Financial Settlement Agreements on Divorce Explained | LegalDocuments.co.uk

What this document is

A Financial Settlement Agreement is a written arrangement between two spouses who are divorcing or have divorced, recording how they intend to split their finances. It typically covers the family home, other property, pensions, savings, investments, personal belongings, business interests, joint debts, and any spousal maintenance.

On its own, a signed agreement between spouses does not automatically bind the parties in the way most people assume. In England and Wales, financial claims arising from marriage can usually only be brought to a final end when a court makes a consent order reflecting the terms the couple have agreed.

Without that court seal of approval, an ex-spouse may still be able to make a financial claim against the other many years later, even after one party has rebuilt their wealth. The agreement itself is therefore best thought of as the blueprint that is then submitted to the court for approval.

It should be drafted with care, based on full and honest disclosure of each party's finances, and ideally reviewed before any signatures are added.

How to use this document

1. Gather full financial disclosure. Before any figures are agreed, each spouse needs a complete picture of what the other owns and owes. That means collecting statements for bank accounts, mortgages, credit cards, loans, pensions, investments, business interests and property valuations. Hiding assets, even accidentally, can unravel an agreement later on.
2. Identify the parties and the marriage. The document should state the full legal names and current addresses of both spouses, along with the date and place of marriage and the date of separation. Where divorce proceedings have already started, the case number and court should also be included for clarity and record-keeping.
3. Set out the division of assets and debts. Work through each asset and liability methodically, recording who takes what and how joint items such as the family home or a mortgage will be dealt with. Pensions often need specific treatment through sharing or offsetting, and this section benefits from precise wording to avoid later disputes.
4. Deal with maintenance and children. If spousal maintenance is to be paid, the amount, frequency, duration and any triggers for variation or termination should be clearly written down. Child maintenance is generally handled separately through the statutory scheme, but the agreement can acknowledge arrangements the parties have reached for the children.
5. Apply to the court for a consent order. Once the agreement reflects what both spouses genuinely want, it is drawn into the form of a consent order and submitted to the family court alongside a short statement of information. A judge reviews the terms for fairness before sealing the order, which is what makes the settlement properly enforceable.