Divorce and future financial claims – what you need to know
There is a common misconception that once you are divorced, that draws a line under everything legally.
In reality, obtaining the final decree of divorce (called the 'Decree Absolute') serves only to legally terminate the marriage. Contrary to popular belief, it does not resolve or conclude any financial issues arising out of the marriage, even if there has been a verbal agreement at the time of separation.
Unless they have remarried without making a claim, either party can pursue a financial claim against their former spouse, unless the court has dealt with or dismissed that claim. In theory, this means that a claim can be made at any time following separation and there is no time limit i.e. a claim can be made even after decades have elapsed since the divorce went through.
The decision in the highly publicised case of Vince v Wyatt serves as a stark reminder of this. The Court ruled that a wife (who never remarried) was entitled to pursue a financial claim against her ex-husband despite the divorce having been finalised more than 20 years ago. The couple originally divorced in 1992. At the time they had no assets. However, in 1995 the husband founded a renewable energy company and by the time of the wife's claim, he was a millionaire. The wife was eventually awarded some money and the husband was also ordered to pay the wife's legal costs.
Whilst the facts of this case are extraordinary, the ruling will affect anyone who has been divorced in England and who has not ensured that there is a financial order in place. It doesn't have to be a large windfall of money such as a lottery win or inheritance. Even a modest change in your financial circumstances since divorce could result in an expensive claim from a former spouse no matter how long ago you were divorced from them.
If there is an agreement at the time of the divorce, or even if there are no money or assets to divide, it is crucial to get that agreement committed to in writing and approved by the court. This is called a 'consent order' and should record the fact that after Decree Absolute there can be no further claims. If you want to avoid unwanted claims in the future, it is essential to obtain this court order. It is not sufficient merely to obtain a divorce or rely on verbal, informal agreements made at the time of the separation.
If you are considering divorce, we would recommend that you seek early legal advice and support. An experienced divorce solicitor is likely to be able to help you achieve a negotiated settlement and avoid a formal application to Court. Your solicitor can also assist you with mediation and other forms of alternative dispute resolution to minimise costs. If both parties agree to a consent order, the procedure is straightforward and does not usually require any attendance at Court.
In the absence of an agreement an application to court may be necessary. The court has the discretion to make a number of orders after taking into consideration the unique circumstances of each case including the level and type of resources available. Settlement is always an option even once proceedings have been issued and again, your Solicitor will work closely with you in order to negotiate this.
The overriding objective of the court is to achieve fairness. At the outset the court will need to consider the needs of both parties and any child of the family. For instance, what do the parties need to set up home and financially manage alone. In the event needs are met and there are surplus assets, the court will consider the division of such assets in light of other factors.
At Enoch Evans our highly experienced family law team is on hand to advise, help and support you at whichever stage of the proceedings you may find yourself. We work closely with our clients to ensure that your financial interests are protected allowing you to plan your future with the comfort of knowing that really is the end of the matter.