A financial settlement agreement is a crucial element of the divorce process, determining how assets, income, pensions, and liabilities are divided. Whether agreed voluntarily or decided by the court, the aim is to reach a fair and lasting resolution that reflects the couple’s circumstances, both now and in the future. Without a legally binding agreement, financial claims can remain open, even after the divorce is finalised.
While most aspects of finances can be made final (although this is not always the case because as part of negotiations, 1 or both parties may insist on "liberty to apply" - see more on this below), arrangements regarding children in a settlement agreement or order are not final (children in this context means generally under 18, unless they’re still in full-time education (like university) or have specific needs (e.g. disability)).
While not legally compulsory, having your divorce financial settlement turned into a court order (known as a consent order) is highly advisable. Full financial disclosure is also very important.
Without a court approved consent order, either party can make financial claims against the other at any time in the future, even decades after the divorce. This means future assets like inheritances, lottery wins or business success could be claimed. The court can also set aside informal agreements if one party didn't provide full financial disclosure.
To protect yourself, you should always ensure there's full financial disclosure, get independent legal advice, and have your agreement turned into a formal consent order approved by the court. This makes it legally binding and provides long-term security for both parties.
Implementation clauses in divorce settlements are crucial as they establish clear timelines, responsibilities, and consequences for non-compliance. Specifically, clauses will usually include :
Timeframes for actions - sets deadlines for each step to be completed
Default provisions - what happens if someone doesn't comply
Consequences of non-compliance - penalties or remedies for breach
Divorce settlement agreements will often include complex or negotiable issues and forward looking clauses such as :-
Life insurance requirements - ensures maintenance payments are secured if payer dies
Property charges as security - uses property as guarantee for payment
Provision for payment defaults - what happens if payments aren't made
Protection against death - ensures arrangements continue if either party dies
Requirements for maintaining security - obligations to keep insurance policies active
Treatment of joint accounts - how and when to close or divide joint accounts
Division of personal possessions - process for splitting household contents
Tax indemnities - protects against future tax liabilities
Future inheritance provisions - addresses treatment of future inheritances
Liberty to apply means agreeing that either party can apply to the court in relation to the settlement. For financial matters specifically relating to children (such as child maintenance through the Child Maintenance Service), the English legal system has built-in review mechanisms without needing liberty to apply provisions.
Liberty to apply clauses are important for, and usually restricted to, allowing the parties to apply to court for implementation issues. Common reasons included in a liberty to apply clause include :
Implementation of asset transfers (e.g., if a property sale is delayed)
Pension sharing order implementation issues
Enforcement of payment schedules
Resolving disputes about interpretation of specific clauses
Addressing unforeseen tax consequences
A time limit (commonly 1-2 years)
Lawyers involved will generally negotiate so as to avoid reopening substantive elements of a divorce financial settlement.
Courts in the UK can and sometimes do interfere with an agreed financial settlement, even when both parties have consented. The court's primary duty is to ensure the settlement is fair and reasonable.
The court will typically approve agreed settlements if they appear fair, but can refuse to make a consent order if:
The agreement is manifestly unfair to one party
There are concerns about undue pressure or coercion
Full financial disclosure hasn't been properly made
The needs of any children haven't been adequately addressed
The agreement attempts to oust the court's jurisdiction
In practice, courts rarely interfere with agreements reached after proper legal advice and full financial disclosure. Most rejections occur when settlements appear significantly imbalanced or when procedural requirements haven't been followed.
There are limited circumstances where a financial order might be challenged. These are deliberately restrictive to maintain the finality principle, and the threshold for success is high. Examples include :
Material non-disclosure of assets - where one party failed to provide full financial disclosure
Fraud or misrepresentation - deliberate deception about finances or circumstances
Extreme unfairness (very rare) - only in the most exceptional circumstances
Clerical errors or obvious mistakes - technical errors in the order itself
Death of a party shortly after order - undermining the purpose of the arrangement
New information that existed at time of order - but was unavoidably unknown
We have a highly experienced team of divorce lawyers who help clients negotiate and formalise legally binding agreements covering assets, income, pensions, and future financial obligations, ensuring clarity and long-term security.
Get in touch
If you would like to speak with a member of the team you can contact us on:
Lead Partner - Family law
Amarjit is Lead Partner for the Family Team. Amarjit advises on all aspects of family law, including divorce, financial matters, nuptial agreements, cohabitation and separation agreements, as well as resolving issues concerning children. The aim is to...
