Will a judge make me pay more if our financial divorce settlement isn’t equal?

Will a judge approve our financial consent order?

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One of the biggest concerns we hear from clients wanting a consent order is what will happen if your proposed financial agreement isn’t an equal split. Will the court approve it? Or will the judge make you pay more to even up the agreement?

I thought it would be helpful if I talked you through a real-life example we are working on, where the split isn’t equal. We will share the justification for the unequal split and discuss how the court may respond. We will also explain what we do to mitigate a negative response from the court and how we deal with the court to achieve the client’s agreed outcome.

Case Study

The couple in question married in 2004, having met the previous year. They were together for 15 years before separating in 2019 and were granted their decree nisi earlier this month and will be able to apply for their decree absolute in August.

For those of you divorcing under the new no-fault divorce laws, decree nisi is now known as the conditional order, and the decree absolute is now known as the final order. The timing to apply for a consent order remains the same – once the decree nisi (or conditional order) from the divorce is granted.

Getting back to our case. Having accumulated significant assets, the applicant visited a high street solicitor in March 2021, who persuaded her to draw up a separation agreement at the cost of £7,000. This is quite a common and lucrative strategy practised by traditional solicitors. It’s particularly appealing to clients who want to feel they are protecting their wealth even though the separation agreement is not legally binding.

Having realised she had paid too much, the applicant ditched the solicitor and decided to use Easy Online Divorce’s services to draft and submit the consent order for court approval.

The applicant remains in the former family home, and the couple has £700,000 in equity in the property. The applicant has savings of £80,000, and the respondent has £25,000. Neither of them has any debt. The applicant has over £400,000 in pensions, and the respondent has just under £100,000.

There is also a difference between the monthly income of the two parties. The applicant’s monthly income is around £5,500 after tax and national insurance, and the respondent receives £2,200.

The agreement

The agreement is for the applicant to buy the respondent out of the house by giving him a lump sum of £350,000. The lump sum will be funded in part by her saving and by remortgaging the former family home.

When we add all that up in terms of splitting the house, 50/50, and each party keeping their own savings and pension, there’s a notable difference between the applicant and the respondent. The applicant will have about £850,000 in assets, and the respondent has just under £500,000 giving a £350,000 gap.

Justification for the unequal financial agreement

The applicant says that she works very hard and has focused her effort on building up a pension rather than on leisure activities. She said that the respondent could have taken a higher-paid job but has chosen to prioritise his leisure time over his career. The applicant’s position is that their financial positions result from lifestyle choices, and the financial agreement should reflect that. The respondent agrees with this and has decided not to claim her pensions or savings.

This agreement will see the applicant have around £875,000 of assets and the respondent have £450,000 after being bought out of the former marital home. The applicant is significantly better off than the respondent, so what is the outcome likely to be?

Will the court think the financial agreement is fair?

Looking at the numbers alone, the judge will likely question the agreement’s fairness. When applying for a consent order, we have to send a document called a statement of information (D81) to the court to provide context around the proposed agreement. The D81 shows each party’s current and proposed financial position and allows us to explain how and why they reached their decision.

We would include that they reached an agreement using a solicitor-drafted separation agreement and that the couple feels the proposed split is fair because of their individual lifestyle choices.

The consent order is the document that contains the agreement the couple is seeking to be made legally binding. This will state that the applicant will buy out the respondent for £350,000. If she failed to do this, she would be forced to sell the house to pay the respondent. The consent order will also provide clean break protection around other assets, including the savings and the pensions. The purpose of the consent order is to give each party peace of mind and certainty that their agreement will happen and prevents either party from changing their mind and making a claim in the future.

The court reviews the statement of information and the proposed agreement contained in the consent order, and if they agree that it’s fair in light of the lifestyle choices, they will approve it.

What happens if the court doesn’t think the financial agreement is fair?

If the judge doesn’t feel that the agreement is fair, they will ask questions using what is known as a general order. The judge is trying to ascertain if the person in the perceived weak position (in this case, the respondent) understands what he is signing up for. The judge will want to know that the respondent understands that he could claim some of his wife’s pension and that he knows that if he signs this agreement, there is no going back and changing his mind in the future.

Typically the judge will ask the parties to explain further why they feel the agreement is fair. In a situation like this, we prepare a statement that the weaker party usually signs that states that they are aware that they could claim the pension but don’t want to because they don’t feel that would be fair based on their lifestyle choices.

We would resubmit the signed statement to the court, and usually, the judge will approve the agreement in most cases.

What happens if the judge still doesn’t approve the agreement?

In very rare cases, the judge will request a short 20-minute hearing. The two parties will usually attend by telephone to explain to the judge why they feel it’s fair. It is a fairly informal call, and you have nothing to worry about if you are both in agreement because the purpose is to ensure that the weaker party is sound of mind and is not being coerced. Following the hearing, the judge will approve the consent order.

How do we avoid the judge’s questions?

We try to minimise any questions from the judge by providing a narrative and thorough background to how the agreement was reached, especially if the agreement isn’t a 50/50 split. In most cases, this approach works, but the judge will use their own experience and intuition to decide if further exploration is required. Again this isn’t anything to worry about, and we can resolve it as long as you genuinely agree and have reached your agreement reasonably and logically based on your specific circumstances.

I hope this article has been helpful and has answered many of your concerns. If you have any questions, email us or call 0204 530 8101; we’d be happy to help.

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