Divorce/dissolution settlements—how to divide assets and understanding who gets what

Last updated on September 29th, 2022 at 08:28 pm

One of the biggest concerns couples have when they divorce or end a civil partnership is where they will live and who will get what.

In this guide, we explain some of the basic rules around dividing assets as part of a divorce settlement. (Note: These are relevant to England and Wales only. Scotland and Northern Ireland have different rules.)

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What is a divorce/dissolution settlement?
What are assets?
Who gets what in a divorce/dissolution?
What is a fair settlement?
What should I ask for?
What is the process of getting a divorce/dissolution settlement?
Can you divorce before getting a financial settlement?
How long does a divorce/dissolution settlement take?
How does cohabitation affect my divorce/dissolution settlement?
How do prenuptial agreements affect divorce/dissolution settlements?
Can you appeal a divorce/dissolution settlement?
Do you have to pay taxes on a divorce/dissolution settlement?

What is a divorce/dissolution settlement?

If you and your partner divorce or end your civil partnership, you need to agree how you’ll approach the division of your home, money and other assets.

You must also decide how you’ll repay any debts and organise any child maintenance or spousal maintenance payments.

If you’re unable to agree, you can apply to the family court for a ‘financial order’. This is where a judge makes an order that determines how your assets will be split (see ‘Who gets what in a divorce/dissolution?’ below).

Although you might come to an amicable agreement between yourselves, it won’t be legally binding until you have it approved by the court. Family solicitors can help you with this.

As your ex-partner might be able to make financial claims against you (and vice versa) at a later date, it’s important to have a legal order setting out exactly what you and they are entitled to.

What are assets?

In a divorce/dissolution settlement, your ‘assets’ might include:

the family home and any other property you both own
pensions
savings and investments
cash
vehicles
furniture and appliances
any businesses you both own

(Note: This is not an exhaustive list.)

A court can draw a distinction between ‘matrimonial assets’ and ‘non-matrimonial assets’.

Matrimonial assets

These are any assets you and your partner acquired during your marriage or civil partnership and/or from when you started living together. They also include any debts you accrued in that time, such as:

mortgages
credit cards
loans
overdrafts

When dividing these assets, the court will aim to be fair and equal, although this doesn’t always mean 50/50 (see ‘What is a fair divorce/dissolution settlement?’ below).

Non-matrimonial assets

These are any assets you and your partner acquired outside your cohabitation/marriage or civil partnership. This might be an inheritance, or a business you owned before you were together.

Non-matrimonial assets aren’t always subject to the same sharing principle as matrimonial assets, and the court can exclude them from a divorce settlement if it deems this to be fair. However, non-matrimonial assets can be used to help meet the needs of the other partner if necessary.

Keep in mind that if you used a non-matrimonial asset to buy a matrimonial asset (for example, buying the family home with inheritance money), this may then become entangled within the matrimonial assets and form part of the matrimonial pot.

The longer you have been married/in a civil partnership, and how long ago you obtained the asset, can also affect whether the court will consider disregarding an asset which a party asserts to be non-matrimonial.

Who gets what in a divorce/dissolution?

If you go to court, one of the judge’s main concerns is ensuring ‘needs’ are met. This means making sure you and your partner both have what you need to pay for housing and other essentials, before the division of assets.

If you have children, the judge will always prioritise their needs—where they live, what child maintenance is paid etc.—over yours.

The judge will consider a number of factors when determining how the assets should be divided. These include:

how long you’ve been married or in a civil partnership
each party’s:
- assets
- age
- earning capacity
- living expenses and standard of living
- significant contributions to the marriage or civil partnership
- disability (if this applies)
- conduct (in some cases)
- liabilities
- children

What is a fair settlement?

A court will aim to be fair and equal when dividing your matrimonial assets. However, ‘equal’ doesn’t necessarily mean half and half. Although the judge will use a 50/50 split as a starting point, there’s no rule to say they must enforce this.

Instead, they will make their decision based on your and your partner’s circumstances. They might award you a bigger share if you:

are financially less well-off than your partner, and need more money to pay for housing and other essentials
have primary care of your children and are responsible for their day-to-day care and upkeep
have a lesser earning capacity because, for example, you gave up progression in your career and the future earnings that would have resulted

When it makes its decision, the court will also take into account the length of the marriage or civil partnership.

How length of marriage/civil partnership is considered

Generally, the longer your marriage/civil partnership, the likelier it is that the judge divides assets equally. However, that is not always 50/50. The court will look at equalising both parties’ financial positions to meet their needs.

Judges also take into account how long you lived together before you married and include this in the length of marriage. They call this a period of “seamless cohabitation”.

Long marriages/civil partnerships

50/50 splits are common for couples considered to have had a long marriage/civil partnership, regardless of who has contributed most of the wealth. A marriage/civil partnership in excess of 15 years or more is likely to be deemed to be a long marriage/civil partnership.

Short marriages/civil partnerships

A short marriage/civil partnership may be considered one that lasted for anywhere up to five years.

If you and your partner came to the marriage/civil partnership with similar wealth and have similar incomes now, the court could:

aim to restore both of you to the financial positions you held before you married/in a civil partnership
rule that you both keep your respective assets

In all cases, where appropriate, the court will try to achieve a ‘clean break settlement’—where you and your partner are removed from having any financial commitments towards the other.

What should I ask for?

Unfortunately, in a divorce/dissolution settlement what you ask for may not be what you get, so it pays to be realistic. It’s for you and your partner to decide on a fair split. If your negotiations are unsuccessful, you’ll have to go to court.

If you and your partner have differences over how best to divide your assets, it might be worth hiring a solicitor to negotiate a settlement on your behalf.

What is the process of getting a divorce/dissolution settlement?

This depends on whether you and your partner are able to come to an agreement (with or without the help of a solicitor) or whether you need to go to court.

If you agree

The important point here is understanding that any agreement between you and your partner won’t be legally binding until a court ratifies it.

To do this, you need to hire a solicitor to draft a ‘consent order’—a legal document that sets out what you and your partner have agreed to. It might also include arrangements for spousal maintenance and/or child maintenance.

If the consent order is considered fair, a judge will approve it, ordinarily without you having to go to court. If they deem it unfair, they could refuse to make the order, so negotiations continue.

If you can’t agree

Before you go ahead with any legal proceedings, you must normally first attend a meeting about mediation and coming to an agreement yourselves. (There are exceptional circumstances to this, such as divorces as a result of domestic abuse.)

If mediation doesn’t work, you can apply to the court for a ‘financial order’, a legal order that sets out how your assets will be split. Currently, the court fee for the application costs £275.

You may have to attend a number of court hearings, and the process can take 6–12 months.

Can you divorce/dissolve a civil partnership before getting a financial settlement?

You can agree a financial settlement before or after your divorce has been finalised. A consent order cannot be made legally binding until your divorce/dissolution is at a certain stage.

If you’re unable to agree on the division of your assets and you want a judge to determine this for you, you can’t make an application for the court to consider financial matters until you’ve sent it your divorce/dissolution application. Ideally, your settlement should be taking place at the same time divorce/dissolution proceedings are underway.

It’s also advisable to sort out your financial settlement before you or your partner marry enter a civil partnership/ again as remarriage/civil partnership can have implications on the claims you can make.

How long does a divorce/dissolution settlement take?

Typically, a divorce/dissolution settlement will take 9–12 months.

How does cohabitation affect my divorce/dissolution settlement?

If you’re living with, or considering moving in with, a new partner after your divorce/dissolution, it’s important to know that this cohabitation could affect the outcome of your divorce/dissolution settlement.

Judges can see cohabitation as demonstrating that you have a stable financial future, even if this might not be the case. They can take this into account when deciding how to divide assets and determining what, if any, maintenance payments you’re entitled to.

How do prenuptial agreements affect divorce/dissolution settlements?

If you and your partner signed a prenuptial agreement before you married/entered into a civil partnership, this should have detailed your financial circumstances and what would happen with your money and other assets if you were to seek a divorce/dissolution.

Before you enter into discussions over a divorce settlement, you must check your prenuptial agreement to confirm exactly what you decided upon.

If you need help in this regard, we advise that you consult a qualified family solicitor.

Read more about prenuptial agreements on this page

Can you appeal a divorce/dissolution settlement?

Technically, yes. However, as this is a complex area you would need to seek legal advice as to the merits of making an appeal.

Do you have to pay taxes on a divorce/dissolution settlement?

It depends. You don’t pay capital gains tax if you transfer assets to your husband, wife or civil partner while married or in a civil partnership, but you might have to pay tax if you transfer the assets after your relationship ends.

Typically, you wouldn’t pay tax if you transferred or sold your main home.

You should seek independent financial advice in respect of tax implications.