If you are going through a divorce, you may have heard the term ‘clean break order’. Rebecca Procter, Head of the Family Team, looks at what this is and why it is important to secure a financial order when you end your marriage.
When you divorce, your solicitor will deal with financial issues alongside the divorce proceedings. This is crucial, because divorce does not end your financial responsibility to each other. Without a financial order, it would be open to your former spouse to make a claim against you long into the future, even decades after your divorce is finalised.
Dealing with financial issues on divorce
Your solicitor will work with you to establish what financial priorities you have and what you hope to keep after your divorce. Your assets will be shared and the starting point for the court is to divide them as equally as possible, although adjustments can be made to take into account one party’s weaker financial position. For example, if one of you has given up their career to raise your children, then they might receive more to compensate you for the reduction in their earning capacity.
Negotiations can take place to try and agree on how assets will be shared. One of you might keep the family home, while the other could receive a larger share of something else, such as pension provision, in return.
Financial orders available on divorce
The court has a range of financial orders it can make in a divorce case, as follows:
- A consent order, sealing an agreement made between you and your spouse so that it becomes legally binding
- A clean break order, dividing your assets and ending your financial responsibilities towards each other
- A property adjustment order, setting out how property will be dealt with
- A pension sharing order
- A maintenance order, requiring one party to pay maintenance to the other
- A lump sum order, where a sum of money is paid to one party
How does a clean break order work?
A clean break order deals with all of your assets, to include property, pensions and savings. It ends your financial obligations to each other.
The order can include maintenance, if the court believes this is necessary. The parties in a divorce are encouraged to work towards financial independence, so if maintenance is granted, it will often be for a fixed period, after which time it will end.
The court will take into account the length of your marriage in deciding how to split your assets. If a marriage is relatively short, for example, five years or less, the court may order that you both leave the marriage with the assets that you brought to it.
In a long marriage, all of your assets are likely to be considered to be marital assets and shared equally or adjusted to take into account the individual circumstances of each party.
How to secure a clean break order
A clean break order can give you certainty for the future and will end the financial obligations you and your spouse have to each other.
The first step is full disclosure of your financial situation, to include issues such as how many children you have, what property you own, how much you earn and how much you have in savings.
Your solicitor will be able to negotiate on your behalf to try and reach an agreement over sharing of your assets. If this is not possible, they can refer you to mediation. A mediator will work with you both to discuss your options and to try and resolve disagreements. Agreeing on financial arrangements without involving the court can be beneficial as you will have a level of control over the outcome and it will also be a quicker and more cost-effective process.
If you cannot agree, then an application can be sent to the court asking it to make a clean break order.
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