Can you change a financial settlement on divorce?

It's a question heard a lot but can you change a financial settlement on divorce? There isn’t a yes/no answer to this question. It’s complicated.

Potential clients ask on a regular basis whether they can change the financial order concluded as part of their divorce. This can be for a variety of reasons; For example, a dramatic drop (or increase) in income, unexpected business failure (or success), their ex meeting or marrying a new partner, practical problems in dealing with an asset. The list goes on.

Firstly, I would ask is whether they have a final court order dealing with the financial aspects of their divorce. This will (or should have been) drafted by a solicitor. It should then have been submitted to the court for approval after the decree nisi. They have a final order, provided the court has stamped it and the decree absolute has been granted. We need to look at its terms and consider which, if any, parts of it can be altered.

Variable parts of an order

A maintenance order, made for the benefit of a child or an ex-spouse, is variable if there has been a change in circumstances. The change has to be substantial to justify a review. Either the paying or receiving party can apply. A person with historically high earnings may have had to scale back their responsibilities for health reasons. This can mean that the maintenance order is no longer affordable. Alternatively, the receiving party could have received a promotion at work. A paying party maintenance with little capital at the time of the divorce may have had a windfall. This raises the possibility of substituting the maintenance order for a one-off payment. The remarriage or civil partnership of a receiving party will automatically bring a maintenance order made for their benefit to an end.

The court can also change lump sum orders payable by instalments, both in terms of timing and amount. An extension of the payment schedule is more likely to be accepted than a change to the total amount.

Where there have been practical difficulties dealing with an asset, for example problems selling a house, the court can rework the order to get things back on track. However, this cannot change the ultimate aim of the original financial order.

Re-writing the whole thing

The legal regime for dividing assets on divorce is heavily geared towards creating finality for both parties. For this reason, the ability to alter financial orders, other than in the situations mentioned above is strictly limited. The courts have, for example, refused to vary an order where shares in a business had plummeted to less than 10% of their value at the time of the divorce in the wake of the 2008 financial crash. However, some cases do get through and the court will agree effectively to “re-write” the financial order.

This can happen in cases where there has been a “mistake”. This means the order was made on the basis of incorrect information. In one reported case, a major accident claim against a business was not covered by insurance. However, this was against everyone’s understanding at the time the order was made. The court did step in here and alter normally unchangeable parts of the order .

In addition, the court can exercise its power to change an order where it has been concluded following fraud or material non-disclosure. They could set aside the original financial order and impose a new one, if they had divided the pot down the middle and it later emerged that one of the parties had a secret £1m stashed away, .

Dramatic events

A dramatic event will occur in a minority of cases that will allow a financial settlement to be reopened. There was a tragic, famous example of this in the 1980s. An ex-wife was awarded the family home to live in with the parties’ children. Shortly after, she killed the children and took her own life. The ex-husband was able to keep the house, against the wishes of his ex-wife’s family. The court is looking for something that completely undermines the original order within a relatively short time of it being made. Such cases are rare but not unheard of.

Getting to yes

It is true that you can achieve almost anything by agreement. The court may refuse to vary part of an order within contested proceedings. However, with the support of skilled advisers, the parties can come to a creative, legally-binding solution together. This requires a high level of cooperation and goodwill, which is not always present when a relationship has broken down. However, the parties can explore options that could be to their mutual benefit through non-court dispute resolution forums, such as mediation.

I can help you think outside the box which may just be worth your while! Feel free to drop me (Gianna Lisiecki-Cunane)   an email gianna@odonnellsolicitors.co.uk.

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