What is a Consent Order or Financial Agreement and why is it so important in Divorce?

Posted:
25-02-2021

What is a consent order or financial agreement?

It should not be underplayed how crucial it is to properly enter in to an ‘official agreement’ (Financial Consent Order) as it closes off all potential future financial claims against you as far as possible. If not done properly or at all, an ex-spouse could make a claim against your assets, property or income in 5,10, 20 or 30 years’ time.

Surely a verbal agreement between us to resolve our finances is enough, and once I receive the Decree Absolute and I am officially divorced, it will automatically mean that the finances are resolved?

Unfortunately not, I am afraid.

You need to both enter in to a Consent Order (if financial matters are agreed). If you are both not ready to divorce and would like a ‘holding position’ which prescribes your financial agreement more ‘officially’. This can be done by entering in to either a Deed of Separation or a Heads of Agreement. They are both binding documents, but you will also both need to undertake the process of full and frank disclosure and instruct your own independent legal advisors. It is also good practice to draw up a Consent Order to accompany the Deed of Separation / Heads of Agreement in order for that Consent Order to be used in future and lodged with the Court.  In rare circumstances the Court can set aside a Deed of Separation or a Heads of Agreement if considered unfair or if it is not properly executed.

Ok, can we just sit down and draft an agreement on a piece of paper. Will that be legally binding and enough?

I used to undertake some pro-bono work for a University and once and spoke to a wife who stated that she had an agreement in writing with her estranged husband, which was independently witnessed. This document encompassed their financial settlement, and she therefore hoped that this would suffice. I had to be very clear with my advice that whilst it was prudent it did not quite cut and would not necessarily be upheld by the court. In order to resolve the financial element of her divorce she had to enter into a properly drafted consent order.

So what is a Consent Order?

A Consent Order (also known as a financial remedy order or financial agreement) is a legally binding document that records the financial agreement reached between divorcing couples. The Consent Order sets out the arrangements for the division of capital assets, liabilities, pensions and income.  The Consent Order must be approved by the Court to be binding.

At what stage is my Consent Order seen by a judge?

Once you are at Decree Nisi stage of the divorce the signed Consent Order can be lodged with the Court along with a signed Statement of your financial information (Form D81) and a fee of £50.  You must have both willingly entered into the agreement, and signed it accordingly, and ideally both received independent legal advice. You may have both undertaken the process of full and frank disclosure at this stage and this is known as voluntary disclosure.

What is a D81/ Statement of Information Form?

Your solicitor and the Judge that reviews your Consent Order will require some basic information about your finances including: your capital assets; your liabilities; your pension provision; and your income.

The D81 Form/ Statement of Information provides a snapshot of your current financial position and, as stated above, accompanies your consent order to provide the court with background information to your financial situation. This information enables the court to assess the fairness of the agreement you have reached. The D81 Form/ Statement of Information sets out your financial position. The Consent Order sets out how the finances are to be divided between you and estranged spouse.

What happens when all those documents have been drafted?

A family solicitor will then draft an application form to submit your Consent Order and D81/Statement of Information to the Court for consideration of the judge. The Judge will assess the fairness of the agreement reached. There is usually no requirement for the parties to attend Court. The Judge will consider the case based on the paperwork submitted by the solicitor.

Has an agreed Consent Order got a good chance of ‘passing’ with the Judge especially if both parties have agreed and entered in to the agreement willingly?

This is not always the case.

With this information the Court should usually be able to determine whether the terms of the Consent Order are reasonable. However, there will be instances where the judge is not satisfied or may have further questions, in which case they may require the parties to write to the court or attend court to explain why the order should be made.  This commonly happens where a party is not represented and on the face of it the order appears to be unfair to the Judge. If the Judge is still not satisfied that the order is reasonable, then they may simply refuse to make the order. This will mean that the financial/property settlement is not final, so that either party could still make a (further) claim against the other.  In those circumstances further negotiations may be necessary.

If the court approves the order, it will seal it and send copies to both parties, or their solicitors.

Finally, an important point to note is the timing of the order. Normally, it will be obtained before the divorce is finalised by the Decree Absolute (it can’t be made before the pronouncement of the Decree Nisi as mentioned above), or simultaneously with the Decree Absolute. It is usually best not to finalise the divorce before obtaining the sealed Consent Order with an application for Decree Absolute as there may be financial consequences. We have previously explored these financial consequences in another blog post. To find out more, click here. Nonetheless, please note that the order will not take effect until the Decree Absolute has been pronounced.

 

Sousa Law are specialist Divorce Solicitors in Southampton. If you require help and advice concerning divorce and financial settlements and would like to discuss how we can help you, please contact us on 02380 713 060 or enquiries@sousalaw.co.uk to book a Free Initial Consultation.

By Giuseppe Pingerna