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ending financial ties after divorce

Posted on 29 March 2023

The End Of Financial Ties After Divorce

Posted in Advice

Read time: 5 minutes

Will my financial ties with my spouse automatically end on divorce? 

Lots of people do not realise that divorce does not automatically sever financial ties between spouses.  What are the key financial questions to consider if you are getting divorced?

Can my ex-spouse make financial claims against me in the future?

If you do not have a court order, your ex-spouse may make claims against you, even if you have reached an agreement as to how your finances will be dealt with.  Plus, even if there are no joint assets and you agree to go your separate ways, it is possible that your ex-spouse may make financial claims against you in the future. 

In the well-publicised case of Wyatt v Vince, Mr Vince, a well-known businessman and football club owner, received a shock when his ex-wife, of almost two decades, decided to make a financial claim years after their divorce. The background was that Mr Vince and Ms Wyatt had married in 1981. When they were together, they lived a new age traveller lifestyle and had little if any money at all. The parties separated in 1984 and divorced in 1992. 

Years later, Mr Vince formed a green energy company, Ecotricity, which was a huge success, making him a reported multi-millionaire. 19 years after the parties divorced, Ms Wyatt issued financial proceedings against her ex-husband, Mr Vince, seeking a lump sum in full and final satisfaction of all her claims. She also applied for interim payments to cover her legal costs. Mr Vince cross-applied for Ms Wyatt’s application to be struck out.

The Court of Appeal had struck out Ms Wyatt’s claim on the basis of new court rules allowing that if the case had no prospect of success, or was an abuse of process, it could be rejected. The Supreme Court granted Ms Wyatt’s appeal against that order, allowing her to pursue her financial claim. It has been reported that an agreement was finally reached between the parties that Ms Wyatt would have a lump sum of £300,000 in full and final settlement of all financial claims that she could make against Mr Vince.

This case demonstrates that it is important to address and finalise financial issues when you get divorced.   

How can I prevent financial claims being made in the future?

If you and your spouse agree, you can enter into a Financial Consent Order. This document sets out the financial agreement reached between you. It may provide, for example, that the matrimonial home shall be transferred to one party, that one party shall pay to the other a lump sum or it can deal with how pensions will be shared. Subject to any provision for maintenance, it will state that there shall be a dismissal of your own and your spouses’ financial claims in life and death, providing for a clean break.

There are various ways in which you can reach an agreement with your spouse as to how your finances will be dealt with, including negotiation through solicitors, mediation, arbitration and through the court process. Once you reach a financial settlement this can be drafted into a Financial Consent Order and thereafter filed with the court for the Judge’s approval. Once this order is approved by the Judge in Court, it is legally binding.

At Winston Solicitors, we always advise that parties enter a Financial Consent Order whether you have assets for division or not, to ensure that any future claims are dismissed. 

What if we cannot agree a financial settlement?

Ultimately, if you cannot reach an agreement as to how your finances will be dealt with, either one of you can ask the Court to make a financial order by making an application to the Court for financial remedy orders. 

The Court process is lengthy and usually involves a three-stage process of three court hearings. If you are unable to reach a financial settlement through this process, then at the third and Final Hearing the Judge will make a court order setting out how the finances shall be dealt with. 

What are the other ways I can try and reach a settlement with my spouse?

As outlined above, there are various ways in which you can reach an agreement with your spouse as to how your finances will be dealt with. One option which has become increasingly popular and often proves successful, is to conduct a Private Financial Dispute Resolution Appointment (PFDR). The court process is a three-stage process, with the second stage usually being a Financial Dispute Resolution Appointment (FDR). It is possible to hold an FDR privately whether you are in the court process or not.

An FDR is similar to a settlement meeting at which the Judge helps to mediate between the parties. All offers and counter offers made and received are shared with the Judge at the FDR. The hearing takes place “without prejudice” which means that any statements made in a genuine attempt to settle the case at FDR cannot be put before the court at a later stage. 

At the FDR, the Judge cannot impose a settlement. The parties have a duty to try and reach an agreement. The Judge will give you an indication as to the likely outcome if the case does not settle. 

The Court usually allocates approximately 1 to 2 hours of court time for the Judge to hear the FDR and they may have many cases in their list that day.   Accordingly, in some cases parties choose to hold a Private FDR (PFDR). This is where both parties agree to instruct a suitable barrister at joint expense, to act as a Judge who would be fully briefed and would be reserved for the whole day in order to assist the parties in reaching a settlement. If a settlement is reached at the PFDR then the legal representatives will draw up a draft Financial Consent Order for filing with the court for the Judge’s approval.

As experienced Family and Divrorce Law Solicitors based in Leeds, we deal with other methods to resolve financial claims such as arbitration. The PFDR process is popular as it maintains the autonomy of decision making with our clients and their spouses. This means they make the final decision on the financial outcome of their marriage and allows them to leave this feeling they have agreed, rather than after a battle in a court or arbitration process. This also allows for very bespoke financial solutions which can take into account their specific family needs and priorities.

If you are in the process of getting divorced and require advice as to your respective financial claims, we are able to advise and assist you through this process.