Divorce and the need for financial consent orders
What is a Financial Consent Order?
Upon divorce or dissolution of a civil partnership, a financial consent order can include details of how assets will be divided, including cash, property, pension funds and other investments, and can also include arrangements for maintenance payments, including child maintenance. The consent order will generally include a clause to stop ex-spouses raising subsequent financial claims against each other including on the death of one of them.
Amanda Wilson
What is a Financial Consent Order?
Upon divorce or dissolution of a civil partnership, a financial consent order can include details of how assets will be divided, including cash, property, pension funds and other investments, and can also include arrangements for maintenance payments, including child maintenance. The consent order will generally include a clause to stop ex-spouses raising subsequent financial claims against each other including on the death of one of them.
Why is a Financial Consent Order important?
Although the process of securing a divorce has been made less adversarial with the introduction of ‘no fault divorce’, the associated negotiating over finances and children is becoming an increasing challenge and, in some cases, is overlooked entirely through lack of knowledge. According to the latest figures there has been a 22% increase in the number of divorce applications, including dissolution of civil partnerships, compared with the same period in 2021, but there was a decrease in financial remedy applications, which were down 31%.
Many are managing the process themselves, turning to online help or untrained mediators, only to discover later that they may have agreed financial or childcare outcomes that leave them at a significant disadvantage, when professional advice and representation may have reached a fairer outcome. Also, by failing to address financial remedy properly and effectively, individuals or couples are leaving themselves open to potential claims months or years later or creating messy and costly legal and financial situations through (entirely understandable) ignorance of the law.
Are there any tax implications?
Another significant issue for parting couples comes in the complexity of capital gains tax liabilities following separation. When a couple first separate, transfers and disposals made during the current tax year can be on a ‘no gain, no loss’ basis. But once outside that first tax year, matters become complex and could involve tax charges on the spouse or civil partner who is transferring the asset.
What about pension sharing?
Another cause for concern among family professionals is that couples navigating divorce without guidance may overlook the importance of pension sharing, particularly where a primary caregiver to children may not have been able to acquire their own pension pot. It seems entirely possible that valuable claims for pension sharing or other provision, may be being missed out on through a lack of awareness and knowledge on the part of one or both of a couple, and failure on their part to take independent legal advice.
How can we help you?
Berry & Lamberts Solicitors have a 270+ year history in the local area and have a longstanding and loyal client base, many of whom are generations of the same family. Their friendly and compassionate family team are here to explain and guide you through legal matters relating to divorce, dissolution and finances.
www.berryandlamberts.co.uk
