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Divorce and Dividing Assets: A Complete Guide to Who Gets What

Marriage breakdown can come about for a wide range of reasons. For some, marriage breakdown occurs as a result of money problems, while for others, it may be that one party has had an affair.

There’s no escaping the fact that marriage breakdown can take its toll, both emotionally and financially. Understanding how your assets may be divided can help you to take control and plan for a future without your spouse.

How are assets divided in a divorce?

During a divorce settlement the court has to consider multiple factors, as set out by section 25 of the Matrimonial Clauses Act: 

  1. The lifestyle and standard of living both parties experienced during the marriage.
  2. Income, property, and other assets each party may own now and in the future.
  3. Ages of both participants of the marriage.
  4. Any disability of either of the parties in the marriage.
  5. Financial and physical contributions to the overall welfare of the family; this includes both parties and children.
  6. Each party’s financial responsibility for bills, children and others.
  7. In the case of proceedings for divorce or nullity of marriage, the value to each of the parties to the marriage of any benefit (for example, a pension) which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.
  8. The value of each person to each other in marriage: a great example of this is a pension, and the understanding that each party will lose claim to that part.

What matrimonial assets are included in a divorce?

Matrimonial assets are one of the biggest things fought over in a divorce settlement, they can include: pensions, lump sums, property, savings and more. These are detailed in the Matrimonial Causes Act 1973

Other additional things typically included in a divorce are custody over children, matrimonial homes, child support settlements and pets. 

What orders can the Court make in a divorce?

There are a few orders the Court can make to ensure fairness when a divorce takes place: 

  1. A lump sum payment
  2. Transfer or sale of a property
  3. Pension sharing
  4. Spousal maintenance
  5. Child maintenance

Some of the orders above are more common than others, for example, spousal maintenance. 

What does the court take into account when dividing assets?

The court considers a lot of things when dividing matrimonial assets; there are no strict rules on dividing assets and every case is different. 

Some of the things the court tends to consider are the welfare of children, available income and resources,  and both parties’ financial needs and responsibilities. They will also consider age, length of marriage, both parties’ behaviours, loss of any benefit, contributions made, physical and mental capabilities and the standard of living breakdown for both parties.

What happens to the house when a couple divorces? 

Usually, the most valuable asset in a divorce is the matrimonial home. There is no simple solution to deciding what should happen to the home, and it’s often decided based on the financial needs of both parties.

The court has the power to make a variety of different orders with regard to the financial settlement following marriage breakdown. If you need to ask a court to decide who will get the family home following your marriage breakdown, the court will consider everything from the value of your assets to the overall needs of both you and your spouse when making its decision.

An example is that the court may order that the house should be transferred from one spouse to the other, or that the house should be sold when a specific event takes place (such as when the youngest child reaches adulthood).

It usually saves a lot of time, money and emotions if you can come to an agreement before divorce proceedings, so you may want to consider a separation agreement. If you can’t come to an agreement the court can decide for you.

Who gets to stay in the house?

In the majority of cases, it’s likely both of the claimants have a right to live in their marital home. While you’re settling for the divorce you will have a financial agreement which usually decides who stays where. 

If you have an issue with this, please seek legal advice from a trained solicitor.

Marriage breakdown

How does the Court decide what is a fair settlement?

Each divorce case is different, and while both parties are worried about ‘fairness’ during proceedings, the court is highly experienced in dealing with these matters. Both parties need to realise that assets aren’t usually split 50/50, but are subject to the rules of section 25 of the Matrimonial Court Act 1973. 

What is a divorce settlement?

For couples who are going through a divorce, the financial side of the relationship breakdown can cause a great deal of worry.

‘Divorce settlement’ is a term which describes how the finances of a couple are to be divided when they divorce. Your divorce settlement can detail everything from how you divide your property, to how any savings and debt will be shared upon divorce.

It is important to note here, that in England and Wales, the divorce process itself does not deal with a couple’s finances

The divorce settlement often runs concurrently with the divorce process. However, getting a divorce does not automatically end the financial relationship between you and your spouse.

Why do I need a divorce settlement?

If you and your spouse agree on your divorce settlement, the next step is normally to get it made into a legally binding consent order.

Without a divorce settlement, your ex-spouse may be able to make a financial claim against you in the future. There is no time limit for making financial claims against an ex-spouse.

This is why it’s vital that a binding court order, detailing your divorce settlement, is obtained.

If you are not able to agree on your divorce settlement, you may have to go to court and ask a judge to decide for you. This is normally viewed as a last resort, as it can be time-consuming and costly.

Can a divorce settlement be reopened?

A divorce settlement can be reopened, but it is very rare for this to happen. Once a consent order has been obtained, the financial ties between a couple are broken and the ability to make financial claims is no longer possible.

Changing a divorce settlement is an extremely complex area of law and legal advice should be sought.

As always, it’s highly advisable to seek independent legal advice regarding your divorce settlement. Speaking with a solicitor experienced in this area of law, such as Austin Kemp, as early on as possible in the process, can help you to understand your rights with regards to the divorce settlement and build solid foundations on which to begin negotiations with your spouse.

Agreeing a financial settlement

Although it is important to understand how the courts could divide your assets upon divorce should they be asked to do so, court should usually be viewed as a last resort.

Asking a court to decide your financial settlement following your marriage breakdown can be both costly and time-consuming.

Reaching an agreement with your spouse may not only save you time and money, but it could also help you to avoid the conflict which can often stem from confronting each other in a court scenario.

If you are unable to reach an agreement with your spouse about who should get what, there are other options that you could consider before involving the courts, including mediation and collaborative law.

Seeking legal advice

It’s highly advisable to get independent legal advice from a solicitor following a marriage breakdown, before entering into negotiations with your spouse. This way, you should fully understand your rights – and have an idea of what a fair division of your assets in the eyes of the law may look like – before you begin discussions.

If you do reach an agreement with your spouse, you may want to get your arrangement made into a legally binding court order. A divorce solicitor should be able to advise you on how to go about this.

The weeks and months following a marriage breakdown can be challenging. Seeking legal advice early on, can help you to understand what to expect, so you can start planning for the future.

Transferring assets

Dividing assets during a divorce is difficult enough. However, we’re regularly asked whether the assets that my spouse has transferred over to a family member will be included in our financial settlement.

Reaching a financial settlement can often be one of the most difficult parts of the divorce process. But what happens if your spouse has transferred assets over to a family member, either before or during your divorce? We take a closer look at the possible implication

The courts can set aside the transfer of the assets in some circumstances

The family courts can, under the Matrimonial Causes Act 1973, review the transfer (or disposition) unless “it was made for valuable consideration (other than marriage) to a person who, at the time of the disposition, acted in relation to it in good faith and without notice of any intention on the part of the other party to defeat the applicant’s claim for financial relief”.

In the end, the courts can, unless these criteria are satisfied, choose to set aside the transfer.

This is a very complex area of law, so expert legal advice tailored to your individual circumstances is highly recommended.

What if the transfer hasn’t yet taken place? 

If you are concerned that your spouse is about to transfer assets to a family member (or any other third party), then it is essential to seek legal advice as soon as possible. In this situation, it could be necessary to ask a court to prevent the transfer taking place.

It is essential to act quickly in this situation, as it may be more difficult to transfer assets back than to prevent them from being transferred in the first place.

The importance of full and frank disclosure

It’s essential for both parties to fully disclose their assets as part of a financial settlement. Not fully disclosing assets on a Form E could result in criminal proceedings being brought against the party in question.

Penalties can be severe for those who are found to have hidden assets. Hiding assets could result in a less favourable financial settlement for the spouse who is found to have done this, or they could even have to pay their spouse’s legal costs.

Learn more about hiding money in a divorce and the penalties.

FAQs

Are assets always split 50/50 in divorce?

In a recent judgement, the judge said: “An automatic or blind application of a 50/50 split in every case can only be an impermissible judicial gloss on the statute, which expressly requires the court to consider all the circumstances of the case.”

However, every case’s circumstances are different and if you are worried about what this may mean for your divorce, seeking legal advice as to your situation is essential.

My spouse has been given a bonus – Am I entitled to a share?

Bonuses on divorce can be a tricky subject. It is not unusual to have some sort of bonus payment contained in an employment contract. These can take the form of anything from performance-related bonuses (such as hitting a specified yearly target), to bonuses paid on the basis of how long the person has been employed by a company.

We are regularly asked about bonuses on divorce and how this is treated during any settlement. When bonuses are discretionary (i.e. when they are not necessarily paid out every single year or month), this can cause complications when it comes to financial settlements, quite simply because earnings could vary significantly from one year to the next. Unsurprisingly, this can often make negotiations surrounding maintenance difficult.

What do the courts say?

Back in April 2018, a case hit the headlines when a woman lost her legal battle for a share of the money her husband made after their marriage had broken down.

 The case, heard by the Court of Appeal, was an appeal of a final financial remedy order made by the Central Family Court. In this case, the majority of the husband’s income was made up of discretionary bonuses.

 At this appeal, the wife argued that her husband’s earning capacity was indeed capable of being a matrimonial asset and, as such, the sharing principle should be applied and it should be divided, as happens with other marital assets.

Additionally, she argued that she should not have to use her capital to meet her income needs when her husband would be able to meet these needs from his earnings.

The wife ultimately wanted 35% of her husband’s net bonuses until 2019,:her appeal was dismissed by the Court of Appeal.

How can our expert divorce solicitors help you with getting a divorce?

Our expert family law solicitors can help you with a range of legal issues relating to getting a divorce, including:

Contact our expert divorce solicitors for advice on getting a divorce

For more information on diciding assets, call our divorce solicitors on 0845 862 5001 or email mail@austinkemp.co.uk.

Our expert family law solicitors offer a nationwide service. We have client meeting office facilities available, in order to have face-to-face client meetings/conferences as and when required in:

Please contact us for more details.

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25th May 2022

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