How Are Assets Split In A UK Divorce?
In a UK divorce, marital assets (e.g., property, savings, investments) are normally split fairly between both parties; however, this does not necessarily mean there will be a 50/50 split.
If you are going through or about to start the legal process of divorce, it is important to understand what is meant by a fair division of marital assets during divorce. Having this knowledge will help you come to a mutual agreement with your ex-spouse or, if your matter goes through the courts, help you understand how a family court judge will decide how your assets should be divided.
In this article, we will explain how assets are split in a UK divorce, including matrimonial and non-matrimonial property: inherited, pre-acquired and post-separation assets.
What assets should be split in a divorce?
When we discuss dividing the ‘marital pot’ in the event of divorce, we mean the division of assets, including the family home, other property, pensions, savings, investments (such as shares), vehicles, jewellery, art, and businesses. Really, anything of significant value (typically exceeding £500) can be split. It is not just items of worth that must be divided following divorce; debts and other liabilities must also be split to ensure a fair outcome.
How will our assets be split in a divorce?
There is no one definitive way to decide how assets should be split in the event of divorce. What matters is that all parties should be able to reach an agreement on a fair division of the ‘marital pot’. Whether you reach an amicable agreement with your ex-partner, you need the assistance of a Solicitor, a mediator, or the family courts, the same factors should apply.
The first step in the process of splitting assets in a divorce in the UK is to document your full financial position using Form E. This requires getting a value of all of your assets, including property, investments, savings, pensions, and business interests. This information should be shared so that you can both reach an agreement with a full understanding of your respective financial positions.
The next decision to make is whether you both want a ‘clean break’ or have ongoing financial ties. A clean break means that once your divorce has been finalised, you will no longer have any financial ties to one another. This removes the possibility of you or your partner making a claim against each other in the future. As such, a clean break is about financial certainty and allowing both people to move on with their lives.
Alternatively, you may decide that one party should pay the other periodic spousal maintenance. Spousal maintenance is typically required when one party was the primary income earner during the marriage, while the other party remained at home and perhaps gave up their career. In this context, it may be fairer for the party who remained at home to look after the home and children to have a larger share of the assets or spousal maintenance to allow them to move on.
What does the court consider when deciding how to split marital assets?
If your divorce financial settlement must be decided in a court because you have been unable to reach an agreement yourselves or through mediation, the judge will look at several factors, including:
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How long you have been married
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The financial resources of both parties (including actual and potential income)
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Whether you have a pre- or post-nuptial agreement
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Your lifestyle during the marriage
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Your ongoing financial needs
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The financial and non-financial contributions of both parties to the marriage
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The age and health of both parties
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The conduct of both parties
It is important to understand that a judge has wide discretion when deciding on divorce financial settlements. This means that they are not necessarily restricted to only dividing matrimonial assets; they can also include non-matrimonial property: inherited, pre-acquired and post-separation assets.
Learn more about How The Courts Calculate A Financial Settlement In A Divorce and the Duxberry Calculation in UK Divorce Cases.
How is non-matrimonial property handled in divorce settlement proceedings?
In general, a family court judge will consider including non-matrimonial property within a divorce settlement if the matrimonial property is not enough to meet the needs of both parties. This is especially likely the longer the marriage.
In the case of S v S [2014] EWHC 4732 (Fam), a judge was asked to decide how a couple’s assets should be divided following divorce. The couple in this case had been in a relationship for 16 years and had total net assets of £25.3 million. The husband had contributed £13 million of pre-relationship wealth at the outset, which was used to provide accommodation and income for the parties. The judge concluded that:
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The couple’s matrimonial assets amounted to £6m
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Splitting the £6m equally would not meet the needs of the wife, which equates to £5.6m
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The wife should be awarded £5.6 million as a clean break lump sum, recognising her contribution to the marriage and prioritising her long-term financial security.
In this case, the court made what is referred to as a ‘needs-based award’. In part, the decision reflected the fact that the husband was aged 71 and the wife was 47. As such, the judge concluded that she had comparatively more of her life ahead of her and needed more to maintain a comfortable life.
Final words
How assets are split in a divorce in the UK is entirely dependent on the facts of the case. It is always recommended to reach a financial settlement and have this drawn up in the form of a legally binding Consent Order.
While some marriages end amicably, there is always a potential for future claims without a Consent Order or a Financial Remedy Order, such as a lump sum order, property adjustment order, pension sharing order, spousal maintenance orders, or clean break orders. This is where the help and experience of a divorce law Solicitor can be invaluable. They will explain your rights and how you can achieve your financial aims post-divorce, and then handle the divorce financial settlement process for you.
Guillaumes LLP Solicitors is a full-service law firm based in Weybridge, Surrey. Our highly experienced family law team can assist you in relation to your divorce, settlement, cohabitation, or reconciliation matter. To make an appointment, please get in touch and call us on 01932 840 111.
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