UK: What Are The Financial Implications Of Remarrying On A Divorce Or Dissolution Settlement?

If the financial arrangements from a previous marriage have not been resolved?

If you have not resolved the finances from your previous marriage and remarry you may be prevented from applying for a financial provision or property adjustment order against your ex-spouse.

Full details of when this 'remarriage trap' applies.

This could lead to a number of unexpected circumstances for you some of which we have set out below:

• If you and your ex-spouse informally agreed that they could remain living in the family home until your children reach a certain age you may be prevented from pursuing the transfer or sale of the family home after you remarry. The arrangement could continue indefinitely until your ex-spouse agrees to deal with the family home or makes a financial application themselves.
• Even after you remarry your ex-spouse may still be able to make a financial application against you. This could involve your new spouse having to disclose details of their financial position as this could be taken into consideration in a financial settlement with your ex-spouse. This could lead to a great deal of animosity both with your ex-spouse but also your new spouse who would most likely want to keep their financial details private and not become involved in court proceedings.

As you can see it is important the financial arrangements arising from a previous remarriage are resolved before a party remarries. This would be by formalising any agreement into a consent order or agreeing a clean break consent order dismissing all of the ex-spouses claims against each other arising from the previous marriage.

If the financial arrangements from a previous marriage have been resolved by a court order or consent order

If you have a court order or consent order setting out the financial arrangements from a previous marriage this may be affected by your re-marriage.

This is because certain undertakings and orders automatically cease on the benefiting parties remarriage.

Undertaking to act as guarantor – if your ex-spouse has given an undertaking to act as your guarantor you may have to procure their release from all liability under the guarantee upon your remarriage.

Undertaking to discharge liabilities – if your ex-spouse has given an undertaking to make payments under an endowment policy, hire purchase agreement or loan agreement these payments may stop on your remarriage.

Undertaking to take out and maintain life insurance policy – similarly if your ex-spouse has given an undertaking to pay premiums under a life insurance policy these payments may stop immediately upon your remarriage.

Occupation of the family home – if you and your ex-spouse have agreed, or it has been ordered, that you will remain living in the family home with the children and either you will own this jointly with your ex-spouse or they will have a charge over the property, an application could be made for the property to be sold on your remarriage.

Payment of mortgage and outgoings on property – if your ex-spouse has agreed, or it has been ordered, that they will continue to pay the mortgage and outgoing on a property these payments may stop on your remarriage.

Spousal periodical payments (spousal maintenance) – All orders for spousal maintenance or secured spousal maintenance usually automatically end on the person who is receiving the payments remarriage. They do not cease upon the payor's remarriage. So if you are the one paying spousal maintenance you will need to consider whether you will still be able to afford the payments once you are living with your new spouse. It may be necessary for the amount of spousal maintenance payable to be renegotiated or an application for variation of the amount considered.

Child maintenance – child maintenance is not affected by the receiving parties' remarriage. However, if the person paying child maintenance remarries and lives with step children or has further children with their new spouse there will be a recalculation of the child maintenance they are paying if assessed by the Child Maintenance Service. The amount which the paying party has to pay is reduced by the number of additional children (step or biological) which they are living with.

Death in service benefit – If it has been agreed, or ordered, that your ex-spouse will nominate you to receive all or a percentage of their death in service benefit this may end on your remarriage.

If you have a financial order from a previous marriage and are considering remarrying it is important that you review this financial order carefully so that you are aware of any financial implications of your remarriage.

Financial considerations for everyone

Prenuptial/postnuptial agreement

Prenuptial agreements can be extremely important to protect your assets in the event of the breakdown of your marriage. Likewise postnuptial agreements can protect assets acquired during the course of a marriage or civil partnership. This is particularly where there may be an imbalance of assets now or anticipated in the future, or you have monies you would wish to ring-fence from a previous relationship. Should things go wrong, you will have a clear idea of where you stand and there is a documented account of your intentions at the time you married.

Full details of pre and post nuptial agreements.

Pension schemes

If you are a member of a workplace pension scheme and you decide to remarry you should consider changing the nominated beneficiary for your pension. This is the person who will receive your pension if you pass away. In some circumstances there may be inheritance tax benefits of nominating a beneficiary for your pension.

Wills

If you remarry this automatically revokes any existing Will you have and you will need to make a new Will to reflect your new circumstances. Remarriage can also complicate inheritance matters particularly if there are children and stepchildren involved. You may wish to provide for your new spouse when you pass away but also ensure that your children from a previous relationship or marriage are provided for. These circumstances will need to be given careful consideration when you revisit your Will and estate plans as it is important that your Will accurately reflects your wishes.

It is important to note that getting a divorce or dissolution does not automatically invalidate a Will made during the marriage but it does exclude your ex-spouse from that Will.

It is very important to review your Will if you are recently divorced or remarried or if there has been change in your circumstances.