How To Deal with Assets and Finances in Divorce
Going through a divorce is hard enough without worrying about how to deal with assets and finances in divorce. Nevertheless, it’s essential that you and your ex-spouse deal with your financial issues following a divorce.
Reaching a divorce settlement and making it legally binding through a financial order is the only for you both to move on with your life and prevent the possibility of financial claims being made by either party sometime in the future.
The court has a wide-ranging discretion in deciding who gets what and there is no divorce settlement calculator to work out what a fair financial settlement is because each set of family circumstances is different.
How to reach a fair divorce financial settlement
There are very few hard and fast rules in deciding who gets what upon divorce. This guide aims to explain what assets are included in a divorce financial settlement and how they can be divided.
Dealing with assets and finances in divorce can be highly complex. For family law, unlike criminal law, the law is very general in that it merely provides guidance on what the court may consider when reaching a fair divorce settlement.
Guidance originates from Section 25 of the Matrimonial Causes Act 1973 and together with decisions made in previous cases in England and Wales (showing how previous courts have applied these considerations) they can influence the court.
The reason why reaching a financial settlement is so important is because the act of divorce itself does not provide a clean break to sever the financial relationship between a husband and wife.
To end the financial relationship following a divorce, you must put your financial agreement into a legally binding court order, most commonly known as a financial consent order, which is a legal document agreed by both parties to a divorce.
If you can’t come to an agreement on how assets, money, and property, for example, should be split, then you can try mediation, collaborative law, going to court or having your solicitor negotiate with your partner for you.
Financial Consent Orders
Without obtaining a financial consent order through court, you will still be financially tied to your ex-partner, even several years after your divorce.
We encourage every couple that gets a divorce through our services to obtain a financial consent order so that you can both move on with the confidence that no future claims can be made by either party.
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Frequently Asked Questions
What does the law say about dividing gifts in a divorce?
The answer is very little. There is a range of factors that need to be taken into consideration before being able to know how they will be treated.
We have written about how gifts are treated in a divorce in more detail to help you understand what the status of any gifts may be in relation to splitting assets.
What happens to inherited assets?
Inherited assets are another interesting topic when it comes to divorce, and similar to gifts there are numerous factors involved that will determine how these assets will be judged.
Generally speaking, any inherited assets accrued before marriage will be judged differently from all other assets, such as property or pensions. This is of course unless these assets have become mixed into normal family life over a long marriage.
There are different rules in England and Wales compared with Scotland so it’s important you understand the law in each jurisdiction.
What is a husband or wife entitled to in a divorce?
Divorce entitlement depends on your individual circumstances; no couple will have the same marriage or financial circumstances as another.
The court will always put the needs of any children first. After this factors such as length of the marriage, role within the marriage, financial needs and more will be taken into consideration.
It can be hard to know what you are entitled to within a divorce settlement, but by following the guidance on fairness most couples can agree to a financial settlement without going to court.