Sometimes couples choose to separate but, for a variety of reasons, decide not to go ahead immediately with divorce or civil partnership dissolution proceedings. Many people who go down this route will just have verbal agreements regarding finances and arrangements for the children. As far as any children are concerned, the more than can be agreed informally, the better. However, when it comes to money matters, there could be very real disadvantages to carrying on without a formal written separation agreement. It may also be that any benefits of delaying the divorce are outweighed by the potential downsides and uncertainties, even if a separation agreement is put in place.
Why choose a formal separation agreement?
There are five potential ‘facts’ on which a divorce petition can be based, four in the case of a civil partnership dissolution. The most commonly encountered are adultery (divorce only) and unreasonable behaviour, which take approximately six months from initiating proceedings to decree absolute or final order. There is no waiting period except that divorce or dissolution proceedings cannot be started until a couple has been married or in a civil partnership for 12 months. Some couples will agree that they would prefer to separate and then wait until two years have passed so that they can divorce or dissolve their civil partnership on the basis of their separation during this period.
The major difference for couples choosing to divorce on the basis of their separation alone is that there is a waiting period between parting and actually getting divorced: at least two years plus the six months or so from starting the divorce process until decree absolute or final order. Any financial settlement agreed by the couple (e.g. selling the house and splitting the proceeds in agreed percentages) will not be final and binding until two things have happened: (1) a financial order recording their agreement has been sent to court and approved by a judge on paper; and (2) the decree absolute (or final order in civil partnerships) has been granted. Only after these two things have happened will there be certainty as to the couple’s future financial arrangements and, if a clean break has been agreed, no possibility of future financial claims by either party.
If a couple decides to go with the two years’ separation option, then the period from their parting until a final and binding financial settlement is immediately extended by a minimum of two years. A lot can happen in two years and we will consider some of the disadvantages of this approach later on. However, if you have decided that you are going to end your marriage or civil partnership but want to wait for two years before commencing divorce or dissolution proceedings, then the best way to reduce (though not eliminate) uncertainty would be to enter into a formal separation agreement.
A separation agreement is any agreement that provides for a couple to live separately. However, a formally drawn up and witnessed document has scope to deal with all aspects of the couple’s finances, such as who will live in the family home or whether any maintenance should be paid, and should ideally set out the form of financial settlement that will ultimately be presented to the court for approval when the divorce goes through.
A separation agreement can therefore contain a wide variety of terms relevant to the family circumstances of each individual couple.
Key elements and likely contents
Agreement to live apart
Central to a separation agreement will be the couple’s acceptance that they will live apart. They may agree a timescale for one or both to set up a new home elsewhere.
It may be appropriate for one party to pay maintenance for the benefit of the other personally and/or for any children they might have. They could also deal in the agreement with the payment of school fees, the payment of a mortgage or rent, and how other outgoings will be met.
Particular thought should be given to dates and circumstances under which any agreement to pay maintenance will end. A family law solicitor will be able to advise on this sometimes tricky issue.
The parties will almost always need to set out their agreement as to how the matrimonial home they share will be dealt with, whether that means a sale, one party buying the other out or giving up a tenancy within an agreement timescale. In addition, the parties will probably want to include terms covering any other properties they own, their savings and investments, responsibility for any debts and the sharing of household contents.
The cornerstone of a properly put together separation agreement is that there has been full and frank disclosure of each party’s financial circumstances. Without this, the separation agreement is extremely unlikely to be upheld in case of a dispute in the future about the terms.
Is a separation agreement binding?
There isn’t a one word answer to this question. A separation agreement is a bit like a prenuptial agreement. It can never be the ‘last word’ on a couple’s financial settlement on divorce because the court always has the ability to step in and put in place an alternative settlement if it needs to. However, if the separation agreement has been properly drawn up with full financial disclosure and certain other safeguards have been met (e.g. the agreement does not unduly prejudice one party, there has been no pressure put on either side to go along with the agreement) then the court is likely to hold the parties to it unless their circumstances have changed substantially since the agreement was signed.
You can see from this that a separation agreement does provide some level of protection against parties backing out of a financial agreement. However, no agreement about the financial aspects of a divorce or civil partnership dissolution is truly legally binding until it has been presented to the court in the form of a financial consent order and approved by a judge.
For and against the separation agreement
- An early agreement made regarding the financial settlement can (if things go according to plan) provide a sound basis for the ultimate financial consent order that should be presented to the court once the divorce or dissolution has reached the appropriate stage.
- Entering into a separation agreement is far less uncertain that simply deferring the question of the financial settlement until the divorce proceedings are initiated two years (or more) post-separation, if a couple has decided that they do want to wait for two years before getting divorced.
- A separation agreement will not achieve finality in same way as a financial consent order approved by the court. The existence of a separation or maintenance agreement cannot prevent either party making a further or differing application for a financial order if or when divorce proceedings are underway, though it could limit their potential to get something different from the agreement.
- With the best will in the world, a lot can happen in two years (or more) between separation and divorce. One of the parties’ incomes could change substantially or they could become ill or bankrupt. If the divorce is initiated at the time of separation, a financial consent order can be put in place, bringing about certainty and finality for the couple’s finances and protecting them from the ups and downs of each other’s financial lives.
- There is a lack of closure. Even with a very good separation agreement, the couple will still have to revisit their financial settlement at the point of divorce and, at the very least, make arrangements for it to be converted into a court order to ensure the settlement is binding.
For more advice speak with our friendly Family Law team.