Working in what can often be a highly contentious area of the law, it does make a pleasant change to get a call from a client who advises that they have agreed how to divide their assets.
In some cases they will just ask for an opinion on the settlement and some will ask, what next?
For some, however, once they have reached an agreement and transferred all assets they do not consult a solicitor and continue on with their lives. Unbeknown to them they are exposing themselves to potential financial risks in the future.
What Are the Risks?
It is a common misconception that once you are divorced i.e. received your Decree Absolute, that's it. This is not the case. It may be surprising to learn that a divorce does not end the financial relationship with your ex-partner. If you do not properly end your financial relationship this could potentially leave your finances open so your ex-partner could make a claim against you in the future. This can also extend to assets that you have not acquired during the term of your relationship, for example inheritance or even a lottery win.
There is also a risk that what you have agreed to is unfair or could negatively impact you in the future as you have not considered the full extent of the assets or the implications of the agreement. This can be particularly risky if one of the parties is more financially astute than the other or has always been in control of the finances.
How Can I Protect Myself?
Get Advice from a Solicitor
The first thing to do is to consult with a suitably experienced solicitor to advise you on the implications of any agreement that you have reached. Both parties will need to instruct their own independent solicitor to avoid any conflicts of interest.
In order to properly advise you, a solicitor will require full financial disclosure from both parties to consider the terms of the agreement in the context of the entire matrimonial assets. A solicitor will also need to understand both yours and your ex's personal circumstances and needs to determine the impact of the settlement.
If, once you have received legal advice, you decide that the agreement is not suitable, you can decline to proceed with the agreement. Until such time as you have a Consent Order approved by the Court (as explained below) you are able to revisit the agreement and begin discussions again. It may be that you wish to do this with the support of a solicitor or at mediation.
Once an agreement is reached, it should be properly documented in a Consent Order.
A Consent Order is a legally-binding document that sets out the financial arrangements that have been agreed. It will document how you will divide any assets, debts, pensions and income following your divorce. The document will be signed by both parties and filed with the Court for approval by a judge. You do not need to attend Court for this, however if the judge has any concerns regarding the terms of the Order, they may ask further questions. In some circumstances, a judge may refuse to approve the Order and recommend that the parties readdress the settlement. This should be an important red flag that the agreement is not suitable for one or both parties.
To ensure all of the aspects of your settlement are properly documented, you should ask a solicitor to draft a Consent Order for you. Depending upon the agreement that has been reached, this can be a complex document however this should be considered as time well spent. The implications of getting it wrong could be financially disastrous for one or both parties.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.