What is a divorce financial settlement?
A financial divorce settlement is a legally binding agreement reached through an agreement that sets out how the financial matters arising as a result of the marriage are to be addressed. It is completed separately from the divorce itself and reflected in a court-approved consent order (also known as a financial order), which aims to achieve a clean break to permanently cut your financial ties.
What is included in a financial order in the UK?
The financial settlement will include various financial elements such as:
- Property: The marital home and any other properties
- Personal items: Including cars and jewellery
- Money: Savings, bank accounts, and investments
- Debts: Including credit cards and loans
- Business interests: Any shares or companies you own
- Pensions: Those obtained before and during the marriage
- Maintenance payments: Including spousal and in some limited circumstances child maintenance monthly payments
Make sure to check out our guide to pulling together the information you need for a financial settlement.
How do divorce settlements work?
When deciding how to divide the assets, the court’s primary focus is the welfare of any children and ensuring fairness. While an equal division of assets is often a starting point, it is rare that a strict 50/50 split is the final decision. They will initially consider each party’s needs and what can be shared as part of the divorce settlement.
They use Section 25 of the Matrimonial Causes Act 1973 to reach a financial settlement, looking into:
- Earning capacity
- Financial needs of the parties and any responsibilities/obligations they are likely to have now and in the future
- Age
- Length of marriage
- Pension amounts
- Debt
- Standard of living enjoyed during the marriage
- Physical or mental disabilities of either party
- Contributions made to the welfare of the family (including looking after the home or caring for children)
A financial consent order records the overall agreement made by the parties (i.e. you and your ex-spouse). It is best if you can both come to an agreement amicably about the division of your assets and outline your reasoning, and how the agreement will be implemented (for example, a lump sum payment from one party to the other) within the draft consent order. Importantly, you should get the agreement drafted by a lawyer who can advise you as to whether it’s likely to be accepted by the court.
If the parties cannot agree, then the court will determine what each party is entitled to and will make a final financial remedy order.
Find out how debt is divided in divorce in our latest advice.
How long does a financial settlement take?
A financial divorce settlement can take, on average between 6-18 months to complete. This entirely depends on the cooperation of both parties, court processing times and the complexities involved in your specific situation. For example, if you have assets held abroad, matters might take longer as there will need to be valuations done across borders.
How do you get a divorce financial settlement?
In order to get a divorce financial settlement, both parties are expected to provide full and frank disclosure of all assets and reach an agreement for how things will be divided. The agreement is then drafted into a financial consent order by a lawyer, to be approved by your local family court.
The negotiation of a financial settlement can be a complex and emotionally charged process. There are certain factors that the court would consider, and it often helps to consult with a family lawyer who can guide you through the process and advise on what would be a fair division of the matrimonial assets.
There are various options available for dealing with financial matters, and reaching a financial settlement, including:
- Direct discussions between spouses
- Mediation/ arbitration
- Negotiations through solicitors
- Court proceedings
Whichever route is taken, it is important to consult a family solicitor to obtain a financial consent order. It is also important that you ensure that you are fully aware of what is in the pot for division. This is normally done through a process known as a financial disclosure.
The financial consent order will outline the financial settlement and once approved by the court, is legally binding. This is a very important document as without one, your financial claims will remain open, even if you are divorced, and one person could make a claim against the other at any point in the future.
What one of our expert lawyers has to say
Siobhan Vegh, Partner at our family law office in Bromley, says:
“Many divorcing couples do not realise how important it is to secure a final financial settlement order, particularly those who have minimal assets to distribute. However, the future is uncertain, and without a financial settlement order, you leave yourself open to a claim against your assets, even where such assets are earned post separation.
“This is a complex area of law, and as such, in order to protect your assets insofar as is possible, it is advisable to seek advice at the point of separation from a family solicitor specialising in matrimonial finances.”
Can I get a divorce without a financial settlement?
Technically, yes, you can get divorced without having a financial settlement. However, this isn’t advised as it leaves you vulnerable to your ex-spouse making financial claims against you in the future as your financial claims remain open, even after you are divorced.
This is why it is crucial to obtain a clean break order, as it legally and permanently severs all financial ties between spouses after a divorce.
Read more about whether you can get divorced without a financial settlement in our latest advice.
What is the remarriage trap?
If one partner decides to remarry before securing a financial order for their previous marriage, they lose the right to make a claim over specific matrimonial assets that they would have had access to if finalising the finances before re-marrying.
For example, if you don’t obtain a finalised financial order from your divorce and you decide to remarry, you cannot apply to the court for a lump sum of money, spousal maintenance, pension sharing order, or property adjustment from your former spouse.
We always advise our clients to wait until they have received a court-approved financial settlement before remarrying to ensure they don’t lose these opportunities.
What happens if my spouse does not follow the financial agreement we reached?
If your spouse has not complied with the financial settlement, for example, they have not released you from the mortgage by the deadline set, the consequences depend on what was written into the agreement. You are entitled to enforce the court order made if other party does not comply with its terms and the court will assist you in enforcing the arrangements.
This is one of the reasons why it is so important to obtain a financial consent order, so that the financial agreement is legally binding and can be enforced.
If your ex has broken the financial agreement, you should contact a family lawyer to discuss the options available to you.
What if I don’t want a financial consent order?
You could obtain a document known as a separation agreement, which is a formal legal contract, but not a court order and not legally binding upon you. It defines how a couple will divide their assets, manage debts, and handle childcare responsibilities without needing to go to court, which saves clients’ time, money, and unnecessary stress.
We recommend that you discuss this with a family solicitor so that you can get appropriate legal advice for your circumstances and understand the potential risks you may face in not getting a consent order.
I divorced years ago, but never obtained a financial settlement – what now?
Even if you divorced decades ago without a financial settlement, you can still apply for a consent order or financial remedy court order. It’s important to do this as your financial ties remain open, so your ex-partner can make a claim on your assets.
At Stowe Family Law, we have expert lawyers who are experienced in financial matters arising from divorce who can help you obtain a financial settlement. Get in touch with our experts today or call 0330 159 9819 to find out more.
Keep reading…
Is everything split 50/50 in divorce?
How to choose a divorce solicitor
How is a pension split in a divorce?
Originally November 2023
