‘What am I entitled to if I get a divorce?’ This is one of the questions we hear most often when dealing with divorce matters.
Why this question would be at the forefront of someone’s mind when contemplating divorce is abundantly clear. Divorce is a difficult decision: it is an end to a considerable part of our lives and a leap into unknown. To add financial uncertainty to it would mean making a difficult situation even more so. This is why one of the most commonly asked questions revolve around what one is entitled in a divorce settlement.
Asset separation is a complex area that is heavily influenced by the particulars of each matter. We understand that each family is different and their financial situation reflects this.
If you wish to see what entitlements you might have in a divorce, it is always advisable to speak to specialist divorce solicitors.
Dividing assets in divorce UK
There is no clear formula that can be applied to the matrimonial assets in an attempt to determine how they will be split. There are, however, some legal principles that govern this complex area of law.
When deciding on dividing assets during divorce proceedings, the UK courts will have to follow two general principles: equality and fairness. To this end, the courts have a two stage approach to all the financial separation matters.
In the first stage, the courts will compute the available resources, meaning they will determine what assets form the matrimonial pot that will need to be divided. To do so, the financial proceedings have an extensive asset disclosure procedure in place. This is an absolutely crucial step and in some cases can make or break the case. It is at this stage that the parties might attempt hiding assets, in hopes to avoid sharing them with the other party. Alternatively, one party might argue against including certain assets as matrimonial assets. Things can become very complex and acrimonious, if not handled with a cool head and solid knowledge of the process. It is also quite often at this stage that the financially stronger partner might try to bully the financially weaker party into accepting a disadvantageous settlement by drawing out the proceedings and draining the other party financially.
Therefore, it is absolutely crucial to have the best divorce solicitors fighting your corner, as early in the financial proceedings as possible and in any event before the disclosure stage has concluded.
The next stage is the distribution of assets. And we will look at how it’s done in the next section of this blog.
UK divorce: is it 50/50 split?
As mentioned above, the two governing principles in asset separation are: equality and fairness. After the breakdown of This is often enough understood that the matrimonial assets will be split equally between the partners, a 50/50 split, so to speak. It is, however not always the case.
In the UK, the 50/50 split of matrimonial assets is merely a starting point. The principles of equality and fairness do not translate into simple mathematical terms when it comes to asset separation.
There are series of factors that the court will look at when determining how the assets will be split.
These factors that determine what you are entitled to in a divorce are:
- (a) the income, earning capacity, property and other financial resources that each of the parties has or will have in the foreseeable future.
Therefore, the courts will look at the financial situation of each party and what it will look like in the future. As we can see, some future assets can also be taken into account when the assets are being split between parties. This is then factored in when determining how the assets are split. It is important to remember that these factors are not viewed as standalone, but rather in combination.
- (b) the financial needs, obligations and responsibilities of each of the parties.
Here as well, the obligations and responsibilities that will likely appear in the foreseeable future, are taken into account. For couples that have children, this element will also encapsulate the needs of the child. Therefore, in most cases having child arrangements resolved before the financial proceedings are concluded can be a wise move. This is because the resident parent, the parent living with the child, will likely have higher financial needs than the non-resident parent and this should be taken into account when making a decision in respect of asset separation.
- (c) the standard of living enjoyed by the family before the breakdown of the marriage.
This means that the courts will look at how the family used to live when deciding how the assets should be divided. This particular factor has an important role in maintaining the principle of fairness. It becomes of a significant importance where there is a clear disparity in the parties financial position.. For instance, it is often the case where one party has stayed at home to assume a more domesticated role and raise the children, while the other has built a successful career and become the sole breadwinner of the family. Without this factor that plays a role of equaliser, the financially weaker party may walk out of the marriage with the bare minimal, despite previously living a a very comfortable life.
- (d) the age of each parties and the duration of the marriage.
This factor is given more weight by the Court where the marriage has lasted many years. The age of the parties will also be given consideration by the court as this can have a significant impact on determining their future earning capacity and their needs.
- (e) any physical or mental disability of either of the parties;
It goes without saying that fairness cannot be achieved without accounting for any special needs related to the health of the parties.
- (f) the contributions that each of the participants has made to family finances, including any contribution by looking after the home or caring for the family.
This one is another crucial factor that looks to ensure the equality and fairness principals. It is important to note that under the UK law, the contribution to looking after the home and the family is considered to be on equal terms with activities that lead to financial gains for the family. This ensures that the party that has dedicated their life to the family will not leave the marriage with empty hands.
- (g) the conduct of each of the parties, but only if the behaviour is of a nature that the court will consider it cannot be disregarded.
This is one of the most misunderstood factors in asset separation. Many assume that adultery or abusive behaviour from their partner entitle them to a larger share to family assets as a way to compensate them for their suffering. This is not the case. Only in very rare cases will the courts find that a party’s conduct should be taken into account when deciding upon the asset separation. Mostly, the conduct that will qualify under this factor, will deal with financial side. For instance, if one party has been particularly controlling of the other spouse’s finances, dissipation of assets etc.
It is always a good idea to consult a specialist lawyer to determine what you can expect from asset separation, as this should form the basis of your attempts at settlement.
How is the house divided in divorce?
As for many couples the matrimonial house is the biggest asset they have, we often have to address the question of ‘How is the house going to be divided?’ as part of explaining to the clients what they are entitled to in a divorce.
As with all matrimonial assets, the division of the house will also need to follow the same principles and factors as explained above.
In practice this can mean one of the following scenarios taking place:
- The house is awarded to one of the parties and the other party is entitled to a lump sum payment.
This scenario can happen in different situations. For instance, perhaps the party will be the resident parent and it is not practicable to require them leave the house, or they have some sort of health issue that makes it unlikely for them to be able to afford another accommodation, or they do not have enough earning capacity to qualify for a new mortgage etc. In any event, each situation should be assessed individually, to ascertain whether it is equitable and fair to award the asset to one of the parties and what sum should the other party be awarded.
- In a different scenario, the house can be sold and the proceeds divided between the parties. The percentages that will be rewarded to each of them will also be stipulated by the court or by agreement, depending on how the asset separation was handled.
As a conclusion, no matter what your financial circumstances are, if the marriage has not been a particularly short one and especially if there are children involved, it is crucial to understand your rights and have clear understanding of know what you are entitled to in a divorce in UK. It is never a good idea to rush into agreeing to a settlement just for the sake of sorting things out quickly and moving on. Complications that can appear from poorly thought out financial settlements can fester and negatively impact your life for years.