How Do I Make Our Divorce Financial Agreement Legally Binding?

What is a Financial Agreement?

A financial agreement is a formal document that sets out how financial matters will be dealt with between two parties—typically couples—during or after a relationship breakdown.

These agreements include the division of assets, liabilities, pensions, and arrangements for spousal support.

Financial agreements can be made at different stages, such as:

• Prenuptial agreements: Made before marriage to protect pre-existing assets.
• Postnuptial agreements: Created after marriage, often to protect assets in the event of future separation.
• Separation agreements: Aimed at couples who are separating but not necessarily divorcing, setting out how they will handle finances during separation.
• Consent orders: A court-approved agreement that finalises the division of assets after divorce or dissolution of a civil partnership.

The importance of formalising financial agreements is often misunderstood.

Without turning these agreements into a legally binding document, such as a consent order, either party could later dispute the terms, which may lead to long-term financial uncertainty.

How Can I Make Our Financial Agreement Legally Binding?

Turning an informal financial agreement into a legally binding consent order involves making a separate application to the court either alongside or after the finalisation of divorce proceedings.

Here’s a more detailed breakdown of each step:

1. Reaching a Mutual Agreement

The first step in the process is for both parties to agree on the terms of the financial settlement. This includes:

• How property and assets will be divided.
• The division of savings, pensions, and other investments.
• Allocation of responsibility for any shared debts.
• Decisions on whether spousal maintenance is required and, if so, the terms of the maintenance payments (amount, duration, and frequency).
• Any arrangements for ongoing child support beyond statutory child maintenance.

Both parties must agree to these terms before proceeding, as the court will not approve a consent order in cases where there is still a dispute. Don’t assume that everything is split 50/50, because in most cases, it’s not.

2. Drafting of the Consent Order

Once you and your ex-partner have agreed to the terms, the next step is to have the financial agreement drafted into a formal consent order.

A consent order is a legal document that outlines the agreed terms of the financial settlement and is submitted to the court for approval.

This is usually drafted by a solicitor to ensure all legal requirements are met.

Using our online consent order service for £499 is an efficient and cost-effective way to ensure your consent order is drafted by a qualified solicitor. This step is critical, as improperly drafted documents can be rejected by the court, delaying the entire process.

The key elements that need to be included in the consent order are:

• A comprehensive list of all assets and how they will be divided.
• Detailed information about pensions and whether there is a pension sharing order involved.
• Spousal and child maintenance arrangements (if applicable).
• Specifics of any debt repayment responsibilities.

The drafting must be clear, leaving no ambiguity about who is entitled to what and what financial obligations remain.

3. Complete Form A (Application for a Financial Order)

To apply for a consent order, you will need to fill out and submit Form A. This is a court form used to request a financial order, and it essentially triggers the process of having your financial agreement reviewed by a judge.

This form is necessary even if both parties agree on all terms, as it ensures the court has the authority to make the order legally binding.

Form A can be submitted alongside your divorce application or after you have received the conditional order (formerly called the decree nisi) but before the final order (decree absolute).

4. Submit the Consent Order to the Court

Once Form A is complete and the draft consent order is ready, both documents are submitted to the court. At this stage, you’ll also need to pay the court fee (currently £53). This can usually be done online.

At this point, both parties will need to sign the consent order. It is important to note that both signatures must be witnessed—typically by a solicitor, but in some cases, a third party can act as a witness.

5. Court Review

After submission, a family court judge will review the consent order to ensure that the terms are fair and reasonable for both parties.

The judge will look at the financial disclosure provided by each party to confirm that both are adequately provided for.

In some cases, the judge may ask for further clarification or minor amendments to be made before approving the order.

6. Court Approval of the Consent Order

If the judge finds the agreement to be fair, they will approve the consent order. Once approved, the consent order becomes legally binding.

This means that the financial agreement is enforceable by law, and neither party can make future claims on the other’s assets unless exceptional circumstances arise, such as a significant change in financial circumstances.

7. Finalising the Divorce

Once the consent order is approved by the court, it’s important to finalise your divorce (if you haven’t already).

This ensures that the financial settlement is legally binding before the divorce is finalised.

What happens after the consent order is approved? Once the court approves your consent order, both parties are legally bound to the terms of the financial agreement.

If either party breaches the agreement (e.g., failing to make spousal maintenance payments), the other party can return to court to enforce the order. This gives both parties certainty and security, knowing that the terms of the financial settlement are final.

Do I Need a Solicitor, or Can I Draft My Own Financial Agreement?

It is possible to draft your own financial agreement if you and your ex-partner are on good terms and agree on how to divide your assets, debts, and other financial matters. However, there are significant risks involved with going down this route without legal help.

Using a solicitor is safer and is recommended for most couples, especially when asset division and maintenance are part of your financial arrangements.

Instructing a solicitor ensures that your financial agreement is comprehensive, fair, and legally binding.

Family law solicitors ensure all necessary details, such as how assets are divided, any spousal maintenance, and pension arrangements are included.

More importantly, they will ensure that the agreement meets legal standards and can be turned into a consent order, which is the only way to make it enforceable.

For those looking to save on costs but still need legal protection, services like our consent order service for £499 offer a more affordable alternative to hiring a traditional solicitor. This service ensures your agreement is properly drafted by a qualified solicitor and submitted to the court for approval, giving you peace of mind without the high cost.

When Should a Financial Agreement Be Reached?

Ideally, a financial agreement should be reached as early as possible during the divorce process, preferably before the final order (formerly called the decree absolute) is granted.

Reaching an agreement early helps ensure that both parties are clear about how assets, debts, and ongoing financial obligations will be handled once the marriage is dissolved.

However, it’s important to understand that the financial agreement doesn’t necessarily need to be reached at the start of the divorce process.

Some couples only begin serious discussions about financial matters once they’ve applied for the conditional order (formerly the decree nisi), which is when the court agrees that the couple can legally divorce.

Waiting too long to settle finances can delay the divorce’s finalisation, but it’s important not to rush into an agreement just to speed up the process. Taking time to ensure the agreement is fair and comprehensive is crucial.

There are several methods couples can use to reach a financial agreement, depending on their relationship dynamics and the complexity of their financial situation.

Some of the common methods include:

1. Direct Negotiation Between Parties

In cases where the divorce is amicable, couples may be able to reach an agreement on their own by directly negotiating terms. This can be done through informal discussions or with the help of online tools that guide them through the financial settlement process.

2. Mediation

Mediation involves an independent third-party mediator who helps facilitate discussions between the couple to reach a fair and balanced financial agreement. The mediator doesn’t take sides but instead helps both parties communicate effectively and reach a mutually acceptable settlement.

3. Collaborative Law

In a collaborative law process, both parties and their respective solicitors commit to working together to reach a financial settlement without going to court. All meetings take place with everyone present, and the focus is on cooperation and transparency.

4. Solicitor Negotiation

If the couple cannot agree on their own or through mediation, each party may engage solicitors to negotiate on their behalf. The solicitors will work to reach an agreement that both parties can accept without going to court.

5. Arbitration

Arbitration is a process where both parties agree to let an arbitrator (a family law expert) make decisions regarding their financial settlement. The arbitrator’s decision is legally binding, similar to a court ruling, but the process is more private and flexible.

Common Pitfalls to Avoid

Here are some common mistakes people make when trying to make their financial agreement legally binding:

1. Not seeking legal advice: Trying to draft an agreement without professional input can lead to missed legal protections. A solicitor can spot issues that might not be obvious to those unfamiliar with family law.
2. Failing to include all assets: It’s crucial that your agreement includes all financial assets, including savings, investments, and pensions. Many people overlook pensions, which can be one of the most valuable assets in a marriage.
3. Not considering future financial changes: Financial circumstances often change after divorce. Agreements should account for future earnings, inheritances, or asset growth to avoid issues down the road.
4. Leaving spousal maintenance unclear: If spousal maintenance is part of your agreement, ensure the terms (amount and duration) are clearly outlined. Vague terms can lead to disputes later.

What Documents Do I Need To Gather?

To make a financial agreement legally binding in the UK, couples need to gather specific documents that outline their financial situation.

These documents are essential because they give both parties—and the court—a clear picture of the assets, liabilities, and income involved.

Here’s a detailed breakdown of the documents required:

1. Financial Disclosure Documents

Both parties must provide full and honest financial disclosure to ensure that the financial agreement is fair and balanced. This involves sharing all relevant financial information, including:

• Bank statements: At least the last 12 months of personal and joint account statements to provide a clear view of savings and spending.
• Investment portfolios: Details of any stocks, shares, or other investments, including their current market value.
• Pension statements: Information on all pension pots, including both workplace and private pensions. Pension values need to be provided as Cash Equivalent Transfer Values (CETV).
• Property valuation: Up-to-date market valuations for any properties owned, whether jointly or individually. This includes the family home, second properties, or buy-to-let investments.
• Mortgage statements: Current statements showing the outstanding balance on any mortgages, including details of repayments.
• Loan and debt documents: Details of any outstanding loans, credit card debts, or other liabilities.
• Business assets (if applicable): For self-employed individuals or business owners, an accountant’s statement outlining the business’s value, including assets and liabilities, is essential.
• Income documentation: Recent payslips or tax returns for self-employed individuals to provide an accurate view of both parties’ income.

Full financial disclosure is crucial because failing to disclose all assets can lead to the court overturning any financial agreement in the future.

2. Proof of Agreement

If you and your ex-partner have already come to an informal agreement on how to divide your finances, it’s important to have a written document that outlines the agreed terms.

This could be an informal financial settlement agreement or email correspondence that clearly shows both parties’ understanding of the division of assets and liabilities.

3. Draft Financial Agreement

Once the financial disclosure is complete, a formal draft financial agreement (typically drafted by a solicitor or through an online service like our consent order service) needs to be prepared.

This document will include all of the terms agreed upon regarding asset division, debt management, spousal support, and pension sharing. It is this document that will eventually be submitted to the court as part of the consent order process.

Secure Your Financial Future with a Legally Binding Agreement

Reaching a fair and comprehensive financial agreement is one of the most important steps in the divorce process.

To protect yourself and your assets, turning your agreement into a legally binding consent order is essential.

If you’re ready to formalise your financial agreement and make it legally binding, speak with our team on Live Chat or explore our fixed-fee consent order service below.