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How is money divided in a divorce?

Deciding to get a divorce can be an emotionally difficult and challenging time for both parties.  Divorce can be very distressing, particularly when it comes to considering how you should separate your finances.  The current law on how money is divided is governed by the Matrimonial Causes Act 1973, which sets out the types of orders that can be made and factors that should be taken into consideration when deciding how assets are to be divided.

What factors determine how assets are divided in a divorce?

The Matrimonial Causes Act 1973 requires the court to consider all the circumstances of the case and to give its first priority to the welfare of children under 18.  In deciding what orders to make, the court will then consider:

  • The income, earning capacity, property and other financial resources which each spouse has or is likely to have in the foreseeable future including – in the case of earning capacity – any increase in that capacity which it would be, in the opinion of the court, reasonable to expect a person to take steps to acquire;
  • The financial needs, obligations and responsibilities which each spouse has or is likely to have in the foreseeable future;
  • The standard of living enjoyed by the family before the breakdown of the marriage;
  • The ages of each spouse and the duration of the marriage;
  • Any physical or mental disabilities of each spouse;
  • Contributions which each spouse has made or is likely to make in the foreseeable future to the welfare of the family, including any contribution by looking after the home or caring for the family;
  • The conduct of each spouse, if that conduct is such that it would in the opinion of the Court be inequitable to discard;
  • The value to each spouse of any benefit which one spouse because of the divorce will lose the chance of acquiring (most usually pension provision).

Are assets always split 50/50 in a divorce?

When dividing the matrimonial assets, the ultimate aim is to achieve fairness.  Fairness is a different concept in every case as it is dependent upon the parties’ circumstances.

The court has a broad range of discretionary powers to make orders relating to property, income and pensions, irrespective of whether the asset is held in joint names or simply by one of the parties.

Spousal maintenance, whether on an interim or long-term basis, is assessed having regard to a party’s respective needs, their earning capacity and all the other factors set out above.

From the above criteria, financial need will be an important factor in determining how the court should apply its powers to make other such orders, including any form of pension sharing or the transfer of capital lump sums between the parties.

Taking into account the factors to be considered by the court and the broad range of discretion available to the court in trying to achieve fairness, it is common for a final settlement to see a departure from an equal split of assets.

Contact Hawkins Family Law if you need help discussing a settlement following separation.

Can you avoid court when negotiating a divorce settlement?

Finding the right forum for resolving any dispute over the matrimonial finances is vitally important. There are a wide variety of “alternative dispute resolution” (ADR) mechanisms, including mediation and arbitration. The aim of these methods is to facilitate a settlement between the parties, which is then converted into a consent order. A consent order is a court order that legally binds the terms of any financial agreement, without requiring the parties to engage in contested court proceedings.

In whatever form of ADR is considered, it is vital that both parties engage in full, frank and clear disclosure to ensure that negotiations are based on all available assets and that the parties can agree the value of those assets.

What orders can the court make in a divorce settlement?

The court has the authority to make the following types of orders:

  • Payment of a capital lump sum from one party to the other;
  • Orders in relation to how pensions should be shared and managed;
  • Sale or transfer of a property (either owned jointly or by one of the parties);
  • Spousal maintenance (also known as periodical payments)

Does the length of marriage affect divorce settlement?

Yes, the length of a marriage is important. However, the court must have regard to all the circumstances in a case and so it can consider those long relationships that move seamlessly into a short marriage before separation in a comparable way, if it is fair to do so.

Is my partner entitled to half my savings?

The court’s broad discretion in achieving a settlement allows it to have recourse to all the parties resources and assets. In deciding whether or not to use the savings, the court will consider when and how they were accumulated (e.g. inheritance or bonus), how the savings have been retained since they were received, as well as the needs of the parties too.

Who decides what I get in a divorce settlement?

The parties are free to negotiate their own financial settlement, using alternative dispute resolution methods if they might assist. It is important that disclosure is completed before those negotiations begin. If the parties cannot agree a settlement themselves, they can engage the court to determine settlement for them instead.

How is the family home divided after a divorce?

For many divorcing couples, arguably the biggest matrimonial asset to think about will be the family home. It is common for many separating couples to have to use the equity held in the property to rehouse themselves following their divorce. However, this is not always the case and each set of individual circumstances will need to be considered before it is decided if the property should be sold or retained.

If you are unsure about how to divide your assets in a divorce financial settlement or are concerned about how your money will be split, it is best to speak to a specialist divorce lawyer who can help you.

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