What Am I Entitled to on Divorce?

When facing divorce proceedings, whether as the one filing for divorce or the respondent, one of the most concerning issues will be the financial settlement. Divorce can be a costly process – understanding your rights and entitlements in advance can be helpful to ensure that you understand what you are entitled to and how best to achieve this. Parties with a clear idea of what they wish to achieve, how they wish to achieve it and whether it is realistic are more likely to reach their desired financial settlement. This can reduce stress and cost.

What is a divorce settlement?

A financial settlement within divorce proceedings setting out how assets and property is to be divided at the end of a marriage or civil partnership needs to be incorporated into an official legal financial order to protect both parties from any future claims they have against each other. It is imperative that it is properly drafted by an expert family lawyer also known as a family solicitor or divorce lawyer who specialises in divorce and finances. If you fail to do so financial claims may remain open resulting in a claim being made many years later.

What are matrimonial assets?

Matrimonial assets, also known as marital assets, are the financials assets that you and your spouse built up during the period of marriage. This is different to non-matrimonial assets (see below). Matrimonial assets can include the following when acquired during the marriage period: -

• Family home
• Other property and land
• Pensions
• Savings
• Cash in the bank
• Vehicles
• Furniture and appliances
• Stocks, Bonds, mutual funds, ISAs, crypto currency
• Businesses and farms

What are non-matrimonial assets?

Non-matrimonial assets are financial assets which were acquired before or after the period of marriage. Each of the examples above, if acquired outside of the marriage period, would be considered a non-matrimonial asset. This would therefore be treated differently to matrimonial assets.

Are non-matrimonial assets excluded from divorce settlements?

Not necessarily. A divorce settlement and division of assets will depend upon various specific circumstances and pre-arranged agreements that might be in place such as a pre-nuptial agreement.

Some non-matrimonial assets may be excluded from financial settlements but this is not always permitted. For example, a non-matrimonial asset such as an inheritance may be used during the period of marriage to buy a car, house or other asset.  The resulting asset would in all likelihood be classed as a matrimonial asset. It also often depends on the needs of the parties. In certain circumstances these may need to be met out of the non-matrimonial assets. This however is not always the case.

Are matrimonial assets split 50:50?

No, this is a misconception. It is generally a starting point that matrimonial assets will be split 50:50; however there is no rule that they must be.

The Court's aim is to divide assets in a way that is fair but this does not necessarily mean half and half. Numerous factors will be considered by the Court including: -

• The relative needs of each party – a spouse in an economically weaker situation may be judged as needing more as part of a fair settlement.
• The arrangement for the children – a spouse responsible for caring for children may be awarded more in order to ensure their wellbeing.
• Future earnings – a spouse who has sacrificed career progression and therefore future earnings, in order to care for the children, may be awarded more capital.

Matrimonial assets will be split equally to the best of the Court's ability; however, they will ultimately determine the division of the assets based on each person's respective circumstances.

What about debts?

Yes, debts will be taken into account.  If you and your spouse have accrued any debts during the term of your marriage these will also be taken into account as part of your divorce financial settlement.  This includes your mortgage, credit cards, overdrafts, loans and any other commitments.

How to work out your assets?

Before any discussions about financial settlements on divorce you must first work out exactly what your assets and liabilities are in the eyes of the Court.  As with everything relating to divorce proceedings we strongly recommend a consultation with a qualified family solicitor. Here are a few things to consider: -

• Property value: you will need to have some idea of the value of the family home and any additional properties owned.  Initially you could obtain a free marketing appraisal. Also be aware of your remaining mortgage balance and how much equity you have.
• Savings account: make sure all your savings/passbooks are up to date.
• Investments: if you have an investment portfolio you should seek the advice of an independent financial advisor to get a valuation of your investments.
• Pension: a value known as the cash equivalent transfer value (CEV/CETV) will need to be obtained for each pension from the pension company.
• Valuable items: make sure to get any expensive items you own valued.
• Total debts: you will need to know the balance on all debts including your credit cards, any car finance, overdrafts or other financial commitments.
• Mortgage capacity: this is important information so that proper consideration can be given to housing needs.

At a later date it may be necessary for experts to provide valuation reports, e.g., an actuary report in relation to pensions or a valuation report in relation to any business or farm. Experts should only be instructed once you have considered matters fully with a divorce solicitor so that the correct information is obtained otherwise you may waste money unnecessarily.

Do you legally have to declare all assets?

Yes.  It is mandatory that all assets are declared.  This includes both joint and sole assets.  Attempts to hide assets may result in a hefty Costs Order being made against you from the Court.

How to protect your assets during divorce?

How matrimonial assets are divided is ultimately the Court's decision; they will seek to do so in a way that is as fair and balanced as possible.

If you suspect that your spouse may be taking unethical steps to hide assets before divorce proceedings get underway, there are a number of ways you can tackle this. However, you should aways speak to a solicitor and get tailored legal advice and never make assumptions.

How do you make a settlement legally binding if you reach an agreement?

To make your financial agreement legally binding a financial Consent Order will need to be prepared by a solicitor and approved by a Court.  This is important because if your agreement is not legally binding the Court will not be able to enforce it should there be any issues later. You also run the risk that if your claims are left open against each other that your former spouse may come back years later and make a claim against you (potentially at a time when your assets have increased).  A financial Consent Order is a legal document.  This should always be prepared by a family lawyer.

What do I get in a divorce settlement?

What you will receive from a divorce settlement will be what you and your spouse, or a Court, determine is fair.  This may not necessarily be your ideal settlement; however, expectations should be managed. A good way to do this is to seek the advice of a divorce solicitor who can review your matrimonial assets and provide a realistic estimate as to what you can expect.

How is the family home divided in a divorce?

For many divorcing couples who own one, the family home is the biggest asset involved in any settlement. What happens to the family home can be one of the biggest causes of stress and friction so it is important to understand how a family home can be divided.

A separating couple will often consider one of the following options: -

• Sell and split: this involves both people moving out and selling the family home and paying off the mortgage.  This money, if sufficient, can then be split as required in order for each party to buy another home.
• Buy out and transfer: one spouse can arrange to buy the other out of the property at an amount to be agreed or as decided by the Court and for the property ownership to be transferred to that spouse thereby making them sole owner.  Normally, although not always, they solely take on the mortgage and arrange for that to be transferred into their sole name.
• Postponed sale (Mesher Order):  This involves one party continuing to live in the house and postponing the sale of the property until a later date, for example when the youngest child moves out. The sale value of the property will then be divided as agreed or as the Court sees fit.

What about the mortgage?

If you are divorcing you must ensure the mortgage is paid even if the family home is uninhabited until such time as an agreement has been reached in relation to the mortgage.  If you have a joint mortgage you will be jointly and severally liable on that.  Failure to pay the mortgage can result in a bad credit rating which may impact on your ability to buy a property in the future.

We strongly recommend seeking advice from a qualified mortgage advisor as well as a family solicitor before proceeding with any mortgage arrangements ahead of your divorce.

When does a financial settlement have to be reached in a divorce?

A divorce can be a lengthy process and there is no set point in this process when a financial settlement must be legally agreed. We strongly recommend however that a settlement is negotiated and agreed, if possible, prior to the divorce proceedings being concluded by way of a final order. There can be unintended consequences if the divorce is finalised prior to an order being made. If a financial order was not obtained prior to the final order being made in the divorce it is extremely important that a financial Consent Order is obtained prior to any remarriage.

How to stop a spouse taking money from a joint account?

It is not unheard of for a spouse to make large withdrawals from a joint account without your agreement ahead of a divorce. This may result in losing money. Be aware that you will also be liable for any debts that are run up in your joint account.

Precautions can be taken such as the closure of a joint account or cancellation of joint credit cards ahead of divorce; however, this can cause potential issues if your spouse requires money for living expenses. As all marriages will have different circumstances we recommend consulting with a divorce and family solicitor to discuss any concerns you might have. They will be able to deliver realistic options tailored to you.

Are business assets included in a divorce settlement?

Yes. Business assets, including farms, can be included in a financial settlement.  As with all matrimonial assets this will depend on your personal circumstances. If an agreement between you and your ex-spouse cannot be reached the Court will determine what they believe to be a fair split. Even if one of the partners has no involvement in the business directly, or did not build it up, they may still be entitled to some of its value. There will be numerous things to consider in each case: -

• If relevant, can the husband and wife continue to work alongside each other? If so, is a new business structure appropriate?
• Is one spouse able to raise funds to buy out the other's interest and thereby leave the remaining spouse to run the business unimpeded.
• Can claims be met out of non-matrimonial assets? 
• Is a sale or part sale the only way to meet the needs of a spouse?

Every business is unique and often imaginative ideas are required to enable constructive proposals to be put forward.

What is spousal maintenance?

Spousal maintenance is money paid by one spouse to their former spouse after a divorce has been finalised.  It is usually paid when one spouse does not have the means to support themselves financially outside of the marriage, a common instance is following a marriage when one person was the sole earner.

Spousal maintenance payments may be required depending on the following factors: -

• The ability of each person to support themselves and earn money.
• Age of divorcees.
• Living standards pre and post-divorce.
• Special needs or disabilities.
• Length of marriage.

In simple terms, if after a long marriage, one partner has not been working or earning for a number of years they will have more difficulty supporting themselves independently after the divorce. In this instance a divorce settlement may offer that person a percentage of their former spouse's income for a period of time after. Depending on their age and other assets this is often limited to allow them an opportunity to find employment, train etc. or for any pension share to come into payment. If spousal maintenance is not necessary a financial clean break order dismissing the claims will be required.

Child maintenance is dealt with separately.

The above is not to be regarded as advice since much will depend upon your personal circumstances. It is important that you seek the advice of a family solicitor to understand your position.

Sills & Betteridge LLP has one of the largest family law teams in the region with an office near you. We have experienced family lawyers in our award-winning family law team who specialise in divorce, financial claims, (including those involving pensions, businesses, farms, inherited assets, trusts, personal injury awards and investments), pre-nuptial agreements, post-nuptial agreements, civil partnership disputes, separation agreements, child arrangements (previously known as custody) and grandparent rights. Our dedicated divorce and family solicitors can deal with both complex and straight-forward divorce and financial settlements and have an outstanding success record. They are highly regarded by the industry and clients alike reaching the prestigious top tier status in the Legal 500. They will help you understand what you are entitled to and work hard on your behalf to achieve that.