Is there a place for Separation Agreements now that the divorce laws have been changed?

Prior to the introduction of the no-fault divorce this year, many separating married couples who managed to reach an out of court financial settlement at an early stage of their separation historically chose to enter into Separation Agreements – a legal document drawn up by family lawyers.

This document would typically reflect the financial arrangements agreed between the parties, such as the future of the family home and its contents and the division of any other assets held between them arising from the marriage such as bank accounts, pensions etc. It would also set out how the parties would obtain a divorce (usually based on two or five years of separation) and would possibly also include contact arrangements for any children.

Under the old, pre-no fault divorce law, a recently separated couple who wanted to commence divorce proceedings faced the prospect of either having to make allegations against the other (unreasonable behaviour) or show that one of them had committed adultery. The only other non-contentious alternatives open to them being for them to wait to bring a divorce petition based on either two or five-years separation.

Therefore, for amicable couples wanting to move on with their lives at the earliest possible opportunity following their separation, provided each party had taken independent legal advice, these Separation Agreements provided them with a degree of certainty regarding the financial arrangements they had reached at that juncture, pending the divorce being commenced two years thereafter.

This therefore raises the question as to whether, in the light of the new no fault divorce whereby one or both parties jointly can now commence divorce proceedings as soon as they wish following the breakdown of their marriage (and deal with the division of the matrimonial assets within that process) there still a place for Separation Agreements?

Historically, whilst these agreements may have been an attractive alternative to an early, mudslinging divorce, they aren’t without their issues, namely:

1. To make these documents as watertight and persuasive as possible should their terms be challenged later by one of the parties, a draft consent order is annexed to the Separation Agreement. This order is the same financial order that the parties would be seeking the court to make when the divorce was brought some two or five years later, which again would reflect the original financial agreement reached between them on their separation. In essence, therefore, the parties pay twice for the same financial agreement to be drafted; once on their separation and the second time during the divorce itself.
2. If one of the party’s financial circumstances have changed by the time the divorce is commenced, it may be that the terms of the Separation Agreement no longer met that party’s needs i.e. if one of the children suddenly required long terms care due to illness and one of the parties has had to give up work to look after them. In these circumstances, they can challenge the terms of the Agreement and seek a greater share of the assets than was initially agreed between the parties. As one of the court’s primary considerations when looking at the division of the matrimonial assets is to consider the parties’ respective financial needs then it may be that there has to be departure from the original terms of the Agreement. Not only resulting in money having been wasted in legal fees for drafting an Agreement whose terms, when it came to the divorce, could no longer be relied upon, but at times resulting in the amicable relationship that the parties had hitherto been able to maintain, falling apart.

The reality is that Separation Agreements have been challenged, sometimes successfully, and only a sealed final Order – such as Consent Order or a Clean Break Order – gives certainty and finality.

Despite these potential pitfalls, even where couples decide to separate and have reached an agreement in relation to financial matters, they may feel for a variety of reasons that it is too early to start divorce proceedings i.e. due to their being young children, and therefore they are not yet ready for that final step. In such situations, a Separation Agreement can still be employed and provide a helpful steppingstone to subsequent divorce proceedings and a financial Consent Order, which the Court will be invited to approve once divorce proceedings have been instigated.

There may, of course, be other situations where it is not considered right to issue a divorce at a particular stage – or indeed at all – such as religious beliefs or other considerations. Therefore, whilst it is likely that following the introduction of the no fault divorce there will still be a place for Separation Agreements, it may not be in the numbers we have seen historically.