A NUMBER of people are aware that they can resolve their property settlement by:
a) filing documents with the Court, or
b) signing a Financial Agreement.
A lot of people think they would like a “very simple” agreement between themselves and their partner, as they think this will be easier than signing documents to be filed with the Court. What they often do not know is that a “Binding Financial Agreement” is not as binding as the name might indicate, and that there is no such thing as a “very simple” Financial Agreement if the document is to have any financial protection for the future.
Financial Agreements can be significantly more expensive and more complicated than preparing Consent Orders, and many are subsequently set aside as being unfair, or because insufficient detail has been provided when preparing the Agreement. In fact in a recent Law Institute Journal article, solicitors were warned against preparing Financial Agreements where the parties have separated, and they have the opportunity to file Consent Orders with the Court, which are binding and have the seal of the Court on the orders.
A Financial Agreement should only be used where there is no possibility to file Consent Orders, such as at the beginning of a marriage or relationship, or during that relationship and prior to separation. There are cases where a Financial Agreement is so unfair that the Court would not seal the orders, and many solicitors prepare Financial Agreements in those circumstances. However this poses a significant risk for the solicitor concerned. If at a later date one of the parties challenges the Financial Agreement for the reason that it is unfair, the solicitor who drafted that Agreement is liable to be sued, as is the other party. Our firm is challenging such a Financial Agreement
on behalf of our client, which Agreement was prepared by another solicitor, and we will very shortly know the result.
There also seems to be a significant amount of ignorance on the part of the public as to the risks parties take if they do nothing about their property settlement at all. Many do not understand that if they separate and do not finalise their property settlement, they may be sitting on a time bomb if they acquire other property later on. Just because it is more than 12 months from the date of divorce, or more than two years from the date of separation,
if the parties are not married, does not mean that the other party cannot still make a property claim out of time.
If someone acquires property, either by purchasing it or through an inheritance or any other means, this property can remain vulnerable to a future claim for property settlement by their former spouse or partner. The only way to really prevent this is to arrange to file Consent Orders with the Court, and this is best done within a reasonable time of the separation, and before acquiring any other property.
For the sake of avoiding a very moderate fee and the preparation of relatively simple documents, many people are taking real risks of future litigation by electing to do nothing about their property after separation.
No doubt it is human nature to want to do nothing where this seems the easiest way
out of having an awkward discussion with the former spouse or partner. The financial consequences can be harsh if that person acquires property over time. It may be especially difficult if the former spouse or partner is significantly less well off, and if that spouse or partner has the care of children. I think I would much rather be acting for the claimant than the respondent in those circumstances.