How are Assets Divided in a Divorce?

When the assets of a divorce are being split between parties, it is often assumed that there will simply be a 50/50 split.

However, there are a range of different factors that need to be considered before deciding what percentage of the assets either party receives. 

What assets are typically considered in a divorce?

Assets that are usually considered in a divorce, or matrimonial assets, are typically financial assets that you and your spouse acquired during your marriage. 

Matrimonial assets include things such as homes, properties, pensions, investments and savings. It can also include any property acquired before the date of the marriage if it was used as the family home. 

Is everything split 50/50 in a divorce in England & Wales?

An exact 50/50 split in UK divorces can happen if both parties’ capital needs are met and there are no other circumstances to take into consideration, such as pre-marital contributions. 

However, since the Courts will take into account many factors when deciding how the assets are split, including the length of the marriage, each party’s income and their financial contributions, there is no guarantee that everything will be split 50/50.

For example, if you are a stay at home parent who has been out of the workplace for a number of years to care for your children, you may need a higher share of the assets than your ex-partner, assuming they have a stable income with good earning capacity.

Who decides how assets are divided in a divorce?

When you and your ex-partner separate, it is ultimately up to both of you to come to an agreement about how your finances are divided. 

The end goal is that both parties feel they have received a fair and reasonable share of the assets acquired during the marriage and have sufficient to meet their needs and move on with their lives.

What happens if an ex-couple cannot agree on how to divide their assets?

If parties cannot reach an agreement directly, then they may wish to try mediation. A family mediator is an independent person who can help you both decide on the division of your assets. 

Reaching a joint decision through mediation is much cheaper and arguably less stressful than going to court, but once an agreement is reached, you should still instruct a family lawyer to have the lawyer obtain a Consent Order from the court to ensure the agreement reached is legally binding.

If yourself and your ex-partner cannot agree on how to divide your assets, then a specialist family lawyer will be able to assist either by negotiating a settlement on your behalf or by making a court application and representing you in court, with the court making the decision on the division of assets.

How does the Court divide assets in a divorce?

When a Court is determining how to divide assets in a divorce, they will follow Section 25 of the Matrimonial Causes Act 1973, with the first consideration being the welfare of any dependent children. 

What does the Court consider when splitting assets in a divorce?

Since there is no specific formula for dividing assets on divorce, the court must take into account the following factors when considering how to divide matrimonial assets. 

  • Welfare of the children: As mentioned, the welfare of any dependent children is the first consideration when deciding how the matrimonial assets are divided.

    Where assets are limited, it usually means the children’s carer will receive most or all of the liquid assets of the marriage so the children and carer can find other accommodation. This does not mean the needs of the other parent will be overlooked, and the outcome will always be to balance the financial needs of both parties.

  • Available property, capital, income and other resources: Before the Court can deal with the division of capital assets, the full extent of them needs to be disclosed and identified, which normally takes place in Court proceedings by a way of exchanging Financial Statements (Form E).

    The Court will look at the current income position of both parties, as well as their future earning capacities.

  • Financial needs, obligations and responsibilities: The Court will look at the needs of both parties in terms of capital and income. Both parties need a roof over their head, so the costs of purchasing new homes and paying the mortgages also need to be looked at.

    In Court proceedings, parties will be required to prepare a breakdown which estimates how much money they will need to meet all of their outgoings and provide details of their housing needs and borrowing capacities.

  • Parties age and length of the marriage: When the Court looks at the length of the marriage, it will usually include pre-marriage cohabitation provided this has been seamless into the marriage.

    With shorter marriages, financial contributions become more relevant in deciding how assets are divided in a divorce. If the parties involved are older and have been married for some time, different considerations become the priority, such as pensions and retirement age.

  • Standard of living: This is usually taken into account when determining the overall settlement. In some cases, there is not enough funds from the sale of assets to go around, which means parties will not be able to maintain the same standard of living enjoyed before the marriage breakdown.

  • Any physical or mental incapacity of the parties: In the vast amount of divorce cases, this is not usually a relevant factor. However, where it is relevant, it can have a significant impact on the outcome of the case. Supporting medical evidence will be necessary if health issues are relevant to needs and earning capacities.

  • Contributions which each party has made or is likely to make in the future: This can include contributions in looking after the home or children, as well as financial contributions.
  • Loss of benefits: This normally relates to pensions, and the Court has the power to make pension sharing orders.
  • Bad behaviour: This is rarely taken into account unless it is exceptional. The Court will only take it into account when it is so serious that it would be unfair to rule it out. 

What orders can the Court make in a divorce settlement?

The court has the power to make a variety of orders, including:

  • Lump sums: The Court can order one party to pay the other a lump sum. 
  • Sale or transfer of property: The Court can order the sale or transfer of all forms of property and decide how the sale proceeds should be distributed, or if a property is being transferred, then how much money should be paid to the transferor (if any). 
  • Pension sharing: The Court also has the power to order the division of pensions. For example, one party could be ordered to transfer all or a percentage of their pension to their ex-partner, creating a new pension fund in their retirement. 
  • Spousal maintenance: One party can be ordered by the Court to pay the other maintenance. A maintenance order can be paid for joint lives or as is more common for a fixed period, or until one of the parties remarries. 
  • Child maintenance: If the level of child maintenance cannot be agreed, then it is dealt with by an application to the Child Maintenance Service. The Court has limited powers to make orders in respect to child maintenance. 

Every divorce case is different and since there are no rigid rules regarding how the assets are divided, the Court has a wide discretion. 

How do you make a financial agreement when divorcing?

It is important to establish financials at an early stage in your divorce and i f possible to reach a mutual agreement between both parties. Try to start out with a detailed list of all assets and streams of income, as well as present and future liabilities. 

Once you both understand what financial assets there are, it is important to take legal advice so you can understand the options available to you. Try to avoid situations in which you reach agreement on financial matters, only to find out it is not possible to implement them.

Do you need a solicitor to help with the financial aspects of a divorce?

It is highly recommended that you enlist the help of a divorce solicitor for any and all financial aspects of a divorce. There will likely be a great number of ramifications associated with the divorce, and you will want to know how this can impact you moving forward. 

There could be cases of hidden assets or information, which a divorce solicitor can help you uncover. Plus, it is essential to ensure that once a settlement is agreed, that it is embodied in a Court Order to ensure it is legally binding. Ideally, an order should also ensure that it is in full and final settlement of all financial claims arising from the marriage, so that there is no possibility of your ex spouse coming back for more in the future as the divorce alone will not stop financial claims.

At VM Family Law, we have a great team of family law solicitors who are experts in helping you move through a divorce and a financial case as smoothly and stress free as possible. Get in touch with our team for a free initial consultation to see how we can help you.

FAQs about assets in divorce

Can you protect assets during a divorce?

Premarital assets can be protected from a divorce if you have never intermingled them with matrimonial assets and the Court grants your request to exclude them from your financial settlement. This can only be achieved when these assets are not required to meet needs.

Having an experienced and knowledgeable solicitor on your side can also help to ensure your assets are protected in the divorce.

Can a prenuptial agreement protect my matrimonial assets?

Since a prenuptial agreement is a contract that you and your spouse sign, declaring who owns which assets, it should protect your matrimonial assets should you get divorced, provided that the agreement was properly drawn up and meets the needs of the children and both parties.

Does the length of marriage affect divorce settlement?

Yes, the length of marriage does have an affect on the divorce settlement. The courts are more likely to enforce a 50/50 split in the divorce for marriages which have lasted longer than a “short-term”. 

Short term marriages usually consist of five years or less.

Our goal is to help our clients solve their family legal matters as smoothly as possible.

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