- What We Do
- Your Options
- Meet the team
- Join Us
This blog explores the pros and cons of applying for final divorce order (or for divorces started before 6 April 2022 – decree absolute) before having a final financial order.
When it comes to the final order in the divorce proceedings (if your divorce was started before 6 April 2022, this will be called the decree absolute), solicitors tend to advise clients not to apply for it until all the finances have been settled and the consent order has been approved by the Court. There are often good reasons for this, but it is one of those scenarios where, if it is analysed in detail and if the client is aware of the risks then the case for waiting to apply for decree absolute may disappear.
Practically speaking, if one party obtains a decree absolute/final divorce order and then remarries he/she may lose some or all of their rights in any subsequent attempt to claim from their former spouse. So, clients should not remarry (at least not without careful thought!) until a financial settlement has been finalised by way of a sealed order of the Court and having allowed time for an appeal and service of an appeal to elapse – in reality another 28 days.
The next consideration is those rare situations where one of the spouses dies unexpectedly in the middle of the financial negotiations. In that situation, if there is no decree absolute or final order in the divorce, the surviving spouse will be entitled to all of the benefits that accrue to their status as a widow/widower. In many cases this can be very substantial, and sometimes far more than may have been available to the deceased in life. This can provide a strong incentive to family law solicitors to advise a delay in applying for the decree absolute.
There are some circumstances where particular assets, for example trust funds, pension funds and other complex assets, cannot be transferred except to a spouse, and so in those circumstances it would again be wise to delay applying for final divorce order/decree absolute until you have the certainty of a final financial order from the Court.
Where your financial settlement includes a pension sharing order, this cannot be implemented by the pension provider until you have obtained a final divorce order/decree absolute. However, your solicitor will be likely to recommend that you wait for a minimum of 28 days from the date your final financial order is sealed by the Court before you apply for final divorce order/decree absolute as the pension sharing order is not fully enforceable for the first 28 days (to allow the time limit for appeals to pass as set out above) so that you can keep your widow(er)’s pension rights as a surviving spouse whilst you wait for the order to become fully enforceable. This is particularly important for the person who stands to benefit from the pension sharing order.
There are some situations where transferring assets between spouses is an integral part of a financial settlement. The transfer of assets may attract tax charges (particularly Capital Gains Tax and SDLT, but there may be other tax considerations depending upon many other factors); the UK tax regime tends to exempt transfers between husband and wife from most tax charges, so again there is a good reason to stay married if any such transfer is part of the potential landscape of settlement (although in fact there may be specific exemptions that apply to married couples – even so, it is preferable to have two layers of protection rather than one).
The rules with regard to Capital Gains Tax and how this applies on divorce where there are property transactions involved can be complex and although there are some changes to be introduced from next tax year to relax the current regulations following the Finance Bill 2022-23, it is advisable to take specialist tax advice before finalising your financial settlement proposals and the timescale for applying for a divorce and final order/decree absolute.
Our advice, when advising clients on divorce and financial settlements, is always tailored to our clients’ individual circumstances. We also present clients with options, whether mediation or the collaborative law process, to assist separating couples in reaching an agreeable outcome without the involvement of the Court.
You may also find this recent blog about forthcoming tax changes helpful.