Clean break settlements are used by a divorcing couple wishing to have a fresh start after the divorce is finalised without being financially tied to the other party. It is a type of financial order that the courts can make and once implemented means that there are no financial commitments (other than child maintenance if relevant).
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A clean break settlement will effectively end the financial relationship between a couple following a divorce. The parties will no longer have any financial claim over their ex-spouse, including in relation to future pensions. Without such an agreement, either party can potentially make a claim at any time in the future.
The length of marriage can determine whether or not it is appropriate. A shorter marriage (under five years) will generally be easier for a clean break, for example if both parties have jobs and capital can be easily separated. However, it may be harder with a longer marriage, since it is more likely that one party did not work to look after the home and/or raise a family. In these cases, spousal maintenance may be appropriate making it unlikely that a clean break would be granted by the courts.
A clean break settlement is not suitable for all divorces and so each couple needs to decide if it is appropriate in their circumstances.
In the right circumstances, there are a lot of advantages to a clean break including:
A clean break settlement will not be granted in situations where it is not appropriate or where the parties do not agree. So generally speaking there are few disadvantages to such a settlement. However, it is worth bearing in mind that it is a court order that needs to be followed and if circumstances change (or do not change) in the future then one party can potentially be negatively impacted. Unless there are very compelling reasons (such as mistake or non-disclosure) then such an agreement will not be overturned. Promotions, inheritance, change in the value of a family home are all factors that will be considered when making the order but no one knows what the future holds- a lottery win for example is completely unexpected (and granted unlikely!) but cannot be planned for. It is also worth noting that spousal maintenance ends once the party receiving it remarries. If this is soon after the divorce, it is likely that the party paying would have paid less this way then a clean break agreement. However, there is no certainty in life and if the other party does not remarry, the maintenance will continue.
To obtain a clean break settlement, the parties need to file a draft consent order with the court containing the terms of the financial settlement, with details of their current finances. If the court accepts the order, it is approved and becomes legally binding once the divorce is finalised. The court needs to be satisfied that both parties are entering into the agreement with full knowledge of the other party’s financial situation following full and frank disclosure. The cost of the settlement is the legal fees to draft the order plus a court fee.
Both parties have to agree to the clean break settlement, and so it is unlikely that it will be possible to use in situations where there is a high degree of disagreement or the relationship has completely broken down.
In determining spousal maintenance for a clean break settlement, the courts generally use the Duxbury calculations to work out an appropriate lump sum to be paid in lieu of spousal maintenance.
A clean break settlement only applies to the financial situation of the two parties. It does not stop a parent’s legal obligations to pay child maintenance and this cannot be overridden by a clean break settlement. Child maintenance applies until the children reach 21 years or end full time education. Regular child maintenance can either be agreed as part of the financial settlement agreement, otherwise the Child Maintenance Service will become involved.
The information on this website is intended as a guide and does not constitute legal advice. Vardags do not accept liability for any errors in the information on this website, nor any losses stemming from reliance upon the statements made herein. All articles and pages aim to reflect the legal position at time they were published, and may have been rendered obsolete by subsequent developments in the law. Should you require specialist advice, tailored to your situation, please see how Vardags can help you.