You may be surprised to find out that divorcing your husband or wife does not automatically release you from the financial ties that were established upon your marriage. The only way to sever those financial ties is to obtain a ‘Clean Break Order’.
What is a Clean Break Order?
A Clean Break Order is a financial order issued upon the conclusion of a divorce. It creates a ‘Clean Break’ between the divorced parties to sever all financial ties to ensure no future financial claims can be made against each other.
If a clean break order is not made after divorce, your ex-husband or ex-wife are legally entitled to pursue a financial claim against you, regardless of how long you have been separated.
A clean break order is always advisable, regardless of whether the parties have any substantial assets at the time of the divorce or not. It is usual to divide the matrimonial assets and thereafter agree to a clean break order.
Individuals may question why a clean break order is needed if they have reached an agreement in terms of finances or there are no matrimonial assets to share. You may see obtaining a clean break order as an extra cost you do not wish to incur and therefore avoid applying for one. However, there may be considerable repercussions for taking this approach. We rarely know what our financial position is going to be in 5 or even 30 years’ time. You could win the lottery or inherit a large amount of money. If there is no Clean Break Order in place, your ex-spouse could seek a financial claim against you, including the assets you have acquired post-marriage.
Impact of remarriage on future financial claims
An individual who, following the making of a Final Order in divorce proceedings, subsequently re-marries, is prevented from applying to the Court for any financial orders against their ex-husband or ex-wife, (excluding pension sharing) unless the claim was made prior to the remarriage.
This means that if you did not obtain a clean break order and your ex-partner remarries, their pursuit of any financial claims against you is severely limited. It is not advisable however to rely upon the remarriage of your ex-spouse instead of a clean break order as there is no definite guarantee they will remarry.
Further, it must be stressed that simply because you have remarried, this does not bar your ex-spouse from issuing a financial claim against you in the future.
It is therefore always advisable to seek a clean break order upon divorce which prohibits any future claims.
The risks of delaying a Financial Order
We understand that divorce can be a very stressful time and you may prefer to delay thinking about the financial side of things. Complex and contested financial matters can be lengthy and costly and it is understandable that it may be the last thing you want to think about when going through a divorce.
However, there are significant risks to delaying a financial settlement and clean break order and it may end up costing you a lot more in the long run as it is likely any disputed issues will become greater and more complex the more time is left.
Also, the value of pensions, property and other assets tend to increase with inflation over time, and therefore any claims in the future could be larger the longer matters are unresolved.
To make a clean break order (and any financial order) legally binding, it must be approved the Court. You can apply to the Court using a Form A along with the draft Consent Order. You are also required to complete a ‘Statement of Information Form’ (D81) which summaries your financial position and any proposed settlements to allow the Court to determine whether the consent order is fair for both parties.
If a clean break cannot be obtained by consent, you will need to make an application to the Court to issue financial relief proceedings. The Court will then consider the full and frank disclosure of the parties’ financial positions and determine whether a clean break order is reasonable and appropriate in the circumstances.
We would recommend that a Deed of Separation was entered into recording the basis of a financial agreement. However, please note that this does not replace a financial order upon divorce and you should still obtain one later on.
Contact us today to find out more about how Laker Legal Solicitors can help.