Clean break settlements (also known as Consent Orders) and Financial Orders are the two main methods for dealing with finances when a divorce happens. The principal difference between the two is that a clean break settlement is usually concluded by mutual agreement and so can be a quicker and simpler process. Financial Orders come into play where a couple cannot agree on how the finances should be dealt with and so the courts are asked to decide how the financial issues should be settled.
How does a clean break settlement work?
The clean break settlement is without a doubt the best option for divorcing couples, as it is conclusive and very difficult to alter at a later date. Following the settlement the divorcing parties will no longer have any financial ties to one another, no matter what changes later on. So, for example, if one of the parties was to win the lottery or have a windfall several years after the divorce there would be no scope for amending what was agreed in the clean break settlement as a result.
The case of Ms Wyatt
A recent case that was decided in the Supreme Court provided a good illustration of why a clean break settlement can be a more decisive and appropriate option. In a divorce between Ms Wyatt and her ex-husband Dale Vince, Ms Wyatt did not issue the financial application until 20 years after the divorce had actually taken place. There is no time limit on concluding financial matters after a divorce so any financial claim could potentially still be live many decades after a Decree Absolute has been issued. In this case Ms Wyatt was awarded £300,000, which was in addition to a total of £325,000 towards her legal costs, despite the fact that the parties’ financial positions had changed considerably since the couple first divorced. Although Ms Wyatt only received a proportion of what she was asking for the case is still a good illustration of why it’s so important to make sure that all matters are settled when it comes to divorce – especially the financial ones.
Clean break – essentials to note
If you’re going through a divorce and considering not bothering with a clean break order because you don’t have much in the way of cash or assets, then be wary of the lack of closure this will provide you with. If you were to come into a lot of money in the future, without a clean break order your ex could be entitled to a share of it.
Just filing for divorce does not give you a clean financial break – unless you have a clean break order then there are no other circumstances in which your financial links are permanently and totally cut.
Relationships after a divorce can change dramatically. You may have had an amicable separation and eased through the divorce proceedings and so decided a clean break was not necessary. However, as soon as one party starts a new relationship, or if financial difficulties arise for one person, relations can become strained and without a clean break this could leave room for claims to be made.
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