Increasingly, couples are choosing to separate and divorce without first resolving their financial arrangements.
Research from the University of Bristol's Fair Shares? study found that 36% of divorcees had not made any particular financial arrangement with their former spouse when they divorced.
This may be due, in part, to the growing accessibility of online divorce services. However, failing to formalise financial matters through a court order can have significant legal and financial consequences.
A financial settlement in divorce is the legal process of determining how a couple's finances will be dealt with after their marriage ends.
It typically covers matters such as the division of assets, including property and savings, whether either party will pay or receive maintenance, and how financial interests, such as pension rights, will be treated.
Pensions can be particularly easy to overlook.
The Fair Shares? study found that 37% of divorcees did not know the value of their own pension pot, while 23% did not know whether their employer pension was a defined benefit or defined contribution scheme.
The research also found that only 11% of divorcees with a pension yet to be drawn had made an arrangement for pension sharing.
In practice, a divorce financial settlement is usually agreed between the parties before being formalised in a consent order approved by the court.
This provides certainty and helps prevent future disputes or claims.
Without a properly documented financial settlement, either party may still be able to apply for a financial remedy, even after the divorce has been finalised.
Why Do Some Couples Delay a Financial Settlement?
There are several circumstances in which a couple may decide to divorce before resolving their financial affairs. For example, one party may remain in the family home to care for young children until they are older, while the other is content for that arrangement to continue in the meantime.
In some cases, the remaining party on the property may not have the financial means to release the other from the mortgage. They may have a modest income, but Child Benefit and child maintenance payments may help them meet mortgage repayments.
A couple may also have limited assets and prefer to avoid the cost of applying for a financial order where there is very little money or property to divide.
The Fair Shares? study found that only 32% of divorcees used legal services in relation to their financial arrangements, while 42% of those who did not said they had been deterred by fear of the cost.
When seeking a financial settlement, obtaining legal advice at an early stage can make a significant difference.
Can I apply for a financial order after Decree Absolute?
A financial order application can be issued after divorce proceedings have been commenced, but the court cannot usually make or approve a final financial order until the Conditional Order has been pronounced.
For divorce proceedings started before 6 April 2022, the Conditional Order was known as Decree Nisi.
Once the court has granted the Conditional Order, you can consider the next steps, including whether to apply for the Final Order (formerly known as the Decree Absolute) and whether a financial order is required so that the court can determine how your finances should be dealt with.
It is generally preferable to finalise a divorce or civil partnership dissolution only after the financial settlement has been agreed and approved by the court in a consent order.
To obtain a consent order, your solicitor will help you prepare the financial agreement, supported by full details of your income, assets, debts and pensions.
The draft order is then submitted to the court for approval. If the court is satisfied that the proposed agreement is fair and properly documented, it will seal the consent order, making it legally binding and helping to prevent future disputes or claims.
There is no legal prohibition on applying for a financial order after a Final Order (or Decree Absolute) has been granted.
However, the potential consequences of delaying an application should be carefully considered.
Can I get a Decree Absolute without a financial settlement?
Although it is possible to finalise a divorce or civil partnership dissolution without first resolving the financial arrangements, this is not usually recommended.
Ending a marriage or civil partnership does not automatically end financial claims.
Even after the divorce has been finalised, either party may still be able to apply to the court for financial provision unless the finances have been properly resolved.
If you want certainty that no further claims can be made, either during your lifetime or following death, a clean break order can dismiss future financial claims between the parties.
If the parties also wish to prevent claims against the estate after death, the order can also expressly deal with claims under the Inheritance (Provision for Family and Dependants) Act 1975.
This is a consent order agreed by both parties and approved by the court.
Once sealed, it records the financial settlement in a legally binding document, helping to conclude financial matters and reduce the risk of future disputes.
How Long Does a Financial Settlement Take After a Divorce?
There is no fixed timescale for reaching a financial settlement after divorce.
The process will depend on how straightforward it is to gather the necessary financial information, whether the parties can reach an agreement without court involvement, and whether the case involves more complex issues, such as property, pensions or maintenance.
Where an agreement is reached early, the process may move relatively quickly.
Your solicitor can assist with financial disclosure, negotiate the terms, and prepare the proposed court order, usually in the form of a consent order, for the court's approval.
If an agreement cannot be reached, the process is likely to take longer, as further negotiations, correspondence, and, potentially, court proceedings may be required.
Timing should also be considered alongside the divorce timetable.
Even if you have already obtained, or are close to obtaining, a Final Order (formerly known as a Decree Absolute), the court may still be asked to determine financial issues at a later date.
For this reason, many people choose to progress their financial settlement as early as possible, helping to reduce uncertainty and minimise the risk of future disputes.
Financial Claims Can Continue After Divorce Without a Court Order
Many people assume that once their divorce has been finalised, all financial ties between them and their former spouse automatically end. However, this is not the case.
This issue potentially affects a significant proportion of separating couples.
The University of Bristol's Fair Shares? research notes that, of approximately 100,000 couples who divorce each year, only around one-third leave the marriage with a financial court order, with the vast majority of those orders being made by consent.
A Final Order (previously known as a Decree Absolute) legally ends the marriage, but it does not automatically dismiss either party's right to bring financial claims against the other.
Unless those claims have been resolved through a court-approved financial order, they can remain open for many years after the divorce.
This means that either party may still be able to apply to the court for financial provision long after the marriage has ended, even if both parties have moved on with their lives or their financial circumstances have changed significantly.
The court will consider the parties' circumstances at the time the application is made, rather than solely at the date of separation or divorce.
The risk of leaving financial claims unresolved was highlighted in the Supreme Court case of Wyatt v Vince [2015] UKSC 14.
Although the parties had divorced almost 20 years earlier with very few assets, the wife was permitted to pursue a financial remedy claim after the husband had built a multi-million-pound business.
We consider this case in more detail below.
To achieve certainty and reduce the risk of future claims, separating couples should consider obtaining a consent order recording their agreed financial settlement.
Where appropriate, this can include a clean break order, which dismisses future financial claims and provides both parties with greater financial certainty following their divorce.
Although financial claims can remain open for many years after a divorce, remarrying before those claims have been resolved can have significant consequences.
In some circumstances, remarriage may prevent you from bringing certain financial claims against your former spouse altogether.
How Can Remarriage Affect Financial Claims After Divorce?
If you are considering remarrying before your financial matters have been resolved, it is important to understand how this could affect your legal position.
Many people assume that once their divorce has been finalised, they can deal with financial issues later.
While this is sometimes possible, remarrying before making a financial remedy application can have significant consequences.
If a party remarries before issuing a financial remedy application, they may be barred from applying for certain orders against their former spouse, including spousal maintenance, lump sum orders, and property adjustment orders.
This is commonly known as the remarriage trap.
It does not necessarily prevent every type of financial claim, and child-related claims are treated separately.
This means that someone who remarries without first obtaining a financial settlement or issuing a financial remedy application could unintentionally lose valuable legal rights.
For this reason, it is generally advisable to obtain specialist legal advice before making plans to remarry.
A family law solicitor can advise whether your financial claims have been properly protected and whether a court application should be made before your remarriage.
Other Risks of Delaying a Financial Settlement
Failing to resolve your finances before obtaining a Final Order can have significant legal and financial consequences. Depending on your circumstances, delaying a financial settlement could affect your legal rights, tax position and the way the court assesses your finances in the future.
Death Before Financial Matters Are Resolved
If one party dies unexpectedly during financial negotiations, before a financial order has been made and before the Final Order has been granted, the surviving spouse may still be entitled to benefits arising from their status as a widow or widower. These benefits can be substantial.
Conversely, if the divorce has already been finalised before financial matters are resolved, the surviving former spouse may lose any automatic spousal benefits that would otherwise have been payable.
The consequences of death during divorce proceedings depend on whether the Final Order has been made, the terms of any will, pension nominations, life policies, and whether any claims may be available under the Inheritance (Provision for Family and Dependants) Act 1975.
Tax Implications of Delaying a Financial Settlement
Asset transfers on divorce are generally tax-free if made pursuant to a financial court order on divorce.
The tax position should be considered very carefully following tax advice in complex cases or where there has been delay..
Obtaining tailored legal and tax advice can help ensure the most appropriate approach is taken.
Changes in Financial Circumstances
The court considers each party's financial circumstances at the time a financial remedy application is determined, rather than limiting its assessment to the position at the date of separation or divorce.
If one party's financial circumstances improve significantly after the divorce, the eventual outcome could be very different from the settlement reached at the time the marriage ended. Delaying financial matters can therefore create additional uncertainty and potentially lead to a less favourable outcome.
Wyatt v Vince [2015] UKSCK 14
The Supreme Court case of Wyatt v Vince [2015] UKSC 14 demonstrates why it is so important to resolve financial matters and obtain a financial order when divorcing.
At the time of their divorce, both parties had very modest assets and did not formally resolve their financial arrangements.
Following the divorce, the husband went on to build a successful green energy business worth approximately £57 million.
Because no financial agreement had been formally recorded or approved by the court, the Supreme Court allowed the wife to pursue an application for financial relief almost 18 years after the Decree Absolute had been granted.
The Supreme Court did not decide the substantive financial outcome. It held that the wife’s application should not be struck out, although it observed that the claim faced significant difficulties. The case illustrates that, without a final financial order, claims may remain capable of being pursued many years after divorce
Although the Court did not decide that the wife was entitled to receive the £1.9 million, she had claimed, the case confirmed an important legal principle: without a court-approved financial order, financial claims between former spouses may remain open long after a divorce has been finalised.
The decision serves as a reminder of the importance of obtaining a financial settlement and, where appropriate, a consent order to achieve certainty and reduce the risk of future claims.
Conclusion
The financial aspects of a divorce or dissolution of a civil partnership can be complex, particularly where a financial settlement involves assets, debts, pensions and maintenance.
It is therefore usually advisable to seek advice from a family law specialist before applying for a Final Order.
A solicitor can provide legal guidance on the options available, explain the factors the court is likely to consider, and advise on what a fair divorce financial settlement may look like in your circumstances.
They can also assist with the financial disclosure process and help ensure that any agreement reached is properly documented, reducing the risk of future disputes or claims.
Although it is possible to divorce without sorting out your finances, doing so can have significant long-term consequences.
Financial claims may remain open indefinitely unless they are dismissed by a court order, and delaying a settlement can affect everything from future claims and remarriage to tax liabilities and inheritance rights.
Contact Our Family Solicitors
Our specialist Family Solicitors can use their experience to help you reach an amicable settlement with your spouse. You can contact us below if you have any more questions or want more information regarding divorce.
0161 941 4000
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Sarah Whitelegge
Legal Director
Sarah has over 17 years of experience acting as a Family Solicitor and as a Legal Director in our team. Sarah has specialist expertise in complex children matters and has experience of dealing with applications for child arrangement orders, prohibited steps orders, and special guardianship orders.
About Sarah Whitelegge