court for the approval of the District Judge in your absence.
If there is to be a pension sharing order you will also need a Pension Sharing Annex to be approved, initially this also has to be approved by the pension trustees before submitting to court for approval with the order and D81
It is not the role of the court simply to “rubberstamp” the agreement that you have reached, but it is the role of the court to assess whether it is reasonable. If the agreement is felt to be reasonable, then an order will be made and what usually happens is that you simply carry out what you have agreed to do.
To obtain a financial order where there is no agreement, involves an application to the court to start financial remedy proceedings. The process starts with Form A, which formally requests a financial order. Once submitted, a series of legal steps will follow, including financial disclosure, negotiations, and court hearings if necessary.
The first stage of the process involves financial disclosure, where both parties must provide full and honest details of their income, assets, pensions, and liabilities. This is essential for ensuring that a fair settlement can be reached. If either party fails to disclose assets or provides misleading information, the court can impose penalties.
Once financial disclosure is completed, both parties are encouraged to reach an agreement through negotiation or mediation. If an agreement is reached, the terms are drafted into a consent order, which is then submitted to the court for approval. The court will review the order to ensure that it is fair and reasonable before making it legally binding.
If an agreement cannot be reached, the case may proceed to a financial dispute resolution hearing, where a judge will provide guidance on how the settlement should be structured. If no agreement is reached at this stage, the case will go to a final hearing, where the court will decide on the financial settlement and issue a binding order.
A financial order cannot be granted without the Conditional Order in the divorce having been made. Once both spouses have decided on the divorce, they can set up a financial arrangement which can be formalised later on, but it is not legal binding and unenforceable unless there is a Financial Order.
The cost of a divorce financial order varies depending on complexity and whether both parties agree on a settlement. If financial matters are disputed, legal fees for negotiation, mediation, or court proceedings can range from to £10,000 to £40,000 plus, depending on the case.
When making a financial order, the court considers several factors to ensure that the settlement is fair. These include the income, financial resources, and earning capacity of each party, as well as their financial needs and obligations. The court also considers the standard of living during the marriage, the duration of the marriage, and the contributions made by each spouse.
If children are involved, their welfare is the court’s primary concern. The court will ensure that arrangements are made to provide financial stability for the children, including housing, education, and general living expenses.
The court aims to achieve fairness but does not always divide assets equally. In cases where one spouse has significantly lower earning potential or has sacrificed their career to support the family, they may receive a larger share of the assets.
In most cases, financial orders are granted based on an agreement reached between both parties, known as a consent order. This legally binding document formalises the financial settlement and ensures that both spouses uphold their agreed terms. Securing a financial order is essential, as it officially severs financial ties between former spouses, preventing future claims and providing long-term financial certainty.
Once a financial order has been issued, it is legally binding, and both parties must comply with its terms. However, in certain but very limited circumstances, it may be possible to vary or appeal a financial order. Changes can be requested if there has been a significant change in financial circumstances, such as loss of employment or serious illness.
Spousal maintenance orders are often subject to review and can be adjusted if the financial situation of either party changes significantly. However, lump sum payments, property orders, and pension sharing orders are usually final and cannot be altered once approved by the court.
Obtaining a financial order is an essential step in ensuring a fair financial settlement after divorce. Whether you need a clean break order, a pension sharing order, or a spousal maintenance agreement, it is crucial to seek legal advice to ensure that your financial future is protected.
If you need assistance with applying for a financial order, negotiating a settlement, or understanding your legal rights, contact a specialist divorce solicitor today. Call 0161 696 6193 or complete our online enquiry form to arrange a confidential consultation.
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