What is a Clean Break Order? - Family Law Partners

What is a Clean Break Order?

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A clean break order is the term commonly used to describe a type of financial settlement between a couple who are divorcing or dissolving a civil partnership, which involves the assets being divided in such a way that there is no ongoing financial link between them.

Clean break orders can either be ordered by the Court following a final hearing in financial proceedings or can be agreed between the parties, known as clean break consent orders. Even if the parties have agreed a clean break consent order, it is still necessary to ensure that the consent order is approved by the Court to make it legally binding. Before approving a consent order the Court will ensure that it has the power to make the orders being requested and will also check that the terms of the order appear fair to both parties. For more information on consent orders, see our blog on Financial Orders.

Orders the Court can make upon divorce or civil partnership dissolution

When parties get divorced or a civil partnership is dissolved the Court has the power to make a wide range of different orders in relation to their finances, which includes any savings, investments, properties or pensions that either party may have. The orders that the Court can make include ordering the sale or transfer of properties, the payment of lump sums, and the sharing of pensions. The Court can also order that one party pay the other party spousal maintenance, which is usually in the form of a regular monthly payment.

Factors the Court takes into account

In determining what order to make, the Court has a wide discretion which means that it can make orders that best suit an individual family’s circumstances. It has the duty to consider all the circumstances of the case with first consideration being given to the welfare of any child of the family under the age of 18. Although the Court needs to have regard to all the circumstances of the case, Section 25 of the Matrimonial Causes Act 1973 sets out a list of factors that the Court must have particular regard to, although the weight to be attached to each factor will vary from one case to another. In summary the specific factors the Court must have regard to are:

  • each person’s income, earning capacity, property and other financial resources that are available now and/or in the foreseeable future
  • each person’s financial needs, obligations and responsibilities as they are now and/or in the foreseeable future
  • the standard of living enjoyed by the family before the breakdown of the marriage or civil partnership
  • each person’s age and the length of the marriage or civil partnership
  • any physical or mental disability that either party has
  • contributions that each person has made, or is likely to make in the foreseeable future, to the welfare of the family, including any contribution by looking after the home or caring for the family
  • the conduct of each of the parties, if that conduct is such that the Court considers it would be unfair to disregard it (although it is very rare for conduct to be taken into account unless it directly affects the parties’ finances), and
  • the value of any benefit which either party will lose the chance of acquiring as a result of the divorce or civil partnership dissolution.

The starting point for the Court in terms of their approach to dividing matrimonial assets is a 50:50 division, although the Court can depart from this with a view to achieving fairness, such as if one party’s needs dictate that they should be entitled to a greater share. In certain circumstances, an agreement made before or during the marriage (a pre-nuptial or post-nuptial agreement) can also have a significant effect on what the court decides.

Clean Break Order

Where an order (whether by agreement or otherwise) provides for a clean break between the parties, this means that the order confirms how the capital assets are to be divided between the parties whilst also stating that there is to be no ongoing spousal maintenance payments. The order will also state that all other claims between the parties are dismissed, meaning that neither party can seek to bring any further claims against the other party in relation to the marriage or civil partnership in future. Clean break orders can be in respect of capital and income in this manner, or just in respect of capital, as I have explained further below.

A clean break as to capital and income enables both parties to move on with their lives financially independent from the other, and knowing that the other party is unable to make any further claims against them.

Court’s Approach to a Clean Break

Whilst there is no presumption in favour of there being a financial clean break between two parties following a divorce or civil partnership dissolution, the Court is under a duty to consider whether it would be appropriate to bring both parties’ financial obligations to the other either to an immediate end, or as soon as possible as the Court considers just and reasonable.  Where there are children (particularly young children) or the marriage or civil partnership has been long (10+ years), a clean break may not be fair or possible unless there are enough assets available to divide between the parties and both have sufficient income to meet their outgoings.

If it is considered necessary for one party to receive spousal maintenance for a period to enable them to meet their reasonable outgoings, in order to try to achieve an immediate clean break, the Court will consider whether there are sufficient assets available to enable a lump sum payment to be made in place of an order for spousal maintenance. This is known as capitalisation of maintenance. The intention of this would be to provide the receiving party with a sufficient fund to meet their income needs in place of an order for spousal maintenance with a view to enabling an immediate clean break to take effect.

Deferred Clean Break

In circumstances where an immediate clean break between the parties is not appropriate and there are insufficient assets for capitalisation, the Court should consider whether a deferred clean break is possible.  In such circumstances the Court will need to consider whether the term for spousal maintenance should be on a joint lives basis (although such orders are now far less common than they used to be), or whether it should only be for a fixed period. Such a period would be determined based on how long is deemed sufficient to enable the recipient to adjust to the breakdown of the marriage or civil partnership and the resulting financial independence without undue hardship. If spousal maintenance is to come to an end after a fixed term, the Court will also need to consider whether the term of spousal maintenance should be extendable or not. If it is an extendable order, the recipient can apply for the Court to extend the term of the Order at any time prior to its expiry. The purpose of ordering spousal maintenance for a fixed term is to try to ensure that even though there is no immediate clean break, there will be a clean break between the parties at a fixed time in the future, known as a Deferred Clean Break.

Clean Break as to Capital

If it is not possible to achieve a financial clean break as to capital and income because an order for spousal maintenance is necessary, the Court will at least consider whether there can be a clean break as to capital. This involves an order that the capital assets are divided appropriately between the parties on the basis that all other capital claims between them are dismissed. This means that even though there may be ongoing payments of spousal maintenance, neither party can seek any further orders against the other in respect of capital whether in relation to lump sum payments, property adjustment orders, orders in respect of pensions or otherwise.

Clean Break on Death

Where two parties are or were married or in a civil partnership, it is possible for them to apply for reasonable financial provision from the estate of the other party upon their death even after divorce or dissolution of the civil partnership, provided that they have not since remarried or entered into another civil partnership. In order to prevent such a scenario, it is standard practice to include a clause preventing either party from being able to make a claim against the other’s estate on their death. This is known as a clean break on death, although it is only appropriate where there are no ongoing spousal maintenance payments.

Child Maintenance

On a final note, it is worth being aware that the above references to a clean break between the parties and financial independence, do not apply as far as child maintenance is concerned. Except in cases where the non-resident parent is a high earner (earning over £156,000 gross per year) jurisdiction for assessing child maintenance falls to the Child Maintenance Service (CMS) rather than to the Court. The Court cannot bind the parties in relation to child maintenance for a period of more than 12 months, irrespective of what the financial order may state. After 12 months have passed from the date of the financial order, either party is in a position to apply to the CMS for a reassessment of the non-resident parent’s child maintenance liability. As the CMS retains jurisdiction for child maintenance, it should be noted that a clean break order following a divorce or dissolution of a civil partnership does not bring an end to a non-resident parent’s responsibility to pay maintenance for their children moving forward.

Craig Yeung-Williams is an Associate Solicitor in our Brighton office.

Whilst this article will hopefully provide a useful summary regarding clean break orders if you need tailored advice regarding such matters then please get in touch with us to arrange a consultation with one of our specialist family lawyers.

 

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