Do I Need a Financial Order If I Am Going Through a Divorce?.

Recent data produced by the Family Court Statistics has shown there were 27,003 divorce applications made from July 2024 to September 2024, which was a decrease of 6% compared to the same quarter in 2023.

However, there were only 11,868 financial remedy applications made. This shows that although more people seem to be applying for a divorce, and the change in legislation has helped streamline the process for many to complete themselves online, it is worrying that parties applying for a divorce are not considering applying for a financial order and the consequences associated with this.

When two people marry, it creates a contractual tie between them which combines them financially. This tie needs to be severed upon divorce, as it is not automatically severed upon the pronouncement of the Final Order of Divorce, which many do not realise. This means that even once a Final Order of Divorce has been pronounced, both parties will still be entitled to make a claim against the other for financial remedy, which does not have a time limit.

How can matters be resolved?

During the divorce proceedings, after a divorce application has been made and acknowledged by the other party, there is a statutory 20 week waiting period before receiving a Conditional Order. This is when the court will consider a financial order that has been agreed.

In order to reach a financial settlement upon divorce, there are a few options that can help parties reach an agreement. Firstly, parties must complete and exchange voluntary financial disclosure, which will assist the discussions and help all parties understand the financial matrix. It is important both parties engage in providing financial disclosure as it provides transparency between parties and will ensure the negotiations remain focused.

Once financial disclosure has been exchanged, the parties can begin to negotiate in order to reach an agreement that is suitable for them both. In order to do this, parties can attend mediation to help discuss their finances and agree a way forward. The mediator will guide the process and ensure both parties are concentrated on reaching a resolution.

If mediation is not suitable, then parties can attempt to negotiate through solicitors in order to reach an agreement. If an agreement can be reached, then a solicitor can draft a Consent Order that can be filed with the court. A Consent Order is a court order that will record what the parties have agreed in respect of distributing their finances and will usually include the provision for a clean break. A clean break will ensure neither party can bring future claims against the other in respect of the marital finances either during their life, or on their estate upon death. The Consent Order will be filed with the court once the Conditional Order has been pronounced and will need to be accompanied with a document setting out the financial circumstances of the parties.

When deciding whether to grant a Financial Order, the court will consider the S.25 factors contained within the Matrimonial Causes Act 1973. This will ensure first consideration is given to any children of the family, and also considers various other elements including (but not limited to) the income, earning capacity, property and other financial resources of both parties; along with the needs, obligations and responsibilities of both parties. The Court is focused on ensuring that any financial agreement reached will meet both parties’ needs and is fair in the circumstances.

Do I need to go to court?

If the parties cannot reach an agreement, then an application to court may be necessary, however, this should be considered as a last resort. Financial Remedy proceedings can be costly, take a long time to conclude and it can put additional pressure and stress on those involved. The court also likes to ensure parties have tried alternate means of resolution prior to making an application to court, and so it is common for the court to direct parties to engage in non-court dispute resolution (NCDR). The court is alive to the unfortunate reality that parties cannot always agree on how to resolve their dispute, however it is always recommended clients remain open minded and attempt to agree as much as they can. This is because litigation can be notoriously unpredictable, and the court has the discretion to make an order which may not be what either party has hoped for.

Vince v Wyatt (2015) is a case that serves as a cautionary tale, which highlights the importance of securing a Clean Break Order. Kathleen Wyatt and Dale Vince divorced in 1992 with no Financial Order in place. Years later, Vince became a multi-millionaire through his green energy company. This prompted Kathleen to file a financial claim for £1.9 million in 2011. The Supreme Court ruled that her claim was legally valid despite the delay and she received £300,000. This case showcases that without a formal Financial Order, claims can resurface decades later, even after one spouse has acquired significant wealth.

If you are considering applying for a divorce, or have recently applied and want to understand your options, get in touch with one of our team for some helpful advice and guidance.