Divorce can be a complex and emotional process, and when it comes to financial matters, many couples assume that if they have few or no assets, there is no need to obtain a financial order. However, this assumption can be risky. Even if you currently have limited financial resources, a financial order provides vital protection for your future finances and ensures that all financial ties between you and your former spouse are legally severed.
Do I need a financial order?
A financial order is essential even if you and your spouse have little to no assets at the time of your divorce. Without a financial order, financial claims remain open indefinitely, meaning that your ex-spouse could potentially make a claim on any future wealth you acquire. This is particularly relevant if you expect to improve your financial situation through career growth, inheritance, or investments.
Might future assets or earnings be at risk without a financial order?
Without a financial order, your ex-spouse could make a claim against you in the future. This is because divorce alone does not automatically end financial obligations between spouses. In England and Wales, financial claims can remain open even after the divorce is finalised unless a clean break order is put in place.
If you acquire wealth in the future—whether through career advancement, a business venture, or inheritance—your ex-spouse might claim a share of these assets, arguing that they are entitled to financial support based on your shared past. There have been cases where individuals have faced claims from ex-spouses many years after their divorce, leading to costly legal battles and unexpected financial settlements.
Are there any situations where it is entirely safe to have no financial order?
There are very few circumstances where it would be completely safe to forgo a financial order. The main scenarios where a financial order might be unnecessary include:
- If both parties have no assets and no income potential: If neither spouse has any assets, income, or prospects of acquiring wealth in the future (for example, if both are retired and living on state benefits with no property or savings), the risk of future claims may be lower. However, even in this case, a clean break order would provide certainty and finality.
- If one spouse passes away shortly after divorce: If a spouse passes away before making any financial claims, their estate may not be able to pursue claims against the surviving ex-spouse. However, this is an unpredictable situation and cannot be relied upon as a strategy.
- If there is a pre-nuptial or post-nuptial agreement: While pre-nuptial and post-nuptial agreements can provide some protection, they are not legally binding in the UK. They may be taken into consideration by the courts, but a financial order is still necessary to provide full legal security.
Even in these scenarios, obtaining a financial order is usually advisable in order to provide complete legal closure to financial claims.
What are the risks if there is no financial order?
Failing to obtain a financial order can leave you vulnerable to several risks:
- Future claims on your wealth: Even if you have no significant assets now, any financial improvements in your life—such as receiving an inheritance, winning the lottery, starting a successful business, or progressing in your career—could be subject to a claim from your ex-spouse.
- Unexpected financial settlements: If your ex-spouse makes a claim in the future, you may have to negotiate a financial settlement or go to court, which can be stressful, expensive, and time-consuming.
- Legal costs: The cost of fighting a financial claim later on can be significant, potentially outweighing the cost of securing a financial order at the time of divorce.
- Impact on new relationships: If you remarry or enter a new financial partnership, your ex-spouse could make a claim that affects your new family’s financial stability.
- Claims against future inheritance: Even if your family members leave you an inheritance, your ex-spouse may argue that they should be entitled to part of it, especially if they can show that your financial situation changed significantly after the divorce.
Types of financial orders for those with few/no assets
There are different types of financial orders depending on your circumstances:
- Clean break order: This is the most suitable option if you have no assets to divide and want to ensure that no future financial claims can be made. A clean break order severs financial ties completely, providing full legal protection.
- Consent order: If you and your ex-spouse agree on a financial settlement, a consent order can formalise the agreement and make it legally binding. This is useful if you have some assets, such as savings or pensions, to divide. A consent order is usually a precursor to obtaining a clean break order when it has not been ordered by the court during financial proceedings.
How do I obtain a clean break order?
The process of obtaining a financial order is relatively straightforward:
- Negotiate with your ex-spouse: If you and your ex can reach an agreement, this will make the process quicker and less expensive.
- Draft the consent order: You can draft the consent order yourself or have a solicitor do it for you. The consent order should outline the terms of your agreement. In addition, you will need to complete a Statement of Information form which provides details about each party’s financial circumstances so the judge can decide if the consent order is fair – both parties must sign the form. A Form A Notice of [intention to proceed with] an application for a financial order must also be sent to the court together with the other documents.
- Court approval: If the court is satisfied that the agreement is fair, they will approve the financial order, making it legally binding.
- Enforcement: Once in place, a clean break order ensures that neither party can make financial claims against the other in the future.
The benefits of obtaining a clean break order even if you have few or no assets are many. It protects you from future claims, provides legal certainty, and ensures that both of you can move on with your lives without ongoing financial entanglements. A clean break order is usually the best option for those without significant assets, as it guarantees that no further financial claims can be made.
While it may seem unnecessary at the time of divorce, failing to obtain a financial order can result in unexpected financial disputes later on. By securing a financial order, you safeguard your future earnings, assets, and financial independence. If you are unsure about your situation, seeking legal advice is always a wise step to ensure that you are fully protected.
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