Do you need a Financial Order?

Many people assume that obtaining a Final Divorce Order (previously known as a Decree Absolute) brings an end to all financial ties between former spouses. However, this is not the case under the  law in England and Wales.

The financial claims that ex-spouses have against one another remain open until they are formally resolved by way of a Court-approved Financial Order. Without this, both parties remain financially vulnerable, even years after the divorce has been finalised.

In this article, Katie Hurst, Associate in Lodders’ Family Law team, highlights the importance of obtaining a Financial Order on divorce.

What is a Financial Order?

A Financial Order is a legally binding document that sets out the financial settlement between divorcing parties. Until this order is sealed by the Court, financial claims remain open, allowing either party to bring claims against the other in the future. This includes claims for property transfers, lump sum payments, ongoing financial support (spousal maintenance) and relating to a party’s pensions . Even if an informal agreement is reached between the parties, it needs to be set out with an Order which is then approved by the Court.

The risk of future claims

One of the most significant risks of not obtaining a Financial Order is that either party can pursue financial claims against the other at any time, unless they have remarried (which limits but does not necessarily extinguish claims). There have been cases where one party has sought financial provision from their former spouse many years after divorce, particularly when circumstances change – for example, if one party experiences financial hardship or if the other party acquires significant wealth.

A sealed Financial Order brings closure to financial matters between divorcing parties. There are different types of orders, including:

• Consent Orders – where both parties have reached an agreement and wish to formalise it – this can include a term that one party provides ongoing provision to the other leaving the parties’ financially linked or can be on the basis of a clean financial break between the parties. This will then be approved by the Court; or
• Financial Remedy Orders – where the Court determines the financial division between the parties and the decision is imposed on the parties.

Without a Financial Order, even a previously amicable agreement can be challenged at a later date, leaving both parties exposed to potential legal disputes and financial claims in the future.

How Lodders can help

Divorce is an emotionally challenging process, and it is understandable that many wish to move on as swiftly as possible. However, securing a sealed Financial Order is an essential step in ensuring a clean financial break and protecting your future.

If you are in the process of getting a divorce, or have finalised your divorce without obtaining an Order, Lodders’ expert Family Law solicitors can provide tailored advice to ensure you achieve a legally binding settlement that offers certainty and security.