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A clean break order is a legally binding order which forms part of your financial settlement pursuant to divorce, that ensures complete financial separation from your spouse and prevents any future financial claims. In this insight, we explore everything you need to know about a clean break and how you can go about seeking one.
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A financial order is a legally binding court order which details your financial settlement when you divorce.
A financial order will typically address issues such as the division of property, investments, pension funds, other assets and liabilities, and spousal maintenance. Until a financial order is made by the court, it is open to parties who divorce to make financial claims and seek capital and income provision from the other.
A final order in divorce proceedings does not deal with the parties’ financial resources or determine their financial claims.
Whilst a financial order typically provides for a clean break in respect of capital, a clean break order ensures that neither party can make financial claims against the other for income, providing a clear and definitive break. Without a clean break, claims for spousal maintenance remain open, so a party may apply for an order for spousal maintenance to be paid, and later seek to vary the amount of spousal maintenance or the term over which it is paid.
A clean break order offers parties complete financial independence and reduces the risk of future conflicts. Whilst a clean break may not be possible, or suitable, in all cases, it is a valuable option for those seeking to sever all financial ties with their spouse and move forward independently after a divorce.
A clean break order is a type of financial order pursuant to divorce.
A clean break order is a financial order that does not include provision for the payment of spousal maintenance (either a substantive or nominal amount) and prevents future claims.
Whilst a clean break order is a type of financial order, not all financial orders result in a clean break; some may involve ongoing financial commitments or maintenance payments.
A clean break may not be suitable for everyone; its appropriateness depends on the parties’ financial resources and other circumstances. A clean break is usually ordered when neither party requires ongoing financial support, as they are both able to meet their own income needs, or the financial resources available for division enable one party to pay the other a lump sum to capitalise the amount required to meet their income needs.
In cases involving significant disparities in financial situations, limited financial resources, ongoing care responsibilities or other complexities, a clean break may not be feasible. In these instances, alternative financial arrangements may be necessary.
Either way, it is crucial to seek legal advice to determine the most suitable approach, ensuring that any divorce settlement aligns with the unique needs and circumstances of those involved.
An immediate clean break refers to the swift and complete financial separation of the divorcing parties at the time the divorce is granted. This involves the division of assets, settlement of financial matters and termination of ongoing financial responsibilities.
In an immediate clean break, the terms of the financial settlement ensure that neither party has ongoing financial obligations to the other after the divorce is finalised. The parties’ respective financial claims for spousal maintenance are dismissed.
This approach provides a clear and final resolution to the financial aspects of the marriage, allowing both parties to move forward without the risk of future income claims.
Alternatively, parties can achieve an immediate clean break by paying or receiving any spousal maintenance payments upfront. In this case, instead of making ongoing periodic maintenance payments (such as monthly or yearly), the paying party pays a lump sum to the receiving party. This lump sum is intended to cover the future spousal maintenance payments that would have otherwise been made over time.
By capitalising future maintenance payments, both parties achieve an immediate clean break, eliminating the need for continuous financial support and severing financial ties between them.
The third type of clean break refers to a financial arrangement where the complete separation of financial ties between the divorcing parties is postponed until a later date. Unlike an immediate clean break, where all financial matters are settled at the time of the divorce, a deferred clean break involves delaying the resolution of certain financial aspects. This could include the division of assets or ongoing financial responsibilities.
Parties may agree on a deferred clean break for various reasons, such as waiting for the sale of a property or until children reach a certain age. It allows for a phased approach to achieving a full financial separation.
Clean break orders are a favourable option for many parties going through a divorce. Firstly, they provide clarity and finality, ensuring no ongoing financial obligations between them. This certainty allows them to plan their financial futures independently.
Additionally, a clean break minimises the risk of future disputes or claims, promoting long-term peace of mind.
Ultimately, clean break orders facilitate a clean and conclusive financial separation and are actively considered and encouraged by the court.
Whilst clean break orders offer clarity, immediate financial independence may not be feasible in all cases, especially if one party is financially dependent on the other. In situations with complex financial arrangements or significant power imbalances, a clean break may not adequately address one party's needs.
Forgoing ongoing support may also lead to financial challenges for the party who needs some form of income, particularly if they lack sufficient capital assets.
It is crucial to carefully consider each party's financial situation and potential future needs before opting for a clean break, as it may not suit all divorcing couples.
No, a clean break order is not automatic on divorce.
While the term ‘clean break’ is often associated with divorce settlements, the actual implementation of a clean break order requires specific legal action. Parties must either negotiate and agree on the terms of the clean break, or a clean break can be imposed on them where a financial application is made to the court and the terms of the financial order are determined by a Judge.
If a clean break is agreed between parties, a financial order must be submitted to the court for approval. Providing the court considers the terms of the financial order fair and reasonable in the circumstances of the case, it should approve and seal the order.
It is the making of financial orders and the dismissal of the parties’ remaining financial claims by the court that achieves the clean break.
The time it takes for a clean break to be ordered by the court depends on how quickly parties can agree the terms of their financial settlement, or if it is necessary for them to go through financial proceedings to achieve a resolution.
If a clean break order is agreed between parties, the court can approve and seal the order as soon as the conditional order is made in the divorce proceedings. If a clean break order is imposed by the court, the order will not be made until the conclusion of the financial proceedings.
As touched on above, if your spouse refuses to sign a clean break order, court involvement can be necessary; parties can apply to the family court for financial orders by commencing financial remedy proceedings. This involves paying a court fee, exchanging financial disclosure, obtaining valuations and other required evidence, and attending hearings before a final decision is made. However, this is much more expensive and protracted approach than if an agreement can be amicably reached between the parties.
In many instances, all financial issues between spouses can be resolved through negotiation, either directly, through solicitors or forms of alternative dispute resolution. Options such as mediation or arbitration can prove highly effective in these circumstances. Alternative methods of dispute resolution provide avenues for achieving a cost-effective resolution and avoiding the complications associated with a prolonged legal battle.
Exploring these alternatives has the potential to save considerable time and legal expenses and alleviate acrimony and stress.
There are limited circumstances in which a clean break order can be overturned. These include:
• In the event of a highly significant and entirely unforeseen change in circumstances shortly after the order is issued; or
• If there is evidence of error or fraud, such as a failure to adequately disclose assets during the financial settlement process.
As experts in matrimonial finance work, we are able to advise and assist if the above circumstances are relevant and need to be considered. For any query or further information on the matters covered in this insight, please do not hesitate to reach out to the team by filling in our enquiry form or emailing us at family@sheridans.co.uk.
