The division of assets can often be the most fraught and acrimonious part of the divorce process. If an application has to be made to the Court to assist with financial settlement in a divorce, the judge will decide the matter having regard to the factors the law requires be taken into account; however, that leaves the judge with a wide discretion as to who is entitled to what.
The Court’s decision will be made on a case-by-case basis, and only after consideration of a wide variety of influencing factors.
At Elite Law Solicitors, our experienced family law team can assist you with all aspects of a financial settlement following a divorce or separation.
If you require any advice or assistance please make a free enquiry by calling 0800 086 2929, emailing firstname.lastname@example.org or by completing our Free Online Enquiry Form.
What is a financial settlement in a divorce context?
Financial settlement is the point in the divorce process at which the division of assets and other financial agreements, including ongoing support, are decided upon and recorded as a binding financial order.
Sometimes a financial settlement can be agreed upon without the need for the Courts’ intervention. In these cases, a period of negotiation and financial disclosure between solicitors can be enough to arrive at an accord.
In other cases, negotiations will not be possible. There are many reasons why a couple might not be able to agree on a financial settlement in a divorce, but the next step is always the same: in cases where mediation and negotiation fails, it falls to the Court to reach a resolution.
How are assets split in a divorce?
The basic guidelines the Court will follow when deciding the division of assets in divorce matters are set out in section 25 of the Matrimonial Causes Act 1973. This section begins by addressing the most important factor to be considered in a divorce case: whether the case involves dependent children. If it does, the Act states that the Court must make the needs and welfare of the children the first point of consideration.
Following this rule, section 25 of the Act sets out a number of matters that the Court may have regard to when exercising its powers in relation to division of assets. These include:
a) Current and future financial assets: The Act states that “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” will be considered.
This process begins with financial disclosure submitted by both parties to the Court. Existing assets will be valued, and the Court will also consider how earning potential might change in the future; for example, if one party has to reduce their working hours to meet their responsibilities as a single carer for their children. If either party is cohabiting with a new partner, their partner’s financial status may also be considered.
b) Current and future financial needs: As with future earning potential, the Court will attempt to account for the future financial obligations each party will likely have.
Primarily this means the cost of re-housing each party – which will be particularly important for whoever will be taking primary care of any children. The Court will ask for a breakdown of estimated outgoings from each party to help them account for this.
c) The family’s standard of life before the breakdown of the marriage: The court must try and maintain for both parties the same standard of life enjoyed during the marriage in so far as this is possible. Unfortunately, in reality divorce usually means that it is not possible to maintain this standard and a fall in the standard of living for both parties is often inevitable.
d) The age of each party and the duration of the marriage:In the case of short marriages, pre-marriage contributions become more relevant.
For a younger couple who have no children and have only been married a short time, the Court may, depending on needs being met, settle upon a clean break order – an order that prevents either party from making a financial claim on the other. For older parties, childcare, pensions and earning potential all become considerations.
e) Any party’s physical or mental disability: This is often not a relevant factor when considering the division of assets in a divorce, but when it does come into play the Court will usually require supporting medical evidence to be provided by a GP or consultant.
f) Contributions any party has made to the welfare of the family: This can be a particular point of contention between divorcing parties. One thing that the Matrimonial Causes Act does make clear is that the definition of contributions includes “any contribution by looking after the home or caring for the family,” meaning that in instances where one party worked and one took on homemaking responsibilities in a marriage, the Court will consider them equal contributors.
Things become less clear where one party has brought significant assets into the marriage, amassed assets since separation, or has acquired inheritance during the marriage. In these instances the Court will consider the needs of each party, the length of the marriage, whether the assets have already been intermingled with matrimonial assets, and any other relevant factors.
g) Benefits any party is likely to lose access to following the divorce: This usually relates to pensions, which are covered in more detail below.
h) The conduct of each party: This is very rarely taken into account unless the Court considers that it is an exceptional case in which it would be unfair to disregard the conduct in question due to its seriousness.
The act defines similar considerations to be made in regard to any dependent children involved: their financial needs and resources, any physical or mental disabilities, and their current or future education needs.
How is property divided following divorce or separation?
There is no straightforward formula for determining what happens to a shared property after divorce.
The starting point in terms of entitlement is equality, but the judge will consider all of the factors outlined above, any one of which may result in the actual division being something other than equality.
The most important factor is usually each parties’ housing need and their ability to meet it. The economically weaker party may need a greater share of the assets to meet his or her needs, especially if he or she has additionally to house children.
It’s important to note that like other aspects of the financial settlement, once the Court is involved they can exercise their power to block or force the sale of a property or decide on the distribution of proceeds from a sale.
In cases where a property is held in only one party’s name, for example, the Court can help to protect the other party from losing out if they feel it necessary, although in cases where someone doesn’t have their name on a property’s mortgage, it is always best for them to try to protect their position as soon as possible themselves by notifying the Land Registry of their interest.
How is a pension split in divorce proceedings?
In longer marriages the question of what happens to each partner’s pension becomes a significant consideration. Pension arrangements are usually dealt with by the Court in one of three ways:
1. Pension sharing: One party is given a percentage share of their former spouse’s pension pot, which is transferred as a lump sum.
2. Pension offsetting: One party retains their pension, but in exchange gives up their claim on another asset, such as the family home.
3. Pension attachment: In this arrangement, a portion of the pension is paid regularly to the other party, similar to a maintenance payment.
These options only relate to private pensions: government guidelines state that the basic state pension cannot be shared if a marriage or civil partnership ends.
How Elite Law Solicitors can help with financial settlement in divorce proceedings
Victoria Clarke is a Partner and the Head of our Family Law and Divorce team; she can provide specialist legal advice in relation to division of assets following divorce or separation.
In addition to office meetings, Victoria offers remote meetings via telephone or video conferencing software so can assist you wherever you are based.
If you need assistance with financial settlement in a divorce or have any queries relating to any of the issues discussed in this article, please get in touch with Victoria by calling 0800 086 2929, emailing email@example.com or completing our Free Online Enquiry Form.
The content of this article is for general information only. The information in this article is not legal or professional advice. If you would like legal advice you should contact a qualified solicitor, such as those within our firm.
What does a wife get in a divorce settlement? ›
A wife in California can be entitled to up to half of the assets in the marriage along with up to 40% of their partner's income for child support, spousal support, and primary child custody.How do I get the most out of my divorce settlement? ›
- A detailed parenting-time schedule—including holidays! ...
- Specifics about support. ...
- Life insurance. ...
- Retirement accounts and how they will be divided. ...
- A plan for the sale of the house.
Examples of non-matrimonial assets
Typical non-matrimonial assets include: Assets inherited by one of the spouses during the marriage. Assets received as a gift by one of the spouses. Assets already owned by one party before the marriage.
Typically, a divorce/dissolution settlement will take 9–12 months.Who loses more in a divorce? ›
While many men are quick to say that their ex-wives took everything, including the dog—or that is what many country songs lead you to believe, anyway—the truth is that women often fare worse in a divorce.What is the number one cause of divorce money? ›
Money arguments are the second leading cause of divorce, behind infidelity. High levels of debt and poor communication lead to stress and anxiety when it comes to finances. Nearly half of couples with $50,000 or more in debt say money is their top reason for arguing. Nearly 2/3 of all marriages start in debt.What factors affect divorce settlement? ›
- Your age and the length of your marriage. ...
- What assets you have. ...
- Your financial needs and obligations. ...
- Your standard of living before the divorce. ...
- Your contribution to the marriage. ...
- Your conduct.
If your car is matrimonial property, it does not necessarily mean you will lose it in the divorce. Instead, its value can be taken into account in any agreement, with the difference being transferred to your partner either in a lump sum or some other form of equivalent financial agreement.IS CASH considered an asset in divorce? ›
Cash balances, stocks, bonds, insurance policies, security deposits, retirement accounts, and investment portfolios are also considered assets.Is income an asset in divorce? ›
Income earned during the marriage.
Regardless of whether one or both spouses work outside of the home, each person's income during the marriage is considered marital property and will be subject to equitable division by the court.
How does a judge decide a financial settlement? ›
The court will look at meeting the needs of both parties, including ensuring their housing and income needs are met. If these needs are met from the available assets and there is a surplus, the court may consider the origin of certain assets in deciding how the remainder is divided.Who decides financial settlement in divorce? ›
The judge will decide on the fairest way to divide the assets if there's enough to meet everyone's needs. They will make arrangements for any children first - especially their housing arrangements and child maintenance. The reason for the divorce or dissolution is not taken into account.Does a divorce financial settlement go to court? ›
Making a divorce settlement without court proceedings
Fortunately, in most cases, we can achieve a fair settlement through negotiation and other alternative approaches, meaning it is very rare that you will need to go to court for your divorce settlement.
Research indicates life after divorce for men is more traumatic than it is for women, taking a more significant emotional toll as well as sparking physical deterioration. Women file for divorce 70% of the time, and when it's a shock, with no time to prepare — that has a marked impact on how men handle divorce.Who is divorce harder on? ›
As a culture, we tend to assume that women are more emotional than men. However, numerous studies have shown that divorce is actually an experience that is tougher for men to cope with.Who gets hurt the most in divorce? ›
Though women tend to take a bigger financial hit from divorce, men often suffer more emotionally and psychologically. Men are more likely than women to suffer from depression after a divorce, and when they experience depression, it tends to consume men more fully than it consumes women.What is financial infidelity in a marriage? ›
What Is Financial Infidelity? Financial infidelity happens when you or your spouse intentionally lie about money. When you deliberately choose not to tell the truth about your spending habits (no matter how big or small), that is financial infidelity.When your husband is financially irresponsible? ›
Seek Financial Help and Counseling
Seeking the help of a financial advisor who understands your goals and financial situation is a great way for you and your partner to confront the issues plaguing your marriage. An advisor can help you develop a budget and a plan to pay down any debts that need attention.
According to a 2016 study published in Psychology Today, you're 50% more likely to get divorced if you get married at 20 years old instead of at 25.What is a fair split in divorce? ›
On divorce, the aim is to divide the assets fairly. Fairness does not necessarily mean an equal division. What it does mean is that the parties must be left in the position of equal standing and that there must be no discrimination between the respective roles of breadwinner and homemaker - which are regarded as equal.
What assets are taken into account in divorce? ›
Matrimonial assets typically include things like the family home, pensions, investments and savings. Matrimonial assets can also include any property acquired before the date of the marriage if this was purchased for use as the family home, or any furniture that was bought specifically for this residence.Do we have pay to wife after divorce? ›
In case of mutual consent divorce, both spouses decide the maintenance and alimony together. However, in contested matters, the court intervenes and decides the issue of alimony or maintenance on the merits of each case.Should husband pay for wife after divorce? ›
“When a couple gets divorced by mutual consent, the decision on whether any alimony or maintenance is to be paid is a matter of consensus between them. In such cases, alimony or maintenance could be paid by either husband to the wife or vice versa.Do I have to give my wife money after divorce? ›
Generally, a former spouse is entitled to claim against your money or assets at any point up until they re-marry unless a financial consent order has been approved by the court. Many separating couples are under the impression that getting divorced breaks all financial ties.Who pays the most for a divorce? ›
Sheikh Mohammed bin Rashid al-Maktoum & Princess Haya bint al-Hussein. According to CNN, in December 2021 the wealthy ruler of Dubai was ordered to pay a staggering $728 million to his ex, ending a years-long divorce battle that included allegations of affairs and threats.What is the one third rule for spousal maintenance? ›
The 'one third rule' is a now outdated approach to deciding spousal support in England and Wales. It worked on the principle that both partners' incomes would be added together, with the lower earning spouse being awarded one third of the combined total, minus their own income.What are women's rights in a divorce? ›
Either party's gender does not determine the outcome of a divorce case. Who gets what in a divorce is determined on a case-by-case basis, and either party may receive custody of a child, regardless of the parent's sex or gender. All parties to a divorce are awarded equal dignity in the eyes of the law.How much alimony is given to wife? ›
If the alimony is being paid in the form of monthly payments, the Supreme Court of India has set 25% of the net monthly salary that should be granted to the wife by the husband. In case, the alimony is being paid in the form of a lump-sum amount, it usually ranges between 1/5th to 1/3rd of the husband's total worth.What is the new law on divorce? ›
What are the details of the divorce law changes? The new laws mean that instead of having to attribute blame to one party, a couple can mutually cite the 'irretrievable breakdown' of their relationship as grounds for wanting to obtain a divorce. This can be done either in a joint statement, or by an individual.Can I empty my bank account before divorce? ›
There are no real repercussions when a spouse empties a bank account of proceeds that are solely theirs — the money belongs to them by right and therefore isn't subject to division in the divorce proceedings. Unfortunately, it's not uncommon for spouses to empty marital bank accounts leading up to or during a divorce.
Can my ex wife collect on my Social Security if I remarry? ›
If you remarry, you cannot receive benefits on your former spouse's record unless the new marriage ends (by death, divorce, or annulment).Who pays the bills after separation? ›
During separation, who pays the bills? As a general rule, household bills should be paid in exactly the same way for the period between separation and divorce, as they were during the course of the marriage. This applies to all the usual types of household expenditure, including: Mortgage/rent payments.How do you avoid splitting money in a divorce? ›
- Hire an experienced divorce attorney. Ideally, this person will emphasize mediation or collaborative divorce over litigation. ...
- Open accounts in your name only. ...
- Sort out mortgage and rent payments. ...
- Be prepared to share retirement accounts.
Capital needs tend to be for one-off items, and can be satisfied by a lump sum in most cases. They include needs for housing, furnishing costs, purchasing cars and clearing debts.What is a needs case in divorce? ›
The needs principle means the Court must ensure that a financial settlement caters for the financial needs of the parties. The needs of the parties and any minor children is often a determining factor in a financial settlement. This is particularly relevant where the available assets do not exceed the parties needs.