Divorce Escrow

Divorce Escrow is an arrangement used to hold funds securely during divorce or separation proceedings.

Instead of one party’s solicitor holding sale proceeds or settlement money, funds are paid into an independent escrow account. The funds are held there and released only when agreed conditions are met.

Divorce Escrow is commonly used where matrimonial assets are sold before the final financial order, or where capital payments are agreed but not yet due to be transferred.

Divorce Escrow is suitable for separating spouses or partners who need a neutral way to hold funds while financial arrangements are finalised.

It is often used where trust between the parties is limited, or where neither party is comfortable with the other’s solicitor holding significant sums for an extended period.

Family lawyers and advisors also use Divorce Escrow where funds need to be held for longer than is normally appropriate in a solicitor’s client account, or where neutrality is important.

Divorce Escrow is typically used once a matrimonial asset has been sold but before the final financial settlement is concluded.

Common examples include the sale of the family home, disposal of jointly owned investments, or realisation of business interests. It may also be used where equalisation payments are agreed in principle but depend on later events or approvals.

Escrow allows funds to be secured and protected while the parties complete negotiations, obtain court approval or finalise documentation.

Divorce and separation often involve large sums of money being realised (eg, from the sale of a property) before the final financial outcome is known. This can create tension and risk for both parties.

One party may not trust the other to hold funds safely. There may also be concern about one party’s solicitor holding funds for a prolonged period, particularly where the money is not yet due to be paid out.

Divorce Escrow addresses these challenges by removing control of the funds from both parties and placing them with a neutral third party. This reduces mistrust and helps prevent disputes about how money is held or used while matters are resolved.

The primary benefit of Divorce Escrow is neutrality. Funds are held independently and cannot be accessed by either party without agreement or an appropriate court order.

This provides reassurance that money realised from the sale of matrimonial assets will remain available for division in line with the final settlement. It also avoids the perception that one party has an advantage by controlling the funds.

Escrow creates a clear and predictable framework for holding money during what is often a sensitive and uncertain period.

Benefits for separating parties

For separating spouses or partners, Divorce Escrow provides peace of mind.

Funds are protected while negotiations continue, and neither party can use the money for other purposes. This can help reduce conflict and allow discussions to focus on reaching a fair outcome, rather than on safeguarding funds.

Escrow can also be helpful where payments are agreed but delayed, for example pending court approval or completion of related steps.

Benefits for family lawyers and advisors

For family lawyers and advisors, Divorce Escrow provides a practical alternative to holding large sums in a client account.

It avoids extended retention of funds in a solicitor’s client account and reduces professional risk. It also provides a neutral solution that can be recommended to both parties without appearing partisan.

Escrow can simplify case management and reduce the scope for arguments about who should hold funds while proceedings are ongoing.

Divorce Escrow can be used in more than one way, depending on how the parties’ finances are being resolved.

Most commonly, escrow is used to hold the proceeds from the sale of matrimonial assets, such as the family home, investment property or jointly owned shares. The funds are paid into escrow once the sale completes and held until the final settlement is agreed.

Escrow may also be used to hold funds for equalisation payments, where one party is due to receive a capital sum but the timing or conditions for payment are not yet final.

Yes. Divorce Escrow arrangements are often tailored to reflect the specific circumstances of the parties and the assets involved.

For example, separate escrow accounts may be used for different assets, or funds may be released in stages as parts of the settlement are agreed or approved.

Escrow can also be combined with undertakings, interim agreements or court directions, provided the release conditions are clearly documented in the escrow agreement.

All escrow arrangements are administered through the dospay digital escrow portal.

The portal provides a single place where authorised parties can view account balances, payment history and escrow status. It also supports the submission and tracking of information required for payments or releases, in line with the escrow agreement.

Using a digital portal reduces reliance on email chains and manual reconciliation. It improves transparency and creates a clear audit trail for payments and releases. Advisors often find this helpful when reviewing payment history or responding to queries during the life of the project.

Divorce Escrow works by holding funds independently while the financial outcome of the divorce is finalised.

Instead of money being controlled by one party or held in a solicitor’s client account for an extended period, funds are paid into an escrow account. The funds remain there until the agreed conditions for release are met.

This allows the parties to progress negotiations or court proceedings without worrying about the safety or availability of the money.

Divorce proceedings and any court orders determine who is entitled to what share of the assets. Divorce Escrow does not change that.

The escrow agreement sits alongside the legal process. It deals only with how funds are held and when they may be released once agreement is reached or an order is made.

The escrow agent does not interpret court orders or decide entitlement. It releases funds only when the agreed documentation or orders are provided, in line with the escrow agreement.

Only parties authorised under the escrow agreement can give instructions to the escrow agent. This is agreed at the outset and documented clearly.

Instructions are usually tied to specific events, such as the issue of a certificate, confirmation of a milestone or the occurrence of a payment default. The escrow agent checks that the instruction matches the agreed conditions before acting.

This approach ensures that payments are controlled, predictable and not dependent on informal requests or unilateral decisions by one party.

Only parties authorised under the escrow agreement can give instructions to the escrow agent. This is agreed and documented at the outset.

Instructions are typically linked to clear events, such as written agreement between the parties, approval by their advisors, or the issue of a court order.

The escrow agent checks that the instruction matches the agreed conditions before acting. Informal or unilateral requests are not accepted.

Below is a practical view of the steps that parties typically follow when using Divorce Escrow.

1. ‍Pay funds into escrow
   Sale proceeds or agreed sums are paid into the escrow account once an asset is sold or an amount is identified.‍
2. Funds held while matters are resolved
   The funds remain held while negotiations continue, court approval is sought or documentation is finalised.‍
3. Provide agreement or court order
   Once the parties reach agreement, or a court order is made, the required confirmation or documentation is provided to the escrow agent.‍
4. Release funds in line with the agreed outcome
   Funds are released from escrow to the parties in accordance with the agreement or court order.‍
5. Handle uncertainty or disputes if they arise
   If there is uncertainty or disagreement, the funds remain held while the agreed process is followed.

Setting up a Divorce Escrow account starts with agreeing why the funds will be held and what conditions will apply to their release. This is usually linked to the sale of matrimonial assets or agreed equalisation payments.

An escrow agreement is then prepared. This document sets out how the account will operate, who can give instructions and what evidence is required for release.

At the same time, we begin the account opening and onboarding process so the account is ready to receive funds when they become available.

The time needed to open a Divorce Escrow account depends on the parties involved and the complexity of the arrangements.

For straightforward cases, account opening can usually be completed within a short period once the required information has been provided and the escrow agreement is agreed. More complex structures, such as those involving trusts, companies or overseas assets, may take longer.

Most delays arise from incomplete information rather than from the escrow process itself.

To open a Divorce Escrow account, standard onboarding checks are required. These are similar to the checks required when opening a bank account or instructing a law firm.

This usually includes confirming the identity of the parties, the ownership of the assets being sold, and the source of funds paid into escrow.

We may also need basic information about the divorce proceedings or settlement framework so the escrow account can be set up correctly.

The following information is typically required to open a Divorce Escrow account:

• Details of the parties to the divorce or separation
• Identification information for each party
• Information about the assets being sold or funds being escrowed
• Source of funds information for the escrowed amounts
• Summary of the agreed or proposed release conditions
• Details of any relevant court proceedings or expected orders

Providing this information clearly and early helps ensure the account can be opened without unnecessary delay.

A Divorce Escrow account is funded by the proceeds of sale or by an agreed payment from one or both parties.

Most commonly, funds are paid into escrow when a matrimonial asset is sold, such as the family home or a jointly owned investment. In other cases, a lump sum intended for equalisation is paid into escrow once agreed in principle.

The funding source and timing are agreed in advance and set out clearly in the escrow agreement.

Payments from a Divorce Escrow account are made only when the agreed release conditions are met.

These conditions are usually linked to a signed agreement between the parties or a court order approving the financial settlement.

When a release request is made, we check that the agreed conditions have been satisfied before releasing funds in line with the escrow agreement.

If instructions are disputed or unclear, we will not release the funds.

Instead, the funds remain held safely in the escrow account while the parties follow the process set out in the escrow agreement. This may involve clarification, confirmation from an agreed third party, or the use of the dispute resolution process under the underlying contract.

This approach protects both parties. It ensures that money is not released prematurely and that funds remain available once the position is resolved.

If a party to the underyling contract becomes insolvent, we continue to operate under the escrow agreement.

Because the funds are held in escrow and not in the control of either party, they are protected from being used for other purposes. We will follow the agreed instructions and any applicable insolvency process, as set out in the escrow agreement.

In practice, this can provide greater certainty than relying on funds held directly by one of the parties, particularly where payment timing or entitlement is being considered as part of an insolvency situation.

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What happens if DOS & Co. becomes insolvent?

All escrow funds are segregated (kept separate from our own funds), safeguarded (protected by law from our own creditors) and kept liquid and unencumbered at the Bank of England. In the event of our insolvency, we have set aside regulatory capital that will be used by our administrators to 'unwind' our affairs - this will usually involve working with the parties to agree the identity of a new escrow agent who will 'step in' to carry out our obligations under the escrow agreement.

Funds paid into an escrow account are held separately from the money of the parties and separately from our own funds. They are not mixed with operational accounts.

All of our escrow funds are held liquid and unencumbered at the Bank of England. This means that there is no counterparty risk (the bank does not lend out funds, so a 'run on the bank' is not possible).

The escrow account is set up specifically for the purposes agreed in the escrow agreement. Funds can only be used in line with that agreement and cannot be applied for any other purpose.

This separation helps protect the funds if something goes wrong elsewhere. For example, the funds are not available to the creditors of the Employer, the Contractor, us, or the underlying bank. They remain ring-fenced for the project until they are released in accordance with the agreed conditions.

We are regulated by the Financial Conduct Authority for the provision of payment services. This means we are required to meet regulatory standards around governance, systems, controls and the handling of client funds.

Where escrow arrangements involve regulated payment activity, those activities are carried out within that regulatory framework. Other aspects of escrow are contractual in nature and governed by the escrow agreement between us and the parties.

In practical terms, this combination of regulation and contract provides structure and oversight, while still allowing escrow arrangements to be tailored to the needs of a specific matter or project.

Escrow is designed to hold, protect and release funds in line with agreed conditions. It does not decide who is right or wrong in a dispute.

We do not interpret the underlying contract, assess the quality of anything done or delivered under that underlying contract, or replace the role of a contract administrator, adjudicator or court. If there is a dispute, the funds remain held while the parties follow the agreed dispute resolution process.

The escrow arrangement also does not remove the need for a properly drafted underlying contract. It supports that contract by providing a clear and neutral payment mechanism, but it does not change the parties’ underlying rights or obligations.

Escrow pricing depends on the structure, value and duration of the escrow arrangement. There is no single fixed fee, as projects and payment flows vary.

Pricing usually reflects three main elements. First, the work involved in setting up the escrow arrangement, including compliance, onboarding and preparation of the escrow agreement. Second, the ongoing administration of the escrow account while funds are held. Third, the handling of payments or releases during the life of the project.

What pricing covers is the independent holding of funds, administration of agreed payment mechanics, record-keeping, reporting, all bank fees and support throughout the project. It does not cover legal advice, contract administration or dispute resolution, which remain the responsibility of the parties and their advisors.

If something goes wrong, the escrow arrangement provides a clear framework for dealing with it.

If there is a mistake, delay or disagreement about instructions, funds remain safely held in escrow while the issue is addressed. We follow the process set out in the escrow agreement and do not release funds unless and until the agreed conditions are met.

If a party has a concern about how the escrow account is being operated, we have a formal complaints process. This allows issues to be raised, reviewed and resolved in a structured way, with escalation routes available if needed.

We are a specialist provider focused on escrow and managed payment arrangements. Escrow is not an add-on to another service. It is a core part of what we do.

Escrow funds are held securely and separately, with infrastructure designed specifically for escrow rather than adapted from other uses. Account opening is handled efficiently, and escrow arrangements are administered through a dedicated digital escrow portal, giving authorised parties visibility and a clear audit trail.

Advisors often recommend dospay because we sit independently of the transaction, operate within a regulated framework, have a proven track record and focus on doing one thing well: Holding and administering escrow funds in a clear, neutral and predictable way.