Common Divorce Settlement Mistakes Couples Make
A divorce is one of the most stressful life events a person can go through. So, it’s unsurprising that many spouses make various mistakes when negotiating their divorce settlement.
It can be easy to make rash decisions when emotions and feelings run high, however, it’s always advisable to seek legal help where possible.
We will highlight a few of the most common mistakes and explain how they can be avoided.
What is the definition of a divorce settlement?
When a married couple gets divorced, they must ascertain the extent of their shared assets.
The value of these assets – including the matrimonial home, pensions, personal savings, and any business assets – must be calculated and added to the matrimonial pot.
The divorcing parties must then come to an agreement as to how to divide up the matrimonial pot. This agreement is then written down and forms part of a consent order, which needs to be approved by a court to become legally binding.
This overall process, as well as the agreement itself, is known as the divorce settlement. It is also sometimes called a financial settlement.
Why is it important to agree to a financial settlement following a divorce?
Reaching a financial settlement ensures that there are no loose ends following a divorce, and helps to achieve a clean break.
It legally binds both parties to stick to any agreements which they might otherwise potentially break, such as the agreed sale of the marital home.
Even in the case of an amicable divorce, disputes can arise in the future when personal circumstances change. In the absence of a financial settlement, either party might renege on the terms of the original agreement.
Furthermore, without a clean break consent order, a claim can be made on the finances of a former spouse even many years in the future.
What are the most common mistakes spouses make when agreeing to a divorce settlement?
We have highlighted the four most common mistakes we see spouses make when agreeing to a financial settlement. You should avoid making these mistakes at all costs as they can hurt your future prospects.
- Not obtaining a consent order – some divorcing couples will reach a formal arrangement regarding the division of the matrimonial pot, but will then fail to obtain a consent order which is approved by the court. Without an official consent order, even if an agreement has been written down, it will not carry any legal weight as a divorce settlement.
- No legal advice – whenever there are substantial assets or complex financial arrangements, it is vital that both spouses obtain independent legal advice. This is particularly the case if one divorcing party is in a stronger position; legal advice helps to level the playing field and reduce the possibility of an unfair outcome.
- Short-term thinking – occasionally the divorcing parties may prioritise their short-term needs over longer-term outcomes. For example, one spouse may agree to a financial settlement that allows them to remain living in the matrimonial home, but which deprives them of future spousal maintenance or pension sharing arrangements.
- Emotions – the divorce process is often fraught with emotions that can lead to making poor choices or not demanding one’s fair entitlement to a portion of the matrimonial pot. Sometimes one spouse may feel pressured into accepting a lower valuation of the true value of assets by their ex, to avoid confrontation or being accused of greed etc.
What happens if a judge disagrees with a divorce settlement?
Once a divorce settlement has been submitted to the court as a consent order, the judge will need to decide whether or not to approve it.
The court has a duty to consider the terms of the financial agreement in relation to the Matrimonial Causes Act 1973.
A judge will take into consideration any legal agreement you have reached prior to submitting a divorce application, such as a prenup or separation agreement, before assessing if the agreement is fair and reasonable.
If a judge disagrees with the terms of a consent order, they may refuse to initially grant the order and request further information.
It will not usually be necessary to go to court, as written information can be submitted, but occasionally a court hearing may be involved. The court will then decide to approve or reject the order.
How do you make a divorce settlement legally binding without going to court?
The divorce settlement will need to be turned into a Consent Order before it becomes legally binding. It will not usually be necessary to go to court in person, but the consent order needs to be drafted by qualified solicitors and then submitted to the court for approval.
A consent order will usually be drafted by a solicitor but high street law firms can be quite expensive.
Divorce-Online can help you put your financial agreement into a legally binding consent order. Our service has been used by over 80,000 couples as a cheaper, easy, and more straightforward alternative to high-street solicitors.