Dealing with your finances on divorce or dissolution

It is a common misconception for separating couples that there is no requirement to resolve their finances once the final divorce or dissolution Order has been granted by the court. 

Although it is not a strict requirement to deal with the finances, some would be surprised to learn that when you marry or form a Civil Partnership, there are certain financial rights that arise from the Matrimonial Causes Act 1973 or the Civil Partnership Act 2004. When applying for a divorce or dissolution, there is the option to make a claim against property, savings, pensions, inheritance upon death and possibly for ongoing financial support. 

What are the risks of separating without dealing with the finances?

Unless an Order is obtained from the court confirming how the finances have been divided, the financial claims that you and your former partner can make against each other remain open, even when the divorce or dissolution is concluded.

Proceeding with a divorce or dissolution without having an order detailing how the finances were divided, may lead to potential disputes in the future. For example, if, after the divorce or dissolution, one person has a successful business venture and there is no order detailing how the finances were divided, the other person could pursue an application. 

How do I deal with the finances?

It is sensible for individuals seeking to divorce or to dissolve their Civil Partnership to obtain a Financial Consent Order (FCO). It is often hoped that separating couples can reach an agreement in relation to the financial aspects of their separation, which can then be recorded in a FCO. The outcome reached must be fair and reasonable in line with the law, so it is often best to obtain advice on the outcome reached. If reaching an outcome with your former partner is (or was) difficult, there are various ways to resolve matters out of court, such as mediation, negotiation through solicitors, arbitration or the collaborative process. Reaching an agreement requires both you and your former partner to actively engage. Without engagement, it is likely that an application to the court will have to be made, in turn increasing acrimony, time, and costs. 

Once an agreement has been reached regarding how the finances will be divided, or an Order is made by a Judge in court proceedings, the outcome will be recorded in a FCO. The FCO will be legally binding and provide certainty moving forward.  

If you require any advice on any of the issues raised in this article, please get in touch via our contact page or contact Monicka Rai direct here.