What is Clean Break Order?

Full Definition

A clean break order is a financial order made by the family court on divorce (or dissolution of a civil partnership) that formally ends the financial obligations and claims each spouse has against the other, so that neither can bring a further claim against the other's income, capital or pensions in the future. It typically achieves this by dividing capital assets -- the family home, savings, investments and pensions -- as a one-off settlement, sometimes with a lump sum payment or a pension sharing order, rather than through ongoing spousal maintenance payments that would otherwise keep the parties financially tied to one another for years. Courts in England and Wales are under a statutory duty to consider whether a clean break is appropriate in every case, since it offers both parties certainty and allows them to move on financially without depending on an ex-partner's continued income or goodwill, but a clean break is not always suitable, particularly where one party has substantially lower earning capacity, young children still at home, or health issues that would make an immediate clean break unfair; in such cases the court may instead order term or joint-lives spousal maintenance, sometimes with a later transition to a clean break once circumstances change. A clean break order can be immediate (ending financial claims straight away) or deferred (for example, dismissing maintenance claims from a future date after a fixed term of payments), and importantly it must be formally approved by the court in a financial consent order to be legally binding and enforceable -- an informal agreement between spouses, even if both sign it, does not itself achieve a clean break and either party generally remains able to bring a financial claim years later unless a court order has been obtained. Because pension sharing and property transfers under a clean break are typically exempt from Capital Gains Tax and certain other transfer taxes when made under a court order in connection with divorce, using a formal clean break order is usually more tax-efficient as well as legally safer than an informal split of assets.

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