Achieving Financial Certainty after DivorceJuly 18, 2017
When married couples separate and either have no significant assets or come to an agreement between themselves about how their assets are to be shared, they often don’t realise that that may not necessarily be the end of the matter.
Simply by virtue of the fact that you are married, you and your spouse have potential claims against each other’s capital, income and pension. Those claims can only be dismissed by a court order so if you come to an agreement (even if that is simply an agreement that you will not make any claims against each other), the terms of that agreement will not be 100% final and binding unless they are put into a Consent Order and approved by the court.
Many people have been shocked to find that agreements that were reached after careful consideration and with a clear intention by both parties to be final, have later been reopened when one of the parties resources, needs or simply attitude has changed. The highest profile example of this is Dale Vince, the entrepreneur and founder of the £57m business Ecotricity.
Mr Vince married his wife in 1981 when they were both travellers. They separated in the mid 1980’s and then divorced in 1992. With no real assets to speak of they perhaps understandably did not formalise the agreement that they would not make any claims against each other at that time or in the future.
In the mid 1990’s Mr Vince launched Ecotricity and in so doing started on a road that has led to him becoming a multi-millionaire. His ex-wife, who importantly had not re-married as that would have barred any application, made an application to court some 20 years after the divorce for financial provision. She was awarded £300,000. Whilst this is a tiny sum for Mr Vince (even after you add his own legal costs), the implications for less outrageously successful divorcees are clear.
The stress and legal costs involved in seeking to enforce an agreement can be considerable and there is very rarely any certainty as to the result. This can all ultimately be easily avoided by ensuring that an order is made at the time of the divorce.
We would strongly advise everyone getting divorced to get a Financial Order. Where there are no assets this is not expensive and even where there are, the fact that there is an agreement will significantly reduce your costs. Whatever the situation, the money could not be better spent, it will provide absolutely certainty for the future.