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The Importance of converting your separation agreement into a court order

on Tuesday, 17 October 2023.

If you have agreed a separation agreement with your ex-spouse then it is important to consider converting the agreement into an order approved by the court. Failure to convert a separation agreement into a court order can lead to financial consequences.

Such consequences have been highlighted in the recent case HAT v LAT [2023] EWFC 162.The former married couple entered into a separation agreement in 1994 but had failed to convert the agreement into a court order. The former wife (W) was awarded maintenance pending suit (MPS) and a legal services payment order (LPSO).

MPS aims to maintain the financial status quo of the parties until proceedings for financial orders are concluded between them. A LSPO is an interim financial order to assist with payment of legal fees.

The separation agreement provided that the former spouses would enter into a clean break, after the former husband (H) had paid W a lump sum of £702,000. Despite this, H voluntarily continued to provide W with financial support, including contributing to the purchase of her property and a generous monthly allowance, until March 2022. At this time H said the monthly allowance would stop and W's home would need to be sold.

In February 2023 W issued a notice of her intention to proceed with an application for a financial order. H then offered monthly interim payments of £4,000. Subsequently, W made an application for MPS seeking £9,344 a month and a LSPO. As the separation agreement had not been made into a court order, W was not formally barred from making such an application.

H was within his rights to stop the monthly allowance but not to require W to sell her home. H had provided ongoing financial support which had led to W's dependency on him.

It was deemed unfair for W's established income stream to be reduced and the previous status quo was restored by the court. The court ordered monthly MPS payments of £8,500 and a LSPO of £200,000. While this is less than what W had initially applied for, it is clear that the court felt W should continue to receive some support from H.

What does this case identify?

The decision made here highlights the importance of converting the terms of any separation agreement and/or any informal agreement regarding the division of matrimonial assets into a court order to prevent financial orders being made in the future. This is particularly pertinent for those who choose to apply for divorce online without taking legal advice and deal with the finances themselves.

Questions can arise as to what the financially weaker party has to lose by bringing an application against a wealthy former spouse, in particular when the financially weaker party also has their legal costs met, in the case of HAT v LAT by a LSPO.

This case is a sharp reminder why it is crucial to receive professional advice when separating or divorcing, to ensure there are no nasty surprises in years to come!

If you require any advice in respect of the financial implications of your divorce, please contact our New Enquiries team on 020 7405 1234, or complete the form below.

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