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Asset division is a key part of the divorce process. Both parties are encouraged to treat proceedings amicably, with their shared possessions being split fairly. However, this isn’t always achievable.
Under the Matrimonial Causes Act, asset division covers a variety of aspects such as property, savings, pensions, content/furniture and maintenance. If an agreement can’t be achieved amicably between the couple, a court application may need to be filed for the court to determine how the assets should be divided. Here, we cover how assets are commonly divided, including the processes that are usually followed.
How to split assets in a divorce
It is encouraged that parties come to an agreement regarding the division of finances between themselves, this can be done independently, via solicitors or through mediation. The agreement reached should then be drafted into a Consent Order and sealed by the court so that it is made legally binding, thus preventing your ex-spouse from making any future financial claims against you. This is known as a clean break. If the parties cannot agree matters, an application for a Financial Order will need to be made to the court, and the court will determine how the assets should be divided.
Splitting assets in a divorce
Financial disclosure
In the first instance, it is advised that parties undergo financial disclosure. This is the process whereby the couple disclose to each other evidence of their financial positions. Financial disclosure is often completed by the couple completing their own separate Form E Financial Statements which detail each party’s income, savings, debts, pensions and equity in any properties. By entering into financial disclosure, it enables both parties to understand each other’s financial position and decide what a fair settlement may be. Failing to engage in financial disclosure in an open and honest manner can result in consequences at the discretion of the court.
Read more: Family Law Guide To Finances on Divorce & Civil Partnership
Court proceedings
If the parties cannot agree a financial settlement, either one of them can file an application with the court. Both parties will be ordered to complete the Form E Financial Statement and ordered to provide full financial disclosure to the court and to each other.
In determining how the assets should be divided the court will consider, a variety of factors, which fall under section 25 of the Matrimonial Causes Act 1973, those being:
- the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future, including in the case of earning capacity any increase in that capacity which it would in the opinion of the court be reasonable to expect a party to the marriage to take steps to acquire;
- the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;
- the standard of living enjoyed by the family before the breakdown of the marriage;
- the age of each party to the marriage and the duration of the marriage;
- any physical or mental disability of either of the parties to the marriage;
- the contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family;
- the conduct of each of the parties, if that conduct is such that it would in the opinion of the court be inequitable to disregard it;
- in the case of proceedings for divorce or nullity of marriage, the value to each of the parties to the marriage of any benefit which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.
The court will also consider the length of the marriage and it is also worth noting that any pre-marital cohabitation, provided that it is seamless cohabitation, is included in the length of the marriage.
Pensions
When considering the division of the assets, the court has the power to share pensions. Pensions can often be one of the most valuable assets in the matrimonial pot and where the combined value of both parties’ pensions are more than £100,000.00, it is advisable to obtain the assistance of a pension expert who will assist in calculating how to fairly share pensions.
Read more about how we can assist you here: Divorce and Pensions
Questions about dividing assets? Trust our expert solicitors
It can be overwhelming to know where to start, but our solicitors can expertly guide you through the process, providing you with independent legal advice.
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FAQs about asset division
How are houses divided in a divorce?
The family home can be is one of the most substantial assets to consider while dividing assets. There are many options available to couples when dividing the equity. As such, we’ve written an in-depth guide covering exactly what happens to the family home during a divorce: What Happens to the Family Home When You Get Divorced?
What about pets?
Whether it’s your cat, dog, gerbils, or hamsters, pets too are treated as a type of asset throughout the divorce process. We’ve also written a piece covering that process, too: Who gets the dog when we divorce?
Do I have to disclose my new partner’s assets?
If you have a new partner, and you are living with them, the courts will order you, as part of the financial disclosure process, to disclose what you know about their assets and income.
Can you divorce without splitting assets?
It is advisable that even if you do not have any ‘joint’ assets with your spouse, that you seek to obtain clean break order to ensure that the financial ties between both parties have been severed.
