Divorce is a very difficult, emotional and uncertain time for all concerned. In many cases, one or both partners will worry about the financial impact of splitting up and wonder how they will cope without the financial support of their partner – particularly if one partner has historically provided the bulk of the family income. Though it is hoped that many marriages and civil partnerships can end amicably, and both parties enter a mutually agreeable separation and dividing of assets, this is often not the case.
The matter of the division of money and assets will then fall to the decision of the courts. Assets can be divided into ‘matrimonial assets’ and ‘non-matrimonial’ assets. Matrimonial assets are what you have acquired or built up during the term of your marriage, and can typically include property, pensions, savings and personal belongings. Non-matrimonial assets are financial assets that were acquired before the start of the marriage, covering essentially the same things as matrimonial assets. Though non-matrimonial assets are treated differently to marital assets, they aren’t necessarily excluded from the settlement.
The circumstance of each divorce case is different, so there are no definitive rules that can determine how assets are divided. There are, however, a couple of overriding principles that the court will consider when making its decision. An equal split is often the starting point in any divorce, as is the principal of fairness – though what is deemed ‘fair’ does not necessarily mean an equal division and will be different from case to case.
There are also a number of factors which will play a significant part in any decision on the division of assets:
- The primary consideration should be the welfare of any children under the age of 18, and how much financial support one partner gives to another to maintain their welfare.
- The standard of living enjoyed by the family before the breakdown of the marriage.
- The income, earning capacity, property and other financial resources each partner has at the time of the divorce, or is likely to have in the foreseeable future.
- The financial needs, obligations and responsibilities which each of the parties has or is likely to have in the foreseeable future.
- The age of each person.
- The duration of the marriage.
- Physical or mental disabilities of either person.
- The contributions each person has made and/or is likely to make to the welfare of the family in the foreseeable future, including contributions of looking after the home and/or caring for the family.
- The conduct of each of the parties during the marriage – if that conduct is (in the opinion of the court) such that it should be regarded in the divorce settlement.
Ongoing maintenance
Few marriages end with both parties earning exactly the same amount, and sharing all household duties, including childcare, absolutely equally. The view that is generally taken is that all input into family life has equal merit, whether that be financial or other contributions.
It is understandable, therefore, that the court sometimes tells the person with the higher income to make regular maintenance payments to help with the other person’s living costs. This is called a ‘maintenance order’, and the payments can be set for a limited period of time, or until one partner dies, remarries or enters into a new civil partnership.
It is usually only paid where one partner can’t support themselves financially without it, and the amount a spouse receives would depend on how much they need to live on, how much income they already have, and how much they could potentially earn in the future.
If the marriage or civil partnership is short – typically, less than five years – it might not be paid at all or paid only for a short period through what’s called a ‘term order’. However, where a couple has been together for a long time, or where an ex-partner is unable to work for a variety of reasons, it can be paid for life.
Family home
Upmost in many divorcing couple’s minds is the question: who keeps the family home?
A family home is usually the most valuable asset within a marriage. So, it’s not surprising that people have a lot of questions regarding the division of their house.
There are several ways a property can be separated, these include:
- Sell and share profits – Both parties move out of the home and split the money from the sale equally to buy a new property.
- Buy out – One spouse buys the other out of the property and becomes the sole owner.
- Transfer of value – One party transfers some of the value of the property to the other person. The spouse leaving the home would not own any of the property but would keep a stake in the home value. If the house is sold, they would then receive their percentage cut.
- Unchanged ownership – One party will continue to live in the house, but ownership of the property remains unchanged.
Clean breaks
Under certain circumstances, it might make sense for both parties to arrange a ‘clean break’ when getting divorced. This means ending all financial ties between both parties as soon as is reasonable after the divorce or dissolution. Where there is a clean break, there will be no spousal maintenance paid in the future. It should be noted that, however amicable and reasonable this may seem at the time, the only way you can guarantee that one party does not try to make financial claims against the other in the future is to get a court order, which must set out the financial arrangements stating that there is to be a clean break.
Here at Hutchinson Thomas, our aim is to achieve a timely and cost-effective outcome that is sympathetic to each individual client’s needs. We have considerable experience and well-tested expertise in handling ‘high value’ and financially complicated divorces, often involving business assets and inherited wealth.
If your relationship has broken down and you need help and advice on reaching a settlement, contact Robert Williams, Senior Partner at Hutchinson Thomas on robert.williams@hutchinsonthomas.com or call 01639 640 152.