What is a Financial Remedy Order and Why it is Important

When couples divorce, they need to decide what happens to their finances. A financial remedy order is one option for resolving this question and protecting both parties from any future proceedings.

In this digital world, it is easier than ever to get a divorce.  A divorce application can be filed online by either spouse, and the applicant no longer has to give a reason for the breakdown of the marriage.

However, going through the divorce process does not resolve the financial claims that arise from a marriage.  If either party owns property, has savings, or pays into a pension, their husband or wife will have a claim against that asset.  This is why it is important to get legal advice before commencing divorce proceedings.

In some circumstances, when a divorcing couple has not dealt with their matrimonial finances at the time of the divorce, their right to make a claim against their ex-spouse remains open into the future.  This is true even for assets which were acquired after the marriage ended.  You could win the lottery years after your marriage was dissolved, and your ex-spouse could take you to court for a share of the winnings.

This is where a financial remedy order comes in.  A financial remedy order is an order of the court deciding what happens to the matrimonial finances.  It is the only way of resolving the financial claims that spouses have against each other with finality.  Most financial remedy orders contain a clean break provision, which terminates the financial obligations between the parties and prevents either of them from making a claim in the future.

Divorcing couples have options in obtaining a financial remedy order.  If they cannot agree between themselves, either one of them can apply to the court to obtain an order.  There will be a long process including multiple hearings, after which a judge will decide what the financial remedy order should provide.  The judge has very wide powers: they can order that property is transferred from one party to another, that one party should pay a lump sum to the other, that pensions should be shared between the parties, that either party pays maintenance to the other, etc.

Even if a divorcing couple agree about how the finances should be divided, it is usually advisable to obtain a financial remedy order by consent.  This means that the financial remedy order has been agreed by the parties and drafted by their lawyers.  It is then sent to a judge to be approved and sealed by the court.  This gives the parties the benefit of a clean break and allows them to move forward with the knowledge that their ex-spouse cannot make any further claim against them, without having to go through the lengthy and expensive court process.

Of course, divorcing couples have the option of finalising their divorce without a financial remedy order.  They can put in place a written agreement without a judge approving it, or they can just decide between themselves without ever writing the agreement down.  However all divorcing couples should consider carefully whether they would benefit from a financial remedy order, which is why all divorcing couples should obtain independent legal advice before taking proceedings.

If you are considering divorce, you may contact our Family Department for an appointment to talk through your options.