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All about Ancillary Relief

What is ancillary relief?

Ancillary relief proceedings are the proceedings relating to financial matters upon divorce or dissolution. It is the legal term for saying “Financial Settlement”. They are called Ancillary Relief proceedings as they are “ancillary” to the divorce/dissolution and are viewed as supplementary or supporting the divorce proceedings.

Today, the more common name is Financial Remedy Proceedings or Financial Settlement.

Financial settlement is separate from the divorce process but may run alongside each other. The process of getting a divorce or dissolution is separate from the process of dividing assets following the breakdown of your relationship. It is really important to understand that proceedings for divorce or dissolution DO NOT automatically deal with a couple’s finances.

A good way to view financial settlement is as shown in the image below as 2 separate sets of proceedings.

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The purpose of Ancillary Relief is to divide the matrimonial assets following a breakdown of a marriage or civil partnership according to the needs and requirements of the couple. To divide your finances, you need a financial Order in addition to your divorce Order. Many couples are able to come to an agreement on how to divide their finances during the proceedings for divorce (either by themselves, or with the help of a third party).

A financial settlement can be achieved several ways such as:

  • Reaching an agreement directly with your partner
  • Negotiation and agreement using a third party such as us.
  • Arbitration
  • Make an application to the Court for a financial Order (as a last resort).

A financial settlement (agreement) can be drawn up at any point during divorce proceedings or civil partnership dissolution.

Frequently asked questions about Ancillary Relief

Do you have to apply for a Financial Settlement through the Court?

Absolutely not. A financial settlement can be achieved either by negotiation and agreement, without having a legal battle in Court. An application to Court to decide financial matters should always be the last resort when all other options have failed.

Can I get divorced without dealing with financial matters?

It is possible to finalise your divorce, and then deal with the division of finances afterwards, or not at all.

However, we would always recommend that it is better to complete your financial arrangements before receiving the Final Order which ends your marriage or civil partnership, or very soon after.

Without a Court approved financial Order, either party can make a financial application against the other at any time after divorce as long as they have not remarried. There is no time limit.

The July 2023 case of Hat v Lat is a good example of why it is important to finalise financial matters following the completion of the divorce or dissolution.

The facts of the case were as follows:

The parties married in 1984 and separated in 1993, with Decree Absolute (the Final Order) being pronounced on 3 November 1998.

In February 1994, the parties entered into a Separation Agreement. The main terms of the Separation Agreement provided for the husband to pay the wife a lump sum of £702,000, and also provided for a clean break between the parties. In accordance with the terms of the Separation Agreement, the husband paid the lump sum of £702,000 and implemented other, more minor provisions of the Separation Agreement.

Crucially to the case, the terms of the Separation Agreement were never converted into a draft consent order.

The husband continued to provide voluntary financial assistance to his ex-wife for nearly two decades despite having no legal obligation to do so under the terms of the Separation Agreement. In March 2022, the husband informed his ex-wife that he would be ceasing all financial assistance. This resulted in the ex-wife making an application to the Court in May 2023 for full financial provision claiming her financial claims arising from the divorce had not been dealt with at the time of their separation. The ex-husband’s case was that financial matters had already been dealt with.

In hearing the case Mr Justice Peel concluded that the absence of a Consent Order meant financial matters were still alive. He concluded that a delay in bringing a claim for financial remedies (even after 29 years!) was not by itself a jurisdictional or procedural bar to making a claim. He therefore allowed the wife’s full financial claim to go to trial.

The moral of the story is: Always resolve financial matters following divorce or dissolution, even if only to seek the dismissal of financial claims.

What is ancillary relief after divorce?

It refers to the process of resolving all financial aspects of a marriage or civil partnership anytime after an application to end the relationship has started. It is a separate and supporting legal process to the divorce or civil partnership.

Who can apply for a financial settlement?

Either party to the divorce or dissolution of a civil partnership can apply for a financial settlement.

Is there a time limit for dealing with financial matters following divorce or dissolution?

There is no time limit set in law when it comes to making financial claims following divorce or dissolution, and only a Court can dismiss them. As illustrated above, the former wife was allowed to pursue her financial claims 29 years after the marriage had ended.

Even where a couple have divorced many years earlier, if they have not had their financial claims dealt with by the Court either by way of an agreed Consent Order or a Court imposed Order, they will still be able to bring claims at any time in the future, as long as they have not re-married.

What documents are usually used in reaching a financial settlement? 

The usual documents that are used in financial matters arising from divorce or dissolution are:

Form E – Financial statement

The Form E sometimes also called Form E – Financial Statement is an in-depth financial document which sets out details of your financial assets and liabilities and includes your income and expenditure as well as information about your needs and the needs of any children.

It is one of the most important documents that is considered when finalising and determining the financial division of marital assets following a divorce, dissolution, or separation. The purpose of the Form E is to enable both parties to provide true, complete, and accurate financial disclosure following the breakdown of their relationship.

Financial disclosure is the process where each party provides details of everything of value, such as income, savings, properties, investments, trusts, and more. It also includes details of any liabilities. Because the Form E is such a detailed and thorough document, it is the preferred method of providing the detailed exchange of financial information and supporting documents which provide evidence and proof of the income, assets, and liabilities.

D81 – Statement of information for a Consent Order

The D81 form is a form used in family law proceedings in England and Wales when a financial agreement has been reached. It is also known as a “Statement of information for a Consent Order in relation to a financial remedy.”

It includes details such as income, assets, debts, and expenses. The form is used when the parties have reached an agreement on how to divide their finances and are seeking the Court to approve a Consent Order which formalises their agreement.

The purpose of Form D81 divorce is to provide the Court with a summary of your current financial situation and to provide the Judge with a clear picture of your finances to allow him or her to better understand whether the financial agreement you have reached is fair and reasonable. It provides details as to the impact of the proposed financial settlement you have agreed in the Consent Order to enable the Judge to approve – or reject – the terms of the proposed Consent Order. The more information the Judge has, the less likely they will have to ask questions.

A Consent Order

A Consent Order is an Order made by a Judge at the request of both parties to a marriage/civil partnership, to confirm a financial agreement they have reached between them.

A clean break financial order is the simplest type of Consent Order that will cut any financial ties between you and your ex-spouse now and in the future. It is ideal for cases where currently there are no assets, property or debts, and the couple want certainty for the future by knowing all financial matters have been dealt with.

Essentially all the financial aspects of the agreement you have reached can be included in a Consent Order. These include:

  • your home – whether it will be sold or transferred to one of you, and how the proceeds will be divided;
  • how other assets such as savings, investments or business interests will be dealt with;
  • what will happen to personal possessions such as furniture;
  • how any pension schemes will be shared;
  • child maintenance for any children;
  • whether one of you will pay maintenance to the other, and for how long;
  • any other expenses – for example, if one of you will continue to pay for life insurance or private healthcare;
  • how any outstanding debts will be dealt with;
  • an agreement that neither of you can make a claim as a financial dependent when the other dies.

What does the Court take into account when deciding financial matters in Ancillary Relief?

In deciding financial matters, a Judge will base their decision on a number of different common sense factors which are contained in Section 25 of the Matrimonial Causes Act 1973 and include:

  • how long you have been married or in a civil partnership
  • your ages
  • your ability to earn
  • your living expenses
  • the standard of living you enjoyed during your relationship
  • your financial needs and responsibilities
  • the available assets
  • any health conditions or disabilities
  • The contributions each party has made or is likely to make in the foreseeable future to the welfare of the family, such as looking after the home or caring for the family.

A Judge will decide on the fairest way to divide the assets if there is enough to meet everyone’s needs. They will make arrangements for any children first – especially their housing arrangements and child maintenance. Wherever possible a Judge will try to arrange a clean break between you, so you no longer have any financial ties to one another.

In the case of a financial agreement contained in a Consent Order, the process for considering whether the divorce financial settlement is fair is the same as if there was a full formal hearing to decide the finances upon divorce or dissolution. The reason for this is that once a Consent Order is approved by the Judge it becomes legally binding, and unlike other types of Court order, a Consent Order cannot be changed, appealed, or set aside unless in exceptional circumstances.

How long does it take to resolve financial matters in divorce?

It depends on several factors for example, whether you have been able to reach an agreement between yourselves or whether financial proceedings are contested through a Court.

As a rule, Ancillary Relief proceedings  through contested Court proceedings can take 12-24 months. Negotiated financial settlements can normally be reached relatively quickly within 6-8 months.

What financial information will I need to give for divorce?

It is necessary to provide details of all your assets, income, liabilities, outgoings, and financial needs, together with evidence in support. In addition to completing a Form E you will also have to provide the following documentary evidence:

  • Mortgage statements
  • Valuations of properties
  • Wage slips/tax returns
  • Bank statements (both personal and business)
  • Pension valuations
  • Records of any savings or investments (e.g., ISAs)
  • Insurance policies
  • Evidence of inheritance (both previous and pending)
  • Details of any outstanding unsecured debts or tax liabilities.
  • 2 or 3 years of accounts if self-employed

Can you get divorced without financial disclosure?

It is possible for a couple to divorce without financial disclosure, but it is not advised. If a couple chooses to agree a financial settlement without first seeking financial disclosure from each other, it subsequently becomes more difficult to overturn an unfair financial agreement as they will have voluntarily chosen not to investigate financial matters. 

Can I refuse financial disclosure?

It is not mandatory to provide financial disclosure in divorce on a voluntary basis. However, a refusal to voluntarily provide financial disclosure will make any financial negotiations virtually impossible and is likely to increase conflict and costs.

Failure to provide voluntary financial disclosure is also likely to result in the matter proceeding to Court as part of Financial Remedy Proceedings. Once those proceedings are issued both parties will be compelled to provide financial disclosure as part of a strict Court timetable. If either party then fails to comply with the Court Order for financial disclosure, a Court may draw adverse inferences from that non-disclosure and punish the non-disclosing party by ordering them to pay costs. A Court can also set aside an Order it has made if non-disclosure is found.

Does getting a divorce cut my financial ties with my ex?

No, financial association continues even after separation or divorce unless you request a Notice of Disassociation from the credit reference agencies. Being financially associated with someone, as is likely to be the case when you are married or in a civil partnership, will show up on your credit report.

This includes:

  • Taking out a mortgage or any other credit together such as a loan or joint credit card accounts
  • Opening joint accounts

You need to apply for a notice of disassociation after the matrimonial assets have been split and transferred into sole names. This will break any link between your credit and your former partner’s.

Without a disassociation, any debt racked up on joint bank accounts or credit cards, or if your ex doesn’t pay bills that they should, could still impact on your credit rating. This in turn could affect what lenders are willing to offer you in the future.

Obtaining a clean break Order is also very strong legal evidence that you no longer have any financial ties with your ex-spouse or partner.

Can my ex wife claim on my inheritance after divorce?

If you do not have a final financial order in place (such as a clean break Order), then yes she can claim. For peace of mind following a divorce or dissolution you should always resolve financial matters even if it is only to obtain a Clean Break Consent Order.

What is the remarriage trap?

The remarriage trap is where a party to a marriage or civil partnership remarries without having resolved financial matters from their previous relationship. Upon their new marriage, they are barred from making any financial claims against their former spouse.

What happens to maintenance payments if one of us remarries?

If the recipient of the spousal maintenance remarries, then the maintenance payments cease. If the payer remarries, the spousal maintenance is unaffected.

Other helpful resources

A very helpful video from Advicenow on How to fill in your financial statement (Form E) – England and Wales

 

 

 

 

 

 

 

 

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