The question as to whether you should look at a separation agreement or a consent order when divorcing is a question often asked by separating individuals. To answer the question, you need to first understand the difference between the two.
What is a Consent Order?
A Consent Order is a legally binding document which records a financial agreement reached between separating couples upon divorce. The Consent Order sets out the financial arrangements and provides for the division of capital assets, liabilities, pensions and records if any spousal maintenance is to be paid.
For a consent order to take effect it must first be approved by the court. It can only be submitted to Court after divorce proceedings have been issued and the Conditional Order has been granted. A Statement of Financial Information (Form D81) is sent to court with the Consent Order. The D81 provides the judge with a snapshot of a couple’s respective financial positions and summarises the effect of the proposed financial settlement. The judge can only approve the Consent Order if they consider the agreement to be fair and reasonable in all the circumstances.
A financial agreement is only considered full, final and binding if it is incorporated into a Consent Order and approved by the Court. Without a Consent Order, a couple’s ability to bring financial claims against one other are largely left open.
What is separation and when would it be appropriate?
Separation is distinct from divorce because the couple remain legally married. In some circumstances, divorce may not be the best solution for married couples. The only legal ground for divorce is that the marriage has irretrievably broken down. In short, this means the marriage is beyond repair and there is no chance of reconciliation. There is a feeling of permanence with divorce, but a separation provides a couple with more time to decide whether the marriage is at an end or whether there might be a hope of saving it.
Separation may be also preferable for a couple where their religious beliefs conflict with the concept of divorce. Separation is the only option available to couples who have been married for less than a year. It is only possible to commence divorce proceedings once a couple have been married for at least 12 months.
What is a Separation Agreement?
Crucially, a separation agreement does not signal an end to the marriage, but it provides a framework for a couple to live separately and remain married. It is a contract that sets out a couple’s respective obligations to each other and outlines how they will operate financially during the separation period and thereafter. These agreements are flexible and can cover the short-term in relation to income and outgoings arrangements or the longer-term with regards to the division of assets and debts on the basis that the separation is permanent.
Benefits / Disadvantages of Separation Agreement
Prior to no-fault divorce coming into effect on 6 April 2022, separation agreements were frequently entered into where a couple wished to avoid apportioning blame to their spouse in order to start the divorce, preferring to rely on the fact of separation to prove their marriage had irretrievably broken down. The change in the law means that this no longer applies but an analysis of the benefits and disadvantages of separation agreements is advisable when deciding whether this it is a suitable alternative to a Consent Order in the context of a divorce:
- Separation agreements are flexible and unique to the couple’s circumstances. Agreements can deal with a whole range of issues including but not limited to maintenance, child arrangements, division of property and even provision for pets.
- While separation agreements are not legally binding, they can be persuasive in Court should any disputes ever arise in respect of finances and child arrangements or if divorce proceedings are ever commenced in the future.
- Separation agreements can be entered into more quickly than a Consent Order since there is no requirement to wait 20 weeks for the Conditional Order.
- If a separation agreement is already in place, this may make the divorce procedure and resolution of the finances smoother and less stressful for all involved because the couple have already agreed the division of the assets. Couples may have also adapted to life as a separated couple by the time they file for divorce.
- The financial and tax implications of separation may be advantageous to a couple. Separation enables a couple to remain married and therefore continue to receive certain spousal benefits in respect of pensions and life insurance.
- Separation agreements may be appropriate where divorce conflicts with religious or cultural beliefs.
- Separation agreements are the ideal solution if you have been married for less than a year. They set out a couple’s responsibilities to each other and provides how any assets may be divided until divorce proceedings can be commenced.
- If you are not married but have separated from a partner, a Separation Agreement could afford you with some protection and may be a great option for you.
- Unlike Consent Orders, separation agreements are not approved by the Courts.
- Separation agreements are not legally binding on the couple and their terms are not enforceable should one party renege or breach the agreement.
- Couples may only obtain a clean break through a Consent Order. With separation agreements, a couple’s financial claims against each other remain open until they are formally dismissed by a Consent Order. This leaves the door open for potential claims to be made for additional provision in the future.
- Separation agreements do not provide finality and certainty. In this way, separation agreements do not provide the same peace of mind for couples as Consent Orders.
- Separation agreements are capable of being varied whereas Consent Orders may only be varied in limited circumstances.
- Without divorce, there can be no Pension Sharing Order and as such there can be no enforceable provision to share a spouse’s pension in separation agreements.
- Legal fees will in effect be duplicated if solicitors are later instructed to draft a Consent Order. This is the case even if the terms of the Consent Order reflect those in the separation agreement.
Other considerations for separating couples
Make or update your Will
It may be in the circumstances of a potential separation or divorce that an existing Will does not reflect a person’s wishes. In the event there is no Will in place and a party to the marriage dies before the divorce is finalised, their estate will pass to their spouse automatically in accordance with the intestacy rules. It is therefore advisable to make a Will or update an existing one to ensure loved ones’ interests are protected.
Severing joint tenancy
It is common for property, especially the family home, to be owned by a married couple as joint tenants. This means if one party to the marriage dies, their share of the property automatically passes to the other spouse through the law of survivorship, irrespective of what is written in their Will.
For this reason, it is advisable to sever the joint tenancy to ensure their half of the property passes in accordance with their wishes.