Divorce is never easy, but it is important that it is fair to both parties. In resolving the financial aspects, this is often misunderstood. There are common misconceptions, many of which are outdated or have never been true. This article aims to outline what you are entitled to upon divorce, although it is crucial to consider that every situation is different.
Marriage, civil partnerships and ‘common law’ relationships
The division of assets on the breakdown of a marriage or civil partnership are dealt with in the same manner, however a ‘common law’ relationship is a term which is widely used, but is not legally recognised. This is a cohabiting relationship to which there is no automatic entitlement to the other party’s assets.
Topics to be answered in this article
What am I entitled to in a divorce?
The starting point for a financial settlement on divorce is often a 50/50 division of the matrimonial assets, depending on a number of other factors. There is no discrimination between whether the husband or wife put more financially into the relationship and looking after the family is considered an equal contribution. S25 of the Matrimonial Causes Act 1973 details the factors to be taken into consideration in deciding how assets are divided in a divorce, and typically the most important factors are the welfare of any children and the needs of the parties.
What are matrimonial assets?
These are assets that have been built up during the period of the marriage and have been acquired for the use and benefit of the family. In establishing the assets both parties have a duty of full and frank financial disclosure and must declare all assets and liabilities held. This is usually obtained by completion of Form E or Financial Statement, which is the document used by the Court and utilised in voluntary disclosure. The matrimonial assets generally consist of the following:
- Money, savings, and investments, which may be held in the parties’ joint or sole bank accounts, together with stocks, shares, bonds and mutual funds.
- Property, including the family home, and any property owned individually or in which one party has an interest. The family home is often the main asset and there are various options for resolution. These include sale of the property with division of the equity, the option to “buy out” the others interest or transfer of the property whilst registering a charge against the property, where one party remains in occupation, with the property to be sold at a later predetermined date, depending on the circumstances.
- Pensions & life insurance policies. Pensions can also form a significant asset and details of the pension value (CEV) will need to be obtained for all pensions held, which can take several months.
- Business interests, which can consist of shares in a limited company, interest in a partnership or a sole trader.
- Furniture and appliances within the family home and any other properties owned.
- Cars, motorbikes, caravans, bicycles.
- Debts, such as loans, credit cards, car finance.
What are non-matrimonial assets?
It may be suggested that assets acquired prior to or after the marriage solely by the husband or wife should not be considered as matrimonial assets. These will not be exempt from division, however in considering whether the asset should be shared, the length of the marriage is a factor and the longer the marriage the more likely it is to be shared. Consideration is given as to whether the asset has become co-mingled with matrimonial assets and, if the marital assets alone do not meet the party’s needs, then assets considered non-matrimonial can be taken into account.
How is a financial settlement decided?
It is always best to try and discuss matters where possible to establish whether agreement can be reached. Mediation is an option where both parties are willing to attend and would benefit from the guidance of an impartial third party in facilitating discussions.
It is advisable that legal advice is sought as to the possible outcomes and options available and how these may work in practice. Legal advice can be sought at any stage, including where an agreement has been reached in principle.
If there is no agreement, an application can be made to Court for financial remedy proceedings. This is typically a three-hearing staged process with the emphasis on negotiation to reach agreement at an early stage. Should negotiations be unsuccessful, a Final Hearing will be required, with the Court deciding the appropriate division of assets.
How do you make the settlement legally binding?
If agreement cannot be reached, the Court will determine the settlement terms at the Final Hearing with the terms drawn into a Court Order.
If agreement is reached through negotiations or Mediation, a Financial Consent Order is required to finalise the terms. This is sent to the Court for consideration and once approved, becomes legally binding upon pronouncement of Decree Absolute in the divorce. Decree Nisi must have been pronounced for the Financial Consent Order to be approved by the Court.
How can Goughs help?
It is important to remember that everyone’s situation is different and in determining the appropriate financial settlement your individual’s needs require careful consideration. We can provide advice and assistance together with representation, where required. We offer an initial free consultation and welcome the opportunity to assist and discuss your options. To get in touch, please complete the form below.