Can you change a financial settlement on divorce?

Can you change a financial settlement on divorce? - Blog post for Smart Divorce by Gianna Lisiecki-Cunane

There isn’t a yes/no answer to this question…it’s complicated.

We get calls from potential clients on a fairly regular basis asking whether they can change all or part of the financial order concluded as part of their divorce. This can be for a variety of reasons: 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.

The first thing I would ask a prospective new client is whether they do indeed have a final court order dealing with the financial aspects of their divorce. This will (or should have been) drafted by a solicitor and submitted to the court for approval at some point after the decree nisi. Provided the court has stamped it and the decree absolute has been granted, they have a final order and 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 – whether it was made for the benefit of a child or an ex-spouse – is always variable if there has been a change in circumstances. The change does not have to be dramatic but it has to be substantial to justify a review. Either the paying or receiving party can apply. Sometimes a person with historically high earnings has had to scale back their responsibilities for health reasons such that the maintenance order is no longer affordable. Alternatively, the receiving party could have received a promotion at work. There can also be situations where a paying party with little capital at the time of the divorce has had a windfall, raising 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, provided this does not 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”, by which we mean the order was made on the basis of incorrect information. In one reported case, a major accident claim against a business was, against everyone’s understanding at the time the order was made, not covered by insurance. The court did step in here and alter parts of the order that would normally be unchangeable.

The court can also exercise its power to change an order where it has been concluded following fraud or material non-disclosure. If the court had divided a £2m pot down the middle and it later emerged that one of the parties had a secret £1m stashed away, it could set aside the original financial order and impose a new one.

There is a tiny minority of cases in which a dramatic event will occur that will allow a financial settlement to be reopened. There was a tragic, famous example of this in the 1980s when 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 (almost) true that you can achieve anything by agreement. Just because the court would refuse to vary part of an order within contested proceedings, it does not mean that the parties – with the support of skilled advisers – cannot 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. That said, there are a whole host of non-court dispute resolution forums, such as mediation, where the parties can explore options that could be to their mutual benefit.

I can help you think outside the box which may just be worth your while! Feel free to give me (Gianna Lisiecki-Cunane) a call on 0161 828 1883 for an informal chat or drop me an email gianna.lisiecki@jmw.co.uk.