Are Personal Savings Classed as Assets in Divorce?
All personal savings, including ISA’s and other investments must be disclosed if negotiating a financial settlement when you divorce, or your civil partnership is dissolved.
Often these personal savings will have been built up within the marriage thereby classing them as a matrimonial asset, even those held in one name only.
Matrimonial assets can be split fairly during a financial settlement and dividing them should be relatively straightforward if you can negotiate with each other amicably.
In this guide we will clarify when your spouse may be entitled to half of your personal savings and if so, the way in which savings are divided during a financial settlement.
Is my spouse entitled to half my savings?
As stated, all savings must be disclosed and considered when reaching a financial settlement with your former spouse or civil partner as they are regarded as a matrimonial asset. But what about assets accumulated after separation?
Is my husband or wife entitled to half my savings is one of the most frequently asked questions that we hear in relation to dividing assets in divorce.
It’s important to know that in England & Wales the divorce itself doesn’t put an end to the financial relationship between you and your former spouse. Therefore, financial settlements are essential as they outline exactly what you both plan to do with your assets, including savings, following the divorce.
A financial settlement provides a financial clean break, meaning that neither spouse can make any future claims against each other’s future assets, including personal savings.
How are savings divided in a divorce?
The way in which savings are divided during a financial settlement is different for each divorce, however; a fair split is always desired. In the majority of cases, a 50/50 split is often the starting point.
Fairness is the key to dividing assets including savings within a divorce, but it’s important to understand fair doesn’t always mean equal.
Some factors that are taken into consideration are:
- Earning Capability
- Needs & Age
- Duration of the Marriage
The general principle is that personal assets within the matrimonial pot should be divided equally upon divorce.
Can savings be exempt from a financial settlement?
There is just one exemption and this is if you are able to prove that the savings were built up before the marriage, classing it as a non-matrimonial asset.
Some examples are:
- Your savings were accumulated previously and brought into the marriage
- The savings were received during the marriage from an outside source – like a gift or inheritance
- You have built up the savings since separating
Please note, although certain criteria often means that your savings can be exempt from a financial settlement, it doesn’t mean that they always are.
If your settlement is taken to court, the judge has the ability to include it if they feel it’s necessary.
Section 25 of the Martial Clauses Act 1973 is the relevant law which provides the guidelines to what is considered in a financial order.
Note: The Matrimonial Causes Act 1973, Section 25 is up to date with all changes known to be in force on or before 30 January 2022. There are changes that may be brought into force at a future date. Changes that have been made appear in the content and are referenced with annotations.
How to divide personal savings accounts
The process of dividing saving accounts may differ depending on the type of savings account and who’s name is on it.
Savings Accounts – dividing savings accounts is often straight forward and simply involves one party transferring the amount which has been decided to the other.
However, some savings accounts can have clauses so it’s important to contact the bank before making any transaction.
Cash ISA’s – Cash Isa’s are only ever held in one person’s name, this means you are unable to transfer the money to the other party. You will have to withdraw the agreed amount and then transfer the money personally.
Savings & Financial Consent Orders
Savings can be included within a financial consent order along with all other assets. A financial consent order simply means that your financial arrangements are written in a legally binding order sealed by the court.
The consent order protects both parties and allows legal action if either party fails to comply with the order.
We offer a range of solicitor drafted financial consent order services to suit your needs. Our services will save you on average over £750 compared to a local high street solicitor – without compromising on the quality of service you receive.
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We provide you with the forms that need completing and signing by both parties. The difference between our services is the amount of work you wish to do and whether you would like our legal professionals to take responsibility and manage your financial application on your behalf.