The divorce process is stressful enough. Whilst getting a Decree Absolute legally ends a marriage, many do not realise that obtaining a divorce does not bring to an end the financial links between divorcing couples.
The only way to ensure a former spouse can’t pursue a claim is to obtain an order from the Court which includes a clean break clause. This is often done within the context of agreeing the division of such assets as divorcing couples have at the time of their separation; but not always.
What is a clean break order?
A clean break order allows you to break all financial ties with your spouse. Once a clean break order has been made, all potential future claims are dismissed so you cannot ask your former spouse for more money or assets.
A clean break order can only be obtained once the Court has the power to deal with financial issues. This occurs during the divorce process itself and, more specifically, once the first stage Decree has been pronounced; Decree Nisi.
Why are clean break orders so important?
You may obtain a divorce but decide that you do not need a clean break order. This could be either because you and your spouse have reached an agreement about who should have what, or because you don’t have many financial resources; maybe you do not own a property, or you don’t have a pension.
However, a few years down the line you win the lottery (lucky you!). The downside is that unless there was a clean break order dismissing your ex-spouse’s claims (and they have not remarried), it remains open to them to make an application to the Court for a share of your winnings.
Lottery wins are rare, and inheritance less so, but the same principle applies. Your ex-spouse may bring a claim for any monies you inherit.
What can happen if you don’t achieve a clean break order?
Wind farm millionaire, Dale Vince, probably regrets not understanding the importance of this question when he divorced in October 1992.
Mr Vince was the founder of the green energy company, Ecocity. The company was very successful and 20 years plus after he and his wife divorced (without obtaining a clean break order) she brought a claim for a share of his wealth.
Ultimately, after Mr Vince had spent vast sums on legal fees and took the matter to the Supreme Court, an agreement was reached, which it is believed involved Mr Vince paying a lump sum to his long-divorced other half, sufficient to allow her to have a mortgage-free home.
Circumstances change and whilst you may not think it important to get a clean break order now, you may come to regret that choice in the future.