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

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 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?’ 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 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 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, 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?

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:

These include:

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 is considered

Generally, the longer your marriage, 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

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

Short marriages

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

If you and your partner came to the marriage 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
  • 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 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 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 £255.

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

Can you divorce 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 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 petition. Ideally, your settlement should be taking place at the same time divorce proceedings are underway.

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

How long does a divorce settlement take?

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

Do grounds for divorce—such as adultery—affect a settlement?

When coming to an agreement with your partner over your divorce settlement, you need to set aside any issues regarding why you are divorcing and attempt to make a fair and reasonable decision based on factors such as how long you’ve been married, what’s best for your children and so on.

If you end up taking your case to court, the judge is unlikely to consider your reasons for obtaining a divorce—whether it’s adultery or any other grounds—when determining how to divide assets between you and your partner, unless the alleged conduct is deemed to be serious.

How does cohabitation affect my divorce settlement?

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

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

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 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 settlement?

It depends. You don’t pay capital gains tax if you transfer assets to your husband, wife or civil partner while married, 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.

Related content

Who gets the house in a divorce?—learn more about what happens to property when couples divorce

Tax and divorce—advice on tax issues when transferring assets

Divorce procedure—understand the different stages of divorce proceedings

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