Divorce Financial Settlement Guide – Who Gets What?

A financial settlement is a crucial stage in divorce proceedings where the distribution of assets and financial arrangements, including ongoing financial support, are determined and formalised as a legally binding financial court order.

Sometimes, an agreement can be reached without involving the courts, making the process smoother and less stressful.  A typical financial settlement often includes arrangements for dividing property, money, pensions, and savings.

There is no set formula or ‘off the shelf’ approach to dividing assets upon divorce. Every couple has different circumstances and sets of needs.

In our experience, negotiating a divorce financial agreement can vary widely. It can go from relatively smooth and cooperative to drawn-out and contentious.

The goal of the negotiation is to reach a proposed settlement that is acceptable to both parties and deemed fair by the court.

What am I entitled to when I get divorced?

Almost daily we receive phone calls asking ‘What is a wife entitled to in a divorce?’. It’s an almost impossible question to answer without knowing the specifics of your situation.

Generally speaking, the immediate needs of any dependent children are the priority. Followed by the immediate housing needs of both parties.

You should seek initial legal advice to ensure you receive a fair share of all assets. The biggest mistake you can make is agreeing to a divorce agreement you don’t understand.

Has your partner disclosed all his/her assets to you through financial disclosure? Are they hiding assets or offering you a lower settlement than is fair?

You probably have many other questions. For example, should I prioritise immediate housing needs over long-term financial decisions? It’s the classic case of House vs Pension.

Talking from a husband’s perspective, the questions we receive are often different. It can be more about wealth preservation.

And no, you cannot divorce your wife and keep everything as some seem to believe. UK divorce law does not allow one person to take everything.

Are you struggling to calculate who gets what in a divorce settlement? Use our divorce settlement calculator to get a customised report on divorce asset division.

How does a Judge decide what is fair?

What does a judge take into consideration when making a decision is a key concern for those going through a divorce

To calculate ‘fairness’ in financial settlements, courts refer to the principles set out in Section 25 of the Matrimonial Causes Act 1973

Here are the factors considered by the Courts in respect of a financial settlement divorce:

1. Financial Situation: The income, earning capacity, property and other financial resources that each of the parties to the marriage has or is likely to have in the foreseeable future.
2. The Welfare of the Children: Their needs come first, including housing and education. Couples are encouraged to prioritise the children in any negotiation.
3. Duration of Marriage: Longer marriages often result in more equal divisions. The length of marriage typically plays a big role in who gets what.
4. Financial Resources and Needs: It considers what each person needs to pay for and any financial obligations they have now or might have soon. The financial needs of both parties are paramount to the court.
5. Previous Lifestyle: The standard of living before divorce the family had should be maintained where possible.
6. The Health of Each Party: Considerations for any physical or mental health issues either party has.
7. Contributions to the Family: Contributions made by each spouse are considered. Contributions are not only monetary related, they can include taking care of the home or the family.

If you’re struggling to agree on terms or understand what’s fair, read the following guide. Fair examples of UK divorce settlement agreements.

What can I expect from a typical UK divorce settlement?

A 50/50 split between the parties is always the starting point, but it’s rarely the final asset split.

Divorce entitlements vary and will depend on your specific circumstances and financial position. In a divorce settlement you might get things like:

• A share of your partner’s pension
• A lump sum payment from joint savings, investments, or any other income-generating assets
• A lump sum payment from the sale of the matrimonial home
• Regular spousal maintenance payments to help with living costs after the divorce
• A share of life insurance policy payouts or cash value

We have helped over 40,000 couples obtain a divorce settlement, but there is a common misconception that all divorce settlements result in a 50/50 split.

The court does not discriminate against the homemaker vs the breadwinner.

This means that a partner who left work to raise the children might be awarded half of any joint assets, a share of their partner’s pension entitlements, and spousal maintenance for some time.

Four ways to negotiate a financial settlement on divorce

1) Negotiate between yourselves

This is the most straightforward approach where you and your ex-partner sit down and agree on the terms of your settlement without any outside assistance.

This can be the least costly option and gives you full control over the outcome, but it requires a good level of communication and cooperation.

2) Mediation:

If negotiating directly is difficult, you can use a mediator. In mediation, a neutral third party facilitates discussions between you and your spouse to help reach a mutually acceptable agreement.

The mediator doesn’t make decisions but assists in communication and problem-solving. Mediation can be less adversarial and costly compared to litigation, and it often promotes amicable resolutions.

3) Collaborative Law:

This is where each person hires their own lawyer but instead of conducting negotiations between you and your partner through letters or phone calls, you meet together to work things out face-to-face.

4) Solicitor-Led Negotiation:

You can have solicitors negotiate on your behalf. This can be beneficial if the relationship between you and your partner is particularly acrimonious or if your financial affairs are complex.

How are money and assets split in a divorce?

Before looking at how money & assets may be split in a divorce settlement, you need to know the difference between assets.

Matrimonial assets

Assets you have built up or acquired during marriage are known as matrimonial assets.

Matrimonial assets typically include:

• The family home and other property
• Pensions
• Savings (joint bank accounts)
• Debts
• Vehicles

These assets will always be added to the overall ‘pot’ and must be split fairly. Bear in mind that fair doesn’t necessarily mean 50/50 of everything.

Non-matrimonial assets

Non-matrimonial assets are financial assets acquired before getting married, for example.

Assets that can be considered ‘non-matrimonial’ include:

• Gifts
• Personal belongings (vehicles, watches, furniture, etc)
• Businesses
• Property owned before marriage
• Investments
• Inheritance

Non-matrimonial assets are usually treated differently from matrimonial assets, however, they aren’t necessarily excluded from a divorce settlement.

For example, if an inheritance has been used during the marriage to purchase a car or house, this asset would now be classed as a marital asset.

There are various ways of splitting your assets, such as lump-sum payments to one spouse, offsetting a pension against other assets of the same value, and agreements on maintenance payments for both a spouse and children.

How does the court assess matrimonial vs non-matrimonial assets in a divorce?

Is there a time limit after divorce on reaching a financial settlement?

There is no specific time limit set by law for reaching a financial settlement after divorce.

The timeframe for reaching a settlement can vary depending on the complexity of the case and the willingness of both parties to cooperate and negotiate.

It’s important to know also that there is no time limit on financial claims after divorce either, which is why it’s vital to ask the court to approve a divorce financial order alongside your divorce proceedings.

If the court hasn’t dismissed a spouse’s financial claims by approving a court order, either party can make a claim in the future, providing that they have not remarried.

How much does a financial settlement cost?

The cost of a financial settlement depends on how it’s reached and the complexity of the case, but they can range from £300 to £1,500 for a consent order, £100 to £200 per mediation session, or £10,000+ if court proceedings are involved.

Factors that affect the cost of a financial settlement are:

• How the settlement is reached: Agreements through mediation or consent orders cost less than court proceedings.
• Legal representation: Solicitor fees depend on experience and the amount of work required.
• Complexity of finances: Dividing property, pensions, businesses, or significant debts increases costs.
• Disputes: Disagreements lead to higher legal fees and extended court involvement.
• Arrangements for children: Child maintenance, school fees, and other needs may add expenses.

How do I apply for a financial settlement if there’s no agreement?

Sometimes, even involving a mediator may not solve the issue.

When negotiations are difficult, you and your ex-spouse have a complicated financial situation or your ex-partner refuses to even discuss finances, you may consider applying to the court to get a financial settlement.

In certain circumstances, you may be better off applying to the court to make a financial agreement, for example;

• If you or your partner own a business
• If one party is financially dependent on the other
• If you have depends (children)
• If one party is against agreeing to a settlement
• If one party has significantly more assets than the other

In a nutshell, if both parties can’t reach an agreement, they need to go to court and have a judge issue them with a financial order.

However, you need to show to the court that you have attended a mediation meeting (unless there has been domestic abuse or social services are involved in which case you can go straight to court).

The deadlines for applying for a financial order are the same: before applying for the final legal document but after you’ve started the paperwork to divorce or end your civil partnership.

To apply for a financial order to the court, you will need to send two copies of the form to the court dealing with your paperwork (but keep one copy for yourself).

The application itself costs £255 and you may need to attend several court appointments and court hearings. This process could take anywhere between 6 and 12 months.

Can I get a divorce without a financial settlement?

Yes, you can get a divorce without having the court approve a financial agreement. In theory, you can apply for a divorce in your 20’s and start financial settlement proceedings in your 50’s unless you re-marry.

Whilst it is entirely possible to get a divorce or dissolve a civil partnership without reaching a financial agreement, it is generally not recommended by family law professionals.

Most people are not aware that legally ending the marriage or civil partnership does not prevent either party from making financial claims in the future, even years after the divorce.

Read more: The Dangers of Divorce Without a Divorce Settlement

There have been high-profile cases where former spouses have returned to court after being divorced for over 20 years and being successful in receiving financial provisions because they didn’t get a financial order approved by the court.

When should I agree to a financial settlement and why?

Once you know that divorce is the inevitable option, it’s important to discuss how any held money or assets are to be divided.

Solicitors will usually advise their clients to sort out their finances before applying for the final order (‘decree absolute’).

This could be for many reasons, but it’s usually for one of the following two reasons;

1.If you can arrange your finances at the same time as going through a divorce, you can have a ‘clean break’ following your divorce. Both parties can move on with their lives, knowing that neither party can not make any future claims.

2.Sometimes, if you deal with your divorce first without sorting out your finances, it can impair your entitlement to certain assets such as pensions. Pensions can only be transferred to a spouse, which you would no longer be, so it’s worth speaking with your solicitor first before applying for the decree absolute.

If you have had a short marriage and there are no joint assets together (property, savings, pensions for example), it’s still important to obtain a clean break financial order from your spouse to end all financial ties.

How Divorce-Online Can Help

Firstly, if you haven’t found the answers to your questions, we have answered 15 FAQs on financial settlements, which could hold the answer you’re looking for.

Reaching a divorce settlement is never easy. Legal advice for couples with wealth is always advised.

If you’re handling your own divorce, or plan to in the near future, you should consider our online consent order services.

Reaching an agreement is part of the process but without having it professionally drawn up into a legal document, it, unfortunately, means nothing.

Please do not attempt to do this yourself. If you’re worried about legal costs, our low-cost services from £399 can help you save thousands in legal fees whilst providing you with certainty.