Divorce Settlement Guide: What am I entitled to?

2nd November 2020

When facing divorce proceedings, whether as the one filing for divorce, or the respondent, one of the most concerning issues will be the divorce settlement. Divorce can be a costly process – understanding your rights and entitlements in advance can be helpful for managing your expectations and reducing stress.

What are matrimonial assets?

Matrimonial assets, also known as marital assets, are the financial assets that you and your spouse built up during the period of marriage. This is different to non-matrimonial assets (see below). Matrimonial assets can include the following when acquired during the marriage period: 

  • Family home
  • Other real estate
  • Pensions
  • Savings
  • Cash in the bank
  • Vehicles
  • Furniture & appliances
  • Stocks, bonds and mutual funds
  • Businesses

What are non-matrimonial assets?

Non-matrimonial assets are financial assets which were acquired before or after the period of marriage. Each of the examples above, if acquired outside of the marriage period, would be considered a non-matrimonial asset. They would therefore be treated differently to matrimonial assets.

Are non-matrimonial assets excluded from divorce settlements?

Not necessarily. A divorce settlement and division of assets will depend on various specific circumstances and pre-arranged agreements that might be in place.

Some non-matrimonial assets may be excluded from financial settlements, but this may not necessarily be permitted. 

For example, a non-matrimonial asset such as an inheritance may be used during the period of marriage to buy a car, house or other asset. The resulting asset would be classed as a matrimonial asset.

Are matrimonial assets split 50/50?

No, this is a common misconception. It is not a rule that matrimonial assets be split 50/50 on divorce; however, it is generally a starting point.

The court’s aim is to divide assets in a way that is fair and equal, but this does not necessarily mean half and half. A number of factors will be considered by the court, including: 

  • The relative needs of each party – a spouse in an economically weaker situation may be judged as needing more as part of a fair settlement.
  • Child custody – a spouse responsible for caring for children may be awarded more in order to ensure their wellbeing.
  • Future earnings – a spouse who has sacrificed career progression, and therefore future earnings, in order to care for children may be awarded more capital.

Matrimonial assets will be split equally to the best of the court’s ability; however, they will determine what can be considered ‘equal’ based on your circumstances.

Are debts matrimonial assets?

Yes, if you and your spouse have accrued any debts during the term of your marriage, these will also be split as part of your divorce financial settlement. This includes your mortgage, credit cards, overdrafts, loans and any other commitments.

How to work out your assets

Before any discussions about financial settlements on divorce, you must first work out exactly what your assets are in the eyes of the court. As with everything relating to divorce proceedings, we strongly recommend a consultation with a qualified family solicitor. Here are a few things to consider. 

  • Property Value: This includes the family home and any additional properties owned. Also, be aware of your remaining mortgage balance and how much equity you have.
  • Total Debts: This includes your credit cards, any car finance, overdrafts or other financial commitments.
  • Savings Accounts: Make sure all your saving passbooks are up to date.
  • Total Household Income: What is the disposable income of your household?
  • Valuable Items: Make sure to get any expensive items you own valued; this includes jewellery, cars, appliances, furniture and other household items.
  • Investments: If you have an investment portfolio, you should seek the advice of an independent financial adviser to get a valuation of your investments.

Do you legally have to declare all assets?

Yes. It is mandatory that all assets are declared before divorce proceedings get underway. This includes both joint and sole assets. Attempts to hide assets may result in a hefty fine from the court.

How to protect your assets during divorce

How matrimonial assets are divided is ultimately the court’s decision; they will seek to do so in a way that is as fair and balanced as possible.

If you suspect that your spouse may be taking unethical steps to hide assets before divorce proceedings get underway, there are a number of ways you can tackle this. However, you should always speak to a solicitor and get tailored legal advice, and never make assumptions. 

How do you make the settlement legally binding?

To make your divorce settlement agreement legally binding, you should draft a consent order and get ir approved by a court. This is important because, if your agreement is not legally binding, the court will not be able to enforce it, should there be any issues later.

You can apply for a consent order at the UK Government website.

What do I get in a divorce settlement?

What you will receive from a divorce settlement will be what you and your spouse, or a court, determines is fair. This may not necessarily be your ideal settlement; however, so expectations should be managed. A good way to do this is to seek the advice of a solicitor, who can review your matrimonial assets and provide a realistic estimate as to what you can expect.

How is the family home divided in a divorce?

For most divorcing couples who own one, the family home is probably the biggest asset involved in any settlement. What happens to the family home can be one of the biggest causes of stress and friction, so it is important to understand how a family home is divided.

A separating couple will usually cease cohabitation ahead of the divorce proceedings – they will then often consider one of the following options:

  • Sell & Split: This involves both people moving out and selling the family home. This money, if sufficient, can then be split in order for each party to buy another home.
  • Buying Out: One spouse can arrange to buy the other out of the property, thereby making them sole owner.
  • Transfer Value: This involves one spouse transferring part of the property value from one person to the other. The departing spouse would no longer own any of the home but would maintain a stake in the home value. If sold at a later date, they would receive a cut.
  • Leave Ownership Unchanged: This would involve one partner continuing to live in the house, but actual ownership of the property remaining shared.
  • Mesher Order: This is exclusive to England and Wales and involves postponing the sale of the property until a later date, for example: when the youngest child moves out. The sell value of the property will then be divided as the court sees fit.

How is a mortgage split during a divorce?

During a divorce, a mortgage will often be split so that only one spouse ultimately has their name on it. This does not always happen and depends on the circumstances of the marriage.

If you are divorcing, you must continue to pay your mortgage, even if the family home is uninhabited. If you have a joint mortgage, you will have both taken equal responsibility for the repayments. This does not change if one or both of you moves out. 

The following are some commonly chosen options: 

  • Sell the property and pay off the mortgage
  • Continue to pay the existing mortgage
  • Transfer ownership to one spouse 

We strongly recommend seeking advice from a qualified mortgage advisor, as well as a solicitor, before proceeding with any mortgage arrangements ahead of your divorce.

When does a financial settlement have to be reached in a divorce?

A divorce can be a lengthy process and there is no set point in this process when a financial settlement must be legally agreed. It is certainly advised that an agreement is reached before either spouse remarries.

We strongly recommend that a settlement is negotiated and agreed, if possible, prior to the divorce proceedings. This will avoid any complications, delays or further legal costs. 

Having it all sorted and agreed in principle beforehand means the court will be able to deliver its financial settlement orders at the same time as decree nisi is declared. 

How to stop a spouse taking money from a joint account before divorce

It isn’t unheard of for a spouse to make large withdrawals from a joint account without your agreement ahead of a divorce. This may result in losing money. Be aware that you will also be liable for any debts that are run up in your joint account. 

Precautions can be taken, such as the closure of a joint account or cancellation of joint credit cards ahead of divorce; however, this can cause potential issues if your spouse requires money for living expenses.

As all marriages will have different circumstances, we recommend consulting with a family solicitor to discuss any concerns you might have. They will be able to deliver realistic options tailored to you.

Use a mediator to agree a divorce settlement

If you and your spouse are struggling to come to an agreement on a divorce settlement, a recommended course of action is to use a mediator. 

This can be particularly helpful if you and your partner cannot discuss your divorce without arguing, if you wish to avoid going through a court process, or if you simply wish to have an impartial point of view. 

The Citizens Advice website can also offer useful information in relation to your financial options before and during divorce. 

Prenuptial agreements

A prenuptial agreement is a contract that a couple may choose to sign before they get married. Also known as a ‘prenup’ this sets out agreed terms relating to what happens to money and other assets in the event of a divorce.

If you and your spouse signed a prenuptial agreement, it is vital that you check it to ensure you are aware of everything that was pre-agreed. You should also make sure your family solicitor is fully aware of it and has a copy for their records and reference. 

For more information on how prenuptial agreements work, we recommend getting a consultation with a qualified family solicitor.

Are business assets included in a divorce settlement?

Yes, business assets can be included in a divorce settlement. As with all matrimonial assets, this will depend on your personal circumstances. If an agreement between you on a business cannot be reached, the court will determine what they believe to be a fair and equal split. 

A family business is likely to be seen as a source of income rather than an asset in the same sense as a family home or savings fund. With this in mind, even if one of the partners has no involvement in the business directly, or did not build it up, they may still be entitled to some of its value.

One example of this is if a spouse offers matrimonial support, looks after children and in effect facilitates the work and success of the other.

Will grounds for divorce affect the financial settlement?

It is unlikely that the particular grounds for divorce stated will influence the outcome of a financial settlement. Unpleasant behaviour or adultery will not generally have an impact on the divorce settlement.

Exceptions may be made for extreme behaviour and circumstances, such as violence or abuse which may have a lasting impact on one of you. Another example could be reckless or unfair spending or sabotaging of matrimonial assets. 

What is spousal maintenance?

Spousal maintenance is money paid by one spouse to their former spouse after a divorce has been finalised. It is usually paid when one divorcee does not have a means to support themselves financially outside of the marriage – a common instance is following a marriage when one person was the sole earner.

Spousal maintenance payments may be required depending on the following factors:

  • The ability of each person to support themselves and earn money
  • Living standards pre and post-divorce
  • Special needs or disabilities
  • Length of marriage
  • Age of divorcees 

In simple terms, if after a long marriage, one partner has not been working or earning for a number of years, they will have more difficulty supporting themselves independently after the divorce.

In this instance, a divorce settlement may offer that person a percentage of their former spouse’s income for a period of time after. 

Child maintenance is dealt with separately.

What happens if a former spouse refuses to pay maintenance?

If you or your former spouse refuses to keep up with maintenance payments, a financial order may be issued by a court to the spouse refusing to pay.

The courts can issue enforced payments. One example of enforced payments is a requirement for the former spouse’s employer to automatically pay the other a monthly salary percentage.

If you are in a situation where a former spouse is refusing to keep paying maintenance, you should contact a solicitor for advice immediately. 

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Last updated July 2020

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