Divorce Financial Settlements: How To Divide Assets In A Divorce [Home, Pensions, & Other Finances]
There are no hard rules when it comes to how assets are divided in a divorce, and every divorce settlement is different. If kids are involved, or you own property together, the process may get even muddier – but not impossible.
If you need advice on how to divide assets after a divorce, our family lawyer, Tayo Taylor, offers her expertise on divorce financial settlements in the blog below.
A 50-50 Divorce Asset Split – Is It Always Possible?
Navigating the divorce asset split can feel overwhelming, and it’s completely understandable if you and your ex-partner are finding it difficult to reach an agreement on your own. This is a complex legal process that often requires a skilled and impartial approach from a family law specialist.
A common belief is that all assets accumulated during the marriage must be split equally, resulting in a 50:50 division. While this can be the right outcome in many situations, it’s important to know that a court can deviate from this equal split if there are valid reasons to do so. In these cases, one spouse may be entitled to a larger share.
When deciding whether a deviation from an equal split is fair and necessary, UK courts consider several important factors, outlined in Section 25 of the Matrimonial Causes Act 1973:
- The income, earning capacity, property, and other financial resources each of the parties has or is likely to have in the future
- The financial needs, obligations, and responsibilities that each of the parties has or is likely to have in the future
- The lifestyle the family enjoyed before the marriage ended.
- The age of each party in the marriage and the duration of the marriage
- The conduct of either person, but only if it would be clearly unfair to ignore it.
- Any physical or mental disability of either party
- Any contributions made or to be made by each party, (note that this does not only mean financial contributions, but also includes child maintenance payments)
Splitting Matrimonial Assets In Divorce – Where To Start?
Divorce is a significant life event, and taking the first steps can feel daunting. Here is some advice to help you navigate this process with a bit more ease:
Take Your Time
It’s best not to rush into a decision. Allowing yourselves and your ex-partner space and time to process things will make it much easier to have productive conversations about your future.
Be Open and Honest
When it comes to your finances, transparency is crucial. You and your ex-partner must be completely honest about all your assets and debts. If a partner later discovers something was concealed, they could take the matter back to court and seek a larger financial claim, which could be both costly and stressful.
Seek Professional Guidance
While it is possible to reach a financial agreement directly with your ex-partner, it’s highly recommended to consult with a solicitor once you have a clear idea of what you want to do. A legal professional can ensure your agreement is fair, legally sound, and properly documented, providing you with peace of mind for the future.
| Our family lawyer, Tayo Taylor, can provide sensible advice on your specific circumstances. Contact her today at:
Email: tayo.taylor@mhhplaw.com Phone: 0203 667 4783 |
When you’re ready to tackle this issue, make sure to discuss:
Your Home
Deciding what to do with your shared family home is often one of the most emotional and significant decisions in a divorce. There are three main options you could consider, each with its own advantages and potential challenges.
Selling the House and Dividing the Proceeds
Selling your matrimonial home is a very common path and can offer a clear financial split. This option provides both people with immediate access to funds, which can be used to secure new housing or help rebuild their financial lives independently. It also provides a clean break, meaning there are no ongoing financial ties to the property after the sale.
However, this isn’t always the ideal solution. If you’ve recently purchased the property, selling might result in a financial loss due to market fluctuations and selling costs, which can be both financially and emotionally difficult.
One Spouse Buys Out the Other’s Share
If staying in the home is a priority for one person and they have the financial ability to do so, they can buy out their ex-partner’s portion of the equity. This often requires a mortgage refinance to remove the other person from the loan.
Similar to selling, this option could provide a clean financial break. It also allows one person to maintain a sense of stability, especially if there are children involved who benefit from staying in their familiar environment.
Continuing to Co-Own the House
In some specific situations, a couple may decide to continue co-owning the home, either temporarily or for the long term. This can be a practical solution if selling isn’t financially viable, such as when a home was recently purchased and a sale would result in a loss, or if neither spouse can secure a separate mortgage on their own.
Continuing a joint mortgage might be a temporary measure. It’s important to know that while you can remain on a joint mortgage, you may need to reconfigure the mortgage to reflect your divorce settlement. This might involve changing the ownership structure from joint tenants to tenants in common, or adjusting each person’s contribution to the mortgage payments.
While this option doesn’t provide a clean break, it can be the most affordable and least disruptive choice in the short term, giving you more time to decide what to do next.
Your Pension
It’s easy to overlook pensions in the whirlwind of a divorce, but they can be one of the most valuable assets a couple holds. If you are married or in a civil partnership, you may be entitled to a share of your ex-partner’s pension, and it’s crucial to ensure this is addressed in your financial settlement.
The best-case scenario is for you and your ex-partner to agree on how to handle pension sharing, either through direct discussion or with the help of a mediator. Mediation can be a very effective way to work through complex financial matters like this.
| Our family lawyer, Tayo Taylor, can provide sensible advice on your specific circumstances. Contact her today at:
Email: tayo.taylor@mhhplaw.com Phone: 0203 667 4783 |
Other Finances
Beyond the big marital assets like your home and pensions, you’ll need to account for everything else to ensure a fair and complete financial settlement. Creating a comprehensive list of all your shared and individual belongings is a great way to start. This list should include:
- Personal belongings such as furniture, cars, and jewelry.
- Money held in both joint and individual bank accounts.
- Savings and investments.
Finally, it’s just as important to list any debts you have, such as bank overdrafts, credit card balances, or hire purchase agreements. If a debt is in both your names, remember that you are both responsible for the full amount, not just half. This means that if your ex-partner stops making payments, you could be held liable for the entire debt yourself.
You’ve Decided How To Split Assets After Separation – What’s Next
Once you’ve decided how to split assets after separation, the next step is to make that agreement legally binding. A solicitor can help you with the divorce financial settlement by drafting a consent order, which is a legal document that formally outlines the division of assets you’ve agreed upon.
Once drafted, the consent order is sent to the court for approval. When a judge signs it, the agreement becomes a legally binding financial order, providing a clean break and protecting both parties from future financial claims.
If You Cannot Agree On A Decision
If you and your ex-partner cannot reach a consensus through negotiation or mediation, you can apply to the court for a financial order. In this process, a judge will consider various factors set out in Section 25 of the Matrimonial Causes Act 1973 to make a decision for you.
Map Out This New Life Stage With MHHP Law
Navigating the complexities of divorce and asset division can be challenging, but you don’t have to do it alone. At MHHP Law, we understand the emotional and financial intricacies of divorce and are here to provide the clear, compassionate, and skilled legal guidance you need.
Contact us today to schedule a consultation and begin mapping out this new stage of your life with the support of a trusted legal partner.
