Documenting a Financial Settlement
Following a separation, if agreement regarding financial issues has been reached, the details of the financial settlement should be documented. How this is dealt with will depend on whether divorce or Judicial Separation proceedings have been started or will be started imminently. In order to attempt to reach a financial agreement, there must be an exchange of full and frank financial disclosure so each party is aware of the other’s financial position so negotiations can take place on an informed basis. Financial disclosure can take place through solicitors, be it within the divorce process or through Collaborative Law or through Mediation.
Sometimes parties do not wish to embark on any Court process but wish to secure some certainty about the arrangements for the children or deal with the finances. A Separation Deed can be drafted if agreement is reached on such matters after financial disclosure. We will advise you whether a Separation Deed is appropriate in your circumstances.
If divorce or Judicial Separation proceedings have already commenced, the agreement of the financial settlement will be set out in the form of a draft Order. Once proceedings have reached the Decree Nisi stage, this draft Order, setting out what has been agreed as part of the financial settlement, is signed by both parties and their solicitors and this is submitted to the Court. As the parties are in agreement as to the contents of the draft Order, it is known as a “Consent Order”. The Court must check whether the agreement is fair before making the Order. It does this by reading a summary of your and your spouse’s financial position; this is called a Statement of Information and is set out on a standard Court form. If the financial settlement is approved by the District Judge, the Order will be made. You do not usually need to attend Court for the Consent Order to be considered.
It is preferable to obtain a Consent Order within divorce (or Judicial Separation) proceedings sooner rather than later. There are two main disadvantages with a Separation Deed as opposed to a Consent Order. The first disadvantage is that if a Separation Deed is breached, it is not enforceable by the Family Courts. The second disadvantage is that if later on there are divorce or judicial separation proceedings, the Court has very wide powers to decide financial issues. In that way you do not achieve finality with a Separation Deed as there is the possibility that the Court will not hold the parties to it. It is possible for the Court to completely override what is in the Separation Deed, it is less likely to do so if both parties have made full and frank financial disclosure and taken legal advice in relation to the financial settlement agreement reached in the Deed to ensure that the Deed takes account of all the factors which the Court is required to consider.
Whether or not you can initiate divorce proceedings immediately with a view to obtaining a Consent Order will depend upon your circumstances. We can advise you whether you or your spouse has grounds to petition for divorce or Judicial Separation immediately.
Please speak to one of our specialist family solicitors for further advice on:
- 01992 558411 – Olive McCarthy/Karen Johnson/Lisa Honey