How To Divide Assets In a Divorce?
There are various different elements involved in 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?
How are assets divided in a divorce?
When researching divorce splits the common split examples are an 70/30 asset split, a 60/40 asset split or a 50/50 asset split. Less common is an 80/20 split divorce.
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:
- the 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.
Which assets are typically included in a divorce?
Most assets that have been acquired or built up during the course of the 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.
- Pensions – 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 that 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.
- Personal belongings – Items such as sofas, TVs, jewelry, and pets are often included within financial agreements.
But any non-matrimonial property – such as an inheritance or assets which were acquired before the marriage and kept separately from joint finances – is 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.
Typical examples of a potential ‘fair’ divorce settlement
Although the divorce settlement you reach will depend upon your 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 the mortgage.
- Lump-sum of money is paid to one-spouse – 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 prenuptial agreement was entered into before marriage.
- 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.
This is why obtaining a consent order upon divorce is vital. Without one either party to the divorce can claim on the other’s assets years later.
Many couples believe their divorce is amicable and therefore they do not need it, however, there have been many cases where one party’s circumstances change and they then wish to make a claim and without a consent order, they may be successful.
We offer a variety of financial consent order services starting at just £199. Use our quick and easy tool below to find out which service is suitable for you.
What are my financial rights to money and assets in a divorce?
Every marriage is unique which means that the way in which assets will be divided upon divorce – whether this is a mutual decision by the separating parties or the result of court proceedings – is very much down to the individual circumstances.
There are generally no automatic rights; instead, it will be about meeting the needs of both husband and wife – and, more importantly, ensuring that any children are adequately provided for.
What happens if we cannot agree on how to divide our assets?
It’s always best to come to a fair agreement between yourselves however, sometimes this just isn’t possible.
The courts can then help decide how your assets should be split but this does come at a cost.
Mediation may work & help keep the costs down but it’s always best to seek legal advice, especially if you believe you are not getting a fair settlement.