Sometimes people who are separating decide to delay getting a divorce or dissolution. This may be because they do not feel emotionally ready to bring their marriage to an and. However, I often find that it is because they think that it would be best to sort out financial issues between them and their spouse before they start the divorce or dissolution process. In fact, often the opposite is the case.
Most people who separate or divorce are able to reach an agreement about financial issues. (Fore the sake of simplicity, I will henceforth refer to divorce only, but it applies equally to dissolutions). It is essential that they then obtain a financial order from the court reflecting the terms of the agreement. If there is no order, then the agreement may not be legally binding, it cannot be enforced and there is the danger of further financial claims in the future because no clean break has been ordered by the court. Furthermore, if there is an agreement that a pension will be split, this can only be achieved a financial order that contains; you cannot implement the split without an order.
Generally speaking, it is risky to implement any of the terms of a financial agreement if you have not obtained a financial order first. If one party gets what they want before the order is made, they may become uncooperative about obtaining a financial order from the court. They may also start to demand that they should receive more.
It may also be prudent to implement the agreement as soon as possible, especially if there is a concern that asset values may rise or fall. Assets suddenly changing in value give lawyers nightmares. When the first COVID lockdown happened in the UK in March 2020, the economic turmoil at the time led solicitors and barristers to warn their clients against doing deals until we could be confident that the values of assets were more stable. Everyone anticipated that assets would plummet in value, only to find that after a few months, the markets rebounded and a property boom took place.
Asset values changing can be particularly relevant in relation to pensions. A pension sharing order (as part of a financial order) must be phrased as a percentage of the fund; it cannot state that the pension share is a fixed sum. Therefore, if the fund rises in value in between the pension valuation being obtained (often many months before a deal is done), the beneficiary of the pension sharing order will see the value of the pension share also rise as the precise amount that they receive is not crystallised until the pension starting order is implemented by the fund. In other words, if you are going to get 50% of the pension fund, you don’t get 50% of what it was worth when the pension valuation was produced by the fund; you get 50% of the pension’s value at the time that the pension fund implements the pension sharing order.
This can be many months after the order has been made; the fund has to implement the pensiosn split within 4 months of being served with the order and the Decree Absolute/final order of divorce. It is normal practice to delay applying for the decree absolute/final order until 28 days after the pension sharing order has been made, in order to avoid the risk that the pension holder dies before the order comes into effect. Therefore, it is possible that that the pension sharing order will not be implemented until 5 months after the pension sharing order is made (possibly longer if there are problems with implementation, such as the recipient not choosing a pension to which the pension credit can be transferred.
Therefore, it is prudent to not just get a financial order, but to obtain the order without delay so that it does not delay implementation of the agreement. And this is where the court process hinders us.
The difficulty is that the court cannot make the financial order until a conditional order has been made in the divorce application – and the applicant cannot apply for the conditional order until a period of 20 weeks has elapsed since the divorce application was issued by the court.
The purpose of the 20 week gap is somewhat unclear. In the 1990’s, the Major government tried to introduce no-fault divorce in the Family law Act 1996. The lengthy period between applying for a “divorce order” (as it was going to be called) and applying for the conditional order was described as a “period of reflection and consideration”; in effect, it was a cooling off period. The new law was passed by parliament, but never brought into force for various reasons and was quietly abolished. It was not until 2020 that a new no-fault divorce law was passed by parliament, coming into force in April 2022. The 20 week period was included in the new law, although it now has no name.
Is it a cooling off period? Not really. In my experience, the vast majority of people who commence divorce applications do not change their minds, despite the divorce process taking anywhere from 8 to 18 months, possibly longer (depending on how long it takes to sort out financial issues). Some people will reconcile of course, but in my experience, reconciliations are most likely before the divorce starts. The ground for divorce is of course that the marriage has to have irretrievably broken down, so most people who start a divorce will have genuinely reached the point of no return.
Therefore, the prudent way forward is often to commence the divorce application as soon as possible so that you can get the financial order as soon as possible and avoid delay in implementing any agreement.
This does not mean that I am advocating getting divorced if you are not ready. You should only do so if your marriage has irretrievably broken down; in other words, it cannot be saved. However, if it is definitely over and there is going to be a divorce sooner or later, then it is often sensible to grasp the nettle and get it underway.
21 January 2023
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