MYTH: “after the Decree Absolute/Final Order my former spouse cannot make a financial claim.”
In this series of articles, we confront the myths of divorce. Our Family Law department has identified the most common myths they encounter when speaking to clients. This week Malvina Peci looks at financial claims following the Decree Absolute/Final Order.
The divorce, and dealing with the financial issues arising out of the divorce, are two distinct (but inextricably linked) legal processes. It is now all too easy for someone to go through the divorce process and get to the stage were decree absolute (or as now known final order) has been pronounced, bringing the marriage to an end, without considering what might need to be done in respect of the finances.
Often, where couples have been able to divide up their assets amicably they may not know that the agreement is not legally binding. They have dealt with the divorce themselves rather than using a lawyer, so it may not even occur to them that there is a further step to be taken to ensure any agreement they have reached in respect of their finances is binding on each of them and that they cannot later change their minds.
In short, decree absolute does not bring an end to the financial claims that can be made against either party, regardless of whether the couple has already divided everything up. This can cause real issues where, for example, one of the parties later comes into some money, such as an inheritance, or where one of the parties has, whether through the fault of their own or otherwise, lost the money they received on the split.
This myth can lead to one of the most common problems for parties in divorce proceedings. Finding that many years after getting divorced, a former spouse has returned to make a financial claim against the assets that have been built up during that time.
To tackle this issue, we need to first establish what a Decree Absolute/Final Order is and the impact it has, before looking at the reality of severing financial claims.
What is a Decree Absolute/Final Order?
A Decree Absolute is the final order in divorce proceedings and confirms the date on which your marriage was legally dissolved.
The pronouncement of a Decree Absolute has several consequences for inheritance. For example, if you have a Will, on your death it will now take effect as though your former spouse had died during your lifetime. The Decree Absolute may also affect your ability to claim a widow/widower’s pension from your former spouse and it is important that legal advice is taken before applying for the Decree Absolute.
There is no time limit on financial claims
There is no time limit on financial claims arising from marriage and they are not extinguished by the grant of a final divorce order alone. If they are brought many years after the divorce, then the court can take into account there has been a delay but it does not rule out the claims being considered.
Wyatt v Vince
The decisive case proving this was Wyatt v Vince where the parties had divorced 18 years previously at a point when they were both relatively poor. The wife remained poor but the husband made a fortune on wind farms. The wife applied for a financial provision for herself and the children and the husband tried to get her claims dismissed without a hearing, due to the time that had passed. The courts made it clear that financial claims survive indefinitely. The parties then settled so the court did not rule on how far the delay should affect the claims. It was relevant in this case that the children had suffered from the relatively poor circumstances of the wife and the husband could have done more to address that at an earlier stage.
Glen & Nicola Briers
In the case of Glen and Nicola Briers, Ms Briers successfully secured £2.7 million of her ex-husband’s £55 million fortune 10 years after their divorce. In the years after their marriage ended, Mr Briers had amassed a fortune through a sports and streetwear business. However, during their marriage, Mr Briers had worked as a teacher before starting the business in the 1980s. By the time the couple split in 2002 (after 18 years of marriage) the business was turning over £1 million a year. Following the divorce, Ms Briers was given a lump sum of £150,000 to pay off the mortgage on the family home, worth £750,000, which she kept. She was also paid a £10,000 annual salary, plus child maintenance. Mr Briers kept the business, which at the time was estimated to be worth more than £10 million. Upon learning this, Ms Briers returned for a bigger cut. The judge ruled that Mr Briers had played down his wealth and therefore awarded Ms Briers a £1.6 million lump sum and 25% of Mr Briers's pension. Ms Briers made a claim against her ex-husband on the basis that they had never formally dismissed their financial claims against each other.
A v B
In another case, A v B, the former husband’s claims made 26 years after the divorce was not successful. The Judge in this case found that the parties had reached a financial agreement and the wife had made provision for the husband, from which he had benefited. However, you should be cautious in simply relying on the financial division agreed between you at some point around or after the divorce as being the answer to defeat a later claim. The court will look to see if the petitioner’s needs have been met by that division and, if they have not, then there can be what might look like a second bite at the cherry. However, it is simply the court reflecting its view of fairness which they would have done had the approval of the court been sought for the arrangements at the time.
Effect of remarriage
It is important that parties are also aware of the “re-marriage trap.” Following the pronouncement of Decree Absolute, if you decide to re-marry without having an approved financial agreement, then you will be prevented from applying for a lump sum, property adjustment (such as a sale or transfer of property) or spousal maintenance against your previous spouse. If your previous spouse is not married on the other hand, they will be able to still make a financial claim against you.
How do I protect myself against future financial claims following a Decree Absolute/Final Order?
To dismiss the financial claims that a former spouse may have against you, you will need to have a financial order approved by the Court. This usually comes in the form of a Consent Order and until approved by the Court, there is not a full, final and binding clean break concerning your financial arrangements.
Unless a financial order is approved by the Court, both you and your former spouse will be able to bring financial claims against one another and could remain exposed to that risk for the rest of your lives. A financial order approved by the courts stops that from happening and protects your position.
It is especially important to be aware of this if your financial position has changed since the divorce, as any assets that have increased in value or new assets that you have acquired since the divorce could be open to a claim from your former spouse for financial provision.
If you have not, and feel you cannot reach an agreement over finances, then you simply need to appreciate the risk that you are taking that at some point in the future one of you might make an application which will be looked at on the basis of the financial positions of each party at that time, not at the time of separation or divorce. There can of course be arguments about post-separation accrual but if the claim is based on needs, then the court may not be persuaded to discount wealth that has come into being after the divorce.
The alternative to taking that risk is to commence a contested court application. Again it is always wise to take advice on this as it can become a lengthy and costly exercise, though there may be ways to minimise this. You can be certain that placing the matter before the court will result in a final outcome so that your final divorce order and financial order really do mean the end of the matter.
If the financial claims have not been dealt with, the door will remain open for claims to be made, even long after the divorce and the pronouncement of decree absolute/final order. A lawyer can help you ensure that all these loose ends are properly tied up, even if you are confident enough to do the divorce element yourself.
Do you have any more questions about divorce and finances? Then contact our Family Law team or discuss your individual situation by calling 01273 956 270 and you will be directed to the correct department.