Without legal involvement, direct negotiation can be both inexpensive and relatively speedy. But most people realise that a formal approach to financial matters is best. An informal, written agreement, even if written down, will not necessarily be regarded as a legally binding settlement by the courts.
On receipt of sensible legal advice, therefore, most divorcing couples choose to turn their financial agreements into legal orders. This minimises the potential for misunderstanding and forestall any future disagreements.
Consent orders
As you might expect, such ‘financial orders’ are both binding and enforceable. They are also known as ‘consent orders’, because each party ‘consents’ to them.
Financial orders are important documents that come with an air of finality. They are intended to be the last word on the matter. Neither party wants to run the risk of repeated courtroom wrangles, with all the associated costs, stress and emotional upset. Nevertheless, the courts can and do reopen financial orders after the completion of the divorce process, if one party makes a compelling case for this.
Changes
One of the commonest situations in which the courts might be asked to ‘vary’ (change) a financial order is previously agreed ‘periodical’ payments – i.e. spousal or child maintenance.
If there has been a significant change in the income of the paying spouse – for example, they have retired – section 31 of the Matrimonial Causes Act 1973 allows the courts may decide to alter the payments set out in the financial order. Note that losing a job is not normally considered a sufficient reason.
Judges may also consider new financial responsibilities facing the paying spouse, such as children with a new partner. But in that instance, they will need to make a strong case, as courts are reluctant to diminish the paying party’s responsibilities towards their first spouse or children.
Other, less common circumstances include major, unforeseen events and failure to fully disclose assets.
Expect the unexpected
An unexpected event could be a sufficient reason to set aside a financial order or make major changes, as long as it occurs relatively soon after completion of the divorce and has major significance. For example, the paying party might receive a large inheritance, the value of a business might go up or it might enter bankruptcy: in each case changing the value of these assets in ways that were not foreseen when the order was originally made.
But the courts will always proceed with caution in order to try and avoid undermining the sense of finality that should accompany financial and encourage excessive litigation. Judges will expect you to act quickly and to only try and make a case on the basis of major developments.
Failure to fully disclose assets
Failing to fully disclose money and valuables during a divorce and thereby save them from division is a temptation to which wealthier divorcees sometimes succumb. The concealed wealth may be current assets or potential future wealth realised, for example, from the sale of a business or the vesting of stock.
‘Non-disclosure’ is a form of fraud because it is in breach of the duty placed on both spouses both to make full and frank disclosure of their wealth, and to keep this disclosure up to date throughout the process, right through until the marriage is officially over. Naturally, the family courts take a dim view of failure to disclose.
But just as with unexpected developments, the courts will only consider setting aside financial orders if a strong case can be made and it is clear that the non-disclosure was enough to undermine the entire basis of the existing financial order. If there is no reasonable prospect of the court having issued a different order if the full facts had been known earlier, judges will almost always leave the existing order in place.
To change or not to change?
As we have seen, the bar for changing a financial order is deliberately set high. The family courts work hard to achieve ‘clean breaks’ whenever possible and end the financial relationship between former spouses as soon as they can. In pursuit of this end, financial orders must be left as they stand in most instances, unless there is a very good reason to change them.
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