Separation agreements or deeds of separation can be used where a couple cannot (or prefer not to) issue divorce proceedings immediately but they wish to resolve the financial issues arising from their separation. Parties may choose to go down this route if there are no immediate facts which can be used to support a petition for a divorce.
A separation agreement records that the couple intend to live separately and apart and may also refer to a divorce taking place in the future. The agreement will also deal with financial arrangements. The agreement can include, for example, the sale or transfer of the family home with any agreed division of the proceeds together with payment of maintenance. The agreement is likely to state that the parties intend the agreement to be in full and final settlement to prevent future claims against the other.
The advantages of a Separation Agreement are:
- The arrangements provided for are usually adhered to by the parties as they have reached agreement themselves rather than having a settlement imposed upon them;
- The agreement allows both parties to move on financially without having to commence the divorce or dissolution proceedings;
- They can be entered into quickly;
- They can set out when divorce proceedings will take place in future.
The disadvantages of a Separation Agreement are:
- They are not legally binding and the court may interfere with them in later divorce and financial proceedings;
- Pensions cannot be shared or earmarked until the divorce proceedings are commenced as only the court can make pension sharing or earmarking orders;
- Although the intention may be for divorce proceedings to be commenced in say, 2 years time, there is nothing to stop either party going back on that and starting proceedings early;
- It is an additional expense on top of the divorce and financial agreement on divorce.
Important matters to consider when entering into a Separation Agreement
- Both parties should have the opportunity to seek independent legal advice;
- There should be full and frank financial disclosure by both parties;
- There must be no coercion by either party to enter into the agreement;
- The agreement should be fair in the circumstances.
Although the agreement will not prevent an application to the court to consider the financial matters, providing the above matters have been complied with the agreement is likely to be upheld by the court.
Recent case law suggests that separation agreements will be legally binding in some cases. In the case of T v T, reported in April 2013, an agreement was signed by the parties in 1991. The agreement conformed to the requirements referred to above but had never been put before the court for approval in the form of a consent order. The wife wanted to pursue an application for financial remedies and argued that the agreement was peripheral to the case. The court held that this was an agreement which was freely entered into, with the intention that it would be acted upon, and had been acted upon. It was therefore upheld.
In conclusion, in situations where divorce proceedings are not started immediately and financial claims cannot be dealt with in a final and binding way, the next best option would be to enter into a separation agreement recording the agreed financial arrangements, which could then be incorporated into a legally binding document (known as a consent order) when divorce proceedings are started.
For more information on Separation Agreements please contact the Family Team at Palmers.