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When to seek a decree Absolute before having a final financial order.

When it comes to applying for decree absolute, solicitors tend to advise clients not to apply for a decree absolute until all the finances have been finalised and the consent order has been approved by the court. There are often good reasons for this, but it is one of those cases where, if it is analysed in detail, the client can decide either way once they have carefully considered the risks.
Practically speaking, if one party obtains a decree absolute and then remarries he/she may lose some or all of their rights in any subsequent attempt to claim from their former spouse. So, whatever else happens, clients should not remarry (at least not without careful thought!) until a financial settlement has been finalised by way of a sealed order of the court and having allowed time for an appeal and service of an appeal to elapse – in reality another 28 days.

The next consideration is those rare situations where one of the spouses dies unexpectedly in the middle of the financial negotiations. In that situation, if there is no decree absolute then the surviving spouse will be entitled to all of the benefits that accrue to their status as a widow/widower. In many cases this can be very substantial, and sometimes far more than what may have been available to the deceased in life. Depending on the circumstances, a Notice of Severance could be served by either party so that relevant properties are held as tenants in common (rather than joint tenancy) pursuant to the Law of Property Act 1925 (section 36(2). This should mitigate against unfavourable outcome if someone dies unexpectedly.
Further, there are some circumstances where particular assets, for example trust funds, pension funds and other complex assets, cannot be transferred except to a spouse, and so in those circumstances it would again be prudent to delay decree absolute (again until these are finalised).

There are some situations where transferring assets between spouses are is an integral part of a financial settlement. The transfer of assets may attract tax charges (particularly Capital Gains Tax and Stamp Duty Land Tax (SDLT), but there may be other tax considerations depending upon many other factors). The UK tax regime tends to exempt transfers between husband and wife from most tax charges, so again there is a good reason to stay married if any such transfer is part of the potential consideration for settlement. There may in fact still be other specific exemptions that apply to married couples – even so, many lawyers may find it preferable to have two layers of protection rather than one.

If you have any query on issues raised in this article or on divorce and financial matters arising from divorce, please contact our Family Department via telephone 0203 223 0800