Do I need a financial settlement?

Without a financial settlement or clean break order, you run the risk of continuing to be financially tied to your ex-partner from a legal perspective. Whatever agreements made in private between the two parties would not have legal standing.

If you divorce without a financial settlement, a former spouse may be able to apply to the court for a financial order many years later. There is no limitation period for making a financial claim, allowing an ex-spouse to make a claim even after 20+ years, as shown in Wyatt v Vince.This shows the financial dangers of DIY divorces and not engaging a legal professional in the process.

Any agreements made informally between the separating couple are not legally binding. These amicable agreements may work in the short term, but if someone decides to break this agreement, there is little legal recourse available for the other party to hold them accountable to the original agreement.

For example, if one party agreed to informal spousal maintenance payments and they suddenly decided to stop these, there would be no easy way to enforce the arrangement without a court order.

Entering a new relationship before severing financial ties from an ex-partner or coming to necessary agreements can complicate things going forward, for all the parties involved.

For example, if you remarry or cohabit with a new partner before obtaining a final financial order, you can severely restrict or even eliminate your right to make certain financial claims against your ex-spouse. This is called the ‘remarriage trap.’

However, the ex-spouse can still make claims against you. This can include assets that are jointly owned by yourself and any new partners you have in the future.

An ex-spouse could have a claim to your pensions if there is no legal settlement in place, which can be particularly damaging if the value of the pension pot has increased significantly over time.

The lower-earning spouse could also be left in financial hardship on retirement if there is no financial order in place ensuring that pensions are split fairly. It is important to consider the long-term impacts of divorce, as well as any immediate concerns, such as housing.

If an ex-spouse dies and there is no legal severing of financial ties, the surviving ex-spouse can make a claim against their estate under the Inheritance Act 1975, claiming for ‘reasonable financial provision’, provided they have not remarried or formed a new civil partnership.

This can lead to conflict and distress between the deceased’s family and the surviving ex-spouse, as well as lengthy (and costly) legal disputes to resolve any disputes.

Read more about how to protect your inheritance from divorce in our latest advice.