How Assets And Money Are Split In Divorce
There are various different elements involved with getting divorced. First there is the official legal process, which involves obtaining a decree nisi and eventually a decree absolute.
Then there are aspects involving any children eg. which parent they live with and how often they visit the other parent etc.
But what we will look at below is the financial side of divorce. Which assets are included in the matrimonial pot and how are these divided up?
What assets are included in a divorce?
Most assets which have been acquired or built up during the course of marriage will be added to the so-called ‘matrimonial pot’ upon divorce. These include:
- Matrimonial home – the house where husband and wife lived (irrespective of whose name is on the deed).
- Personal savings – whether these are in individual or joint accounts, any monetary assets are generally added to the pot.
- Pension – this is considered to be a matrimonial asset, and its value can be taken into account when coming to a financial settlement.
- Business assets – even non-family businesses which were just set up and managed by one spouse are generally considered to belong to both husband and wife in terms of their value. But rather than selling the business and splitting proceeds, often the division of assets will be realised via ongoing maintenance payments and/or a lump sum.
But any non-matrimonial property – such as an inheritance or assets which were acquired before the marriage and kept separately from joint finances – are often treated differently in the context of divorce.
The rationale behind this was set out in the case of White v. White, in which the court acknowledged “the view, widely but not universally held, that property owned by one spouse before the marriage, and inherited property whenever acquired, stand on a different footing from what may be loosely called matrimonial property.”
How are assets divided in divorce?
When researching divorce splits the common split examples are 70/30, 60/40 or 50/50.
The general principle is that the matrimonial pot should be divided equally upon divorce.
Although each individual divorce will have its own specific set of circumstances, and the court may decide that one party is entitled to a larger share (depending on need), there is an assumption of a 50:50 split as the starting point.
However, there is an overriding principle of ‘fairness’ which may well trump a simple division of assets.
Section 25 of the Matrimonial Causes Act 1973 sets out the various factors which a family law court should take into account when deciding on how any assets should be divided, including:
- welfare of any children under the age of 18 (this is the primary consideration);
- the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future;
- the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;
- the standard of living enjoyed by the family before the breakdown of the marriage; and
- the age of each party to the marriage and the duration of the marriage.
Divorce settlement examples
Although the divorce settlement will depend upon the specific scenario, common arrangements include:
- 50:50 split of assets – with monthly maintenance paid to the primary carer of any children.
- Mother and children remain in the matrimonial home – husband pays mortgage.
- Settlement with a lump sum – known as a ‘clean break’.
How long after a divorce can you claim assets?
Although a decree absolute officially ends a marriage, financial claims can be made by either party well into the future, unless:
- A clean break order or a consent order has been put in place – these essentially prevent future claims.
- Remarriage – if one party has remarried, this can prevent them from making a financial claim.
Otherwise, there is no time limit on any claims. As such, a clean break or consent order should be considered.
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