Introduction to Financial Orders
Financial orders are legal decisions made by the court to settle financial matters between divorcing couples. Their main role is to ensure that money, property, pensions, and other assets are divided fairly, taking into account each person’s needs and circumstances. Without a financial order, there is no legally binding agreement about how finances will be split, which can leave both parties vulnerable in the future.
The purpose of financial orders is to provide clarity and security for both sides. These orders can cover a wide range of issues, including how the family home is dealt with, how savings and investments are shared, and arrangements for ongoing maintenance payments. Maintenance orders, for example, may require one person to pay regular support to their former spouse or children. Pension sharing orders are also common, ensuring that retirement savings are divided fairly – if you want to understand more about how pensions are treated, see this helpful guide on pensions.
By making a financial order, the court aims to achieve a fair outcome for both parties and prevent future disputes. The law guiding these decisions is mainly found in the Matrimonial Causes Act 1973, which sets out the factors the court must consider, such as the length of the marriage, each person’s income and needs, and the welfare of any children involved.
On this page, you’ll find an overview of the main types of financial orders, including property adjustment orders, lump sum orders, maintenance orders, and pension sharing orders. For a broader look at how these fit into the overall process, visit our guide to financial settlements during divorce. Each type of order is designed to help both parties move forward with financial confidence after divorce.
Clean Break Orders
A clean break order is a type of financial order made during divorce proceedings that ends all financial obligations between former spouses. Once a clean break order is granted, neither party can make future financial claims against the other, providing both with certainty and independence moving forward. This can be especially beneficial for couples who want a clear and final separation of finances, allowing each person to move on without ongoing ties.
Courts will consider whether a clean break is fair and appropriate, taking into account the circumstances of both parties and any children involved. The decision is guided by the Matrimonial Causes Act 1973, Section 25, which sets out the factors judges must weigh when making financial orders.
While a clean break can offer peace of mind, it may not be suitable in every situation – such as when ongoing spousal maintenance is needed due to differences in income or caring responsibilities. To learn more about when and how these orders are used, and whether a clean break might be right for your circumstances, see our detailed guide on clean break orders. For a broader understanding of divorce finances, you may also find our overview of Financial Remedy helpful.
Lump-Sum Orders
A lump-sum order is a type of financial order the court can make during or after divorce proceedings. It requires one party to pay a fixed, one-off sum of money to the other. This payment can help settle financial claims between former spouses, such as dividing savings, compensating for an unequal share of property, or addressing outstanding debts.
Courts consider several factors before making a lump-sum order, including each person’s financial needs, the length of the marriage, and contributions to the family. These orders are often part of a wider financial settlement, alongside arrangements for property, pensions, or ongoing maintenance. The legal framework for these decisions is set out in the Financial Remedies Act 1973 and the Family Procedure Rules 2010.
For a more detailed explanation of how lump-sum orders work, when they might be used, and what the court will consider, see our comprehensive guide on lump-sum orders. You can also find practical legal information about making or responding to a lump-sum order.
Pension Sharing Orders
Pensions are often one of the most valuable assets in a marriage, making them a key consideration during divorce. A pension sharing order is a legal tool that allows the court to divide pension benefits between spouses, ensuring that both parties receive a fair share as part of the overall financial settlement. The court has the power to make pension sharing orders under the Family Law Act 1996, Section 25, which sets out the factors to be considered when dividing assets.
With a pension sharing order, a portion of one spouse’s pension is transferred to the other, giving each person control over their own share for the future. This can be an essential step in achieving a balanced financial outcome after divorce. For a full explanation of how this process works, what the court considers, and the practical steps involved, see our detailed guide on pension sharing orders.
For further reading, you may find the government’s The Pensions Advisory Service and the guide on Pension Sharing Orders helpful.
Property Adjustment Orders
Property adjustment orders are legal instructions that allow the court to change the ownership or shares of property between divorcing spouses. Their main purpose is to ensure that assets like the family home or other real estate are divided fairly, reflecting each person’s needs and circumstances after the marriage ends. The court has the power to transfer, sell, or adjust property rights, which can be especially important when deciding what happens to the family home.
These orders are governed by specific rules set out in the Family Law Act 1996, Section 24, which explains how and when the court can make such adjustments. Because property adjustment orders can be complex and have long-term consequences, it’s important to understand all the factors the court considers, including any property considerations during divorce.
For a detailed explanation of how these orders work, what types of property they can cover, and what to expect from the process, visit our dedicated page on property adjustment orders. For further background, you can also explore the comprehensive guide from Practical Law on Property Adjustment Orders.
Spousal Maintenance
Spousal maintenance is a type of financial support that one spouse may be required to pay to the other after a divorce, especially when there is a significant difference in their incomes or earning potential. Its main purpose is to help the lower-earning spouse meet their reasonable needs and maintain a standard of living similar to that enjoyed during the marriage.
Courts consider several factors when deciding whether to order spousal maintenance, how much should be paid, and for how long. These include each person’s income, age, health, future earning capacity, and the length of the marriage. Maintenance can be set for a fixed period or, in some cases, may continue until one party remarries or either person dies. The legal framework for these decisions is set out in the Family Law Act 1996, Section 23.
It’s important to note that spousal maintenance is different from child maintenance arrangements, which are designed to support children after separation.
To learn more about how spousal maintenance works, including how courts calculate payments and what to expect during the process, visit our detailed guide on spousal maintenance.
Additional Considerations in Financial Orders
When dealing with financial orders during or after a divorce, there are several important factors to keep in mind to ensure a fair and effective settlement.
Full Financial Disclosure
Both parties are required to provide a complete and honest account of their finances. This includes details of income, assets, debts, and pensions. Without full financial disclosure, the court cannot make a fair decision, and any agreement reached could later be challenged. For more on your responsibilities, see our guide to financial disclosure during divorce.
Managing Debt
Debt is a crucial part of any financial settlement. The court will consider how debts are shared and whether they should be paid off or split between the parties. Understanding your options for managing debt during divorce can help prevent future disputes and ensure a more stable financial future.
Time Limits for Applying
There are strict time limits for applying for financial orders after divorce. While you can apply at any time after your divorce, waiting too long can complicate your case. Learn more about time limits on financial settlements to avoid missing important deadlines.
Changing or Enforcing Orders
Life circumstances can change, or one party might not comply with a court order. If this happens, you may need to look into changing financial orders or enforcement of financial settlements. For further guidance, see this helpful resource on enforcing financial orders.
By understanding these additional considerations, you can better protect your interests and work towards a fair financial outcome.
