When a relationship/marriage breaks down, and you decide to get a divorce, one of the most challenging issues you will have to deal with are issues regarding your joint assets and finances. In fact, things get even more complicated when there are children involved. Now, the law relating to property or financial settlement in the UK during a divorce is quite complex, given that it is the court that largely decides on who gets what. Other than child maintenance, you can’t really tell how the judge will calculate the amount each one of you will get. In fact, you can’t tell what a fair settlement would be, given that each case, family, and circumstances tend to be very different. But, unlike criminal law, the ambiguity is very much deliberate and is, in fact, regarded as positive when it comes to family law.

The law in the UK is very general when it comes to the division of matrimonial properties as it only provides a mere list of what the court may take into account. In many cases, you find that many judges do rely on previous cases as legal precedents – showing how the court did apply the various factors in section 25 of the matrimonial act, thereby acting as general guidance. In this article, we will tell you everything you need to know about the division of matrimonial assets and how the court applies its wisdom on the matter, which will, in turn, help in making your divorce as fair and uncomplicated as possible. It’s essential to consult with a family law solicitor who can provide personalised advice and guide you through the legal proceedings, ensuring your rights and interests are protected.

Working out the matrimonial and non-matrimonial property

When you and your partner decide to get a divorce, and it gets to financial settlements, the first thing you will need to do is to establish what is the matrimonial property and what is not, and you will need to separate them. In simple terms, matrimonial assets are assets that both you and your spouse acquired during the marriage, whereas non-matrimonial assets are assets that each spouse acquired before getting married, or after the divorce. The matrimonial assets include things like the family home, savings, and pensions. One thing about matrimonial assets in England is that it doesn’t matter who put the money forward to accumulate these assets, when you are married, the assets that you acquire belong to both of you. So, if one spouse contributes to a pension scheme, the other partner is entitled to a part of it. Non-matrimonial assets could include things like family businesses, inheritance as well as property that was purchased before the marriage.

Why is separating the assets important?

During financial settlements in a divorce, both partners will need to divide the assets between them. For the settlement to be regarded as fair and reasonable, you have to separate the assets that can be divided from the ones that should not. For instance, it may not be fair to have the inheritance that you received 10 years before the marriage up for settlement. It won’t be fair also to have the spouse who gave up his or her career to raise the children left without a peny after years of marriage. So, that being said, it is important to identify some of the assets that would be divided so that it will be fair to both of you.

Now, you need to note one thing, any asset that was received during the marriage will be shared – and this includes even the inheritance from your family – if it was received while you were in the marriage. However, we must also note that the matrimonial assets will not always be divided 50/50, as it will depend on the financial situation of each spouse. Essentially, the law in the UK expects that each spouse will receive a fair amount that will meet all their financial needs after the marriage.

For the non-marital assets, they are a bit more complicated, but you can always have them removed from the financial settlement scheme. There are circumstances where this request might not be granted, if say, some of these assets were somehow used in the marriage. For instance, if you used an inheritance you received to purchase your current marital home, the home will still be considered a matrimonial asset and will be up for settlement. Also, if the matrimonial assets don’t sufficiently provide for your children and spouse, a judge may order the non-marital assets to be included in the settlement.

Who gets the house during the divorce?

The family home is always an asset that, in many cases, is always subjected to settlement. Now, since you are divorcing, of course, you can’t live together, which means one of you will have to move out. Whether you own the home or you are just renting, both spouses are entitled to the house, especially if you bought the home together. When it comes to the financial settlement, a few things could happen with the house; the spouse raising the children could take the home and continue raising them there until they are all grown, or, the partner who stays could agree to pay the partner who moves out a specific amount, which could be seen as buying his or her stake of the house. The partners could also decide to sell the property and then split the proceeds. Now, whichever agreement the divorcing spouses reach, it must be fair to both of them. Also, they could decide by themselves, but if they don’t reach an agreement on what should happen to the house, the court may assert itself on the issue. Here is what the court considers in deciding the partner that gets the house according to Section 25 of the Divorce Act:

• Any children under the age of 18. The court tends to give the house to the partner who chooses to live with the children. When determining who gets the house after the divorce, the court is obligated by law to regard all the circumstances of the case. And one of the considerations is the welfare of children under the age of 18. The main aim of the court in such cases is to achieve stability for these children, and one of the ways to do this is to ensure that they are living in stable accommodation or owned accommodation.  
• The court will also consider the standards of living both partners enjoyed during the marriage.
• The earning capacity of each partner, and the spouse who has been responsible for the financial expenses incurred on the home. The court will also consider each partner’s financial situation in the foreseeable future, including their abilities to cater to the financial needs that may arise then.  
• The court will also consider any mortgage payment and property taxes being paid on the house and the partner with the ability to keep these payments going on.
• The court will also consider any physical or mental disability of either party to the marriage
• The conduct of each party, especially on that the court regards as super crucial to disregard.
• It may also consider the ages of the partners, as well as the age they got married.

After the court balances all these factors, it can issue any of the following orders:

• It can order the couple to sell the house and then share the proceeds
• It can order the transfer of ownership from one party to the other.
• It can also postpone the sale of the home if there are children involved until they get to 18 years of age.

Do I have any home rights if the other party owns the family home?

Basically, when we talk of home rights, we are talking of the rights that permit both you and your spouse to keep living in your marital home no matter who bought it. So, even when it is your husband or wife who bought the house, you still have a right to continue living in it unless a court excludes you from being there. Other than this, here are other rights you can get:

• You can request the court to allow you to return to the home when you have moved out.
• You also get the right to register with the Land Registry, so that the property can’t be sold or transferred without your knowledge.
• You can make mortgage payments, especially when the other person stops making them.
• In case of any mortgage repossession, you will be notified, and you can also apply to be joined in such repossessions.

Now, we have to mention that these rights largely apply to married couples who live together in the UK. Also, these rights are only valid when the property is being used by both of you. So if the property in question has never been used as a marital home, these rights don’t extend to them.

The other thing that you should keep in mind is that the home rights only apply until the financial settlements are finalised, given that after this, the new order will immediately take effect. The rights will also come to an end once the Final Order is out, which is why it is crucial to reach an arrangement on the family home before the order is pronounced.    

What happens when there is a mortgage to be paid?

Likely, a matrimonial home may still have a mortgage by the time you are divorcing, and you might be wondering what will happen to the mortgage, or better yet, who will be responsible for the payments. Now, the simple answer on who is responsible is that it would depend on the one who is named on the mortgage.

If both of you are named on the mortgage, you both will definitely be responsible and liable for the payments. This is what can be referred to as joint or several liability. This, however, doesn’t mean that you are each liable for half the amount, what happens is that if one partner cannot be able to pay for the mortgage, then the partner, who can pay will be liable for the entire mortgage. So, when divorcing, it won’t matter who makes the payment, just that the payments are being made.

Now, if only one partner is named on the mortgage, then that person is solely responsible for continuing with the payments even after the divorce. However, as a legal owner, or someone whose home rights as been registered with the land registry, you can still make the payments.

What if you have been living in a rented house during the marriage?

Obviously, a rented house can’t be classified as a marital asset as both of you aren’t the legal owners, and so, it can’t be put for settlement during the divorce. However, what will happen during the divorce settlement is for you to decide who will keep the tenancy and continue staying in the rented property. Now, one thing that you should keep in mind is that whether the tenancy is listed under one of the partners or you are joint tenants where both of you have home rights, at least until the tenancy ends, no one can ask the other partner to leave, and both of you have the right to be there. But during a divorce, only one of you can keep the tenancy, given that one of the partners will have to move out. You will have to agree amongst yourselves who will keep the tenancy, where the one who agrees to move will need to transfer the tenancy responsibilities to the one who remains. But remember that you will have to involve the landlord in this. Also, you could request the landlord to cancel the existing tenancy agreement, and then create a new one in the name of the spouse who remains on the property.

But if you can’t agree on who should remain in the rented property, you can involve the court, which will consider everything on Section 25 and make a decision that is in the best interest of everyone.

What happens to property owned before marriage in the UK?

As we have already mentioned above, there is the matrimonial property and there is also non-matrimonial assets. Most likely, before one gets married, of course, he or she may have some properties or assets of their own, and many do wonder what will happen to such assets if they decide to keep them throughout the marriage. Now, we also did mention that there are some instances where the court might decide whether or not to exclude the non-matrimonial assets from the matrimonial pot. But two main aspects might inform the court on the decision to take. They include:

• Passage of time – when the marriage lasts for a very long time, it is very likely that the non-matrimonial assets may gradually start to be viewed as matrimonial property, especially if the properties are not kept separate and are mingled with your marital assets.
• The mingling of properties – with a long marriage, it is highly likely that the property you owned before the marriage will be mingled with your other assets over time. For instance, the property might generate income that you might start using in your marriage, or may start to use the home as a family vacation home. The more this happens, and the more time passes, the more likely these properties will eventually be added to the matrimonial pot.   

Can I protect the property I owned before marriage?

You can also protect your non-matrimonial assets from divorce settlements, in that when splitting your matrimonial assets, the assets you owned before the marriage won’t be included. What you need to do is to have your partner sign a prenuptial agreement. A prenup is basically a contract that’s entered into by a couple before they enter into the marriage that sets out how any assets they have will be divided in case they get divorced. Even though it’s not a guarantee, a prenup can protect assets, especially the ones you acquired before the marriage, from being included in the matrimonial pot. You can also decide to get a post-nuptial agreement to protect your assets after the divorce as well.

Now, onto whether the prenups are legally binding in the UK – the answer is yes, they are legally binding. Courts in the UK do recognise prenuptial agreements, however, they can veto any clause in the agreement that they deem discriminatory to the children. Also, there has always been a tendency where one partner forces the other to sign the contract even though they weren’t happy with its implications – the courts are always so wary of this issue as well. If there is sufficient evidence that there was coercion when signing the contract, or one spouse wasn’t of sound mind at the time of signing, then the judge may question the validity of the agreement.

That being said, we also have to mention that a prenup can be contested in court, but one will need to prove legitimate reasons for the judge to even consider invalidating the agreement. Some of these reasons include the following:

• Children being treated unfairly under the agreement.
• The agreement was signed when one of the spouses was mentally ill or was coerced into it.
• If one or both spouses didn’t understand the real implications of the agreement at the time of the signing. But one has to prove this beyond any reasonable doubt.

The other crucial thing about the prenup is that it must be signed at least 21 days before you get married, where both partners are supposed to disclose any debts or assets they have. Also, a prenuptial agreement with forged signatures or with altered text after it was signed will most certainly lead to its invalidation in court.    

My husband/wife had a house before we got married, can I claim it?

It depends! If it was protected with a prenup before you got married, having a claim to it could be a bit complex, especially if due process was followed, and you agreed to sign it willingly. But if there is no prenup in place, you might have a slight chance of having it included in the matrimonial pot. If you have been living in the home as a family home, you have even better chances of having the judge include it. And if it is a property that you don’t use, it can still be included, but there are specific circumstances that may have to warrant that. You can consult your divorce attorney on how you navigate through all this.  

Can I buy a house during the divorce?

During a divorce, the spouses tend to separate or live in separate houses. But one may wonder whether he or she can buy another house while the divorce process is still on. The simple answer is, yes, you can buy! But you need to keep one in mind though – that the court still classifies the time before it pronounces the final order as ‘during the marriage/civil partnership’. This means that if you buy a house during this time, it will be considered during financial settlement, and its value will be put into consideration when dividing matrimonial assets. In simple terms, your spouse can make a claim against the value of that home, which is why it is strongly advisable that you wait until the Final Order is pronounced by the court, which will mean that your divorce has been finalised and that your marriage is over before you buy a new home.    

What happens if I move out of our matrimonial home before we are divorced?

As per UK law, even when you move out, if you decide to come back, you will still enjoy the same home rights as you did before. However, looking at things practically, moving back in might be more difficult, as you may find the other partner did make some changes, like changing the locks and sorts. But this doesn’t take any of your home rights away. Now, if you decide to move out, after a fight with your spouse, or have gotten to a point where you can’t be in the same house as your partner, you must take with you everything you deem crucial to you. Also, you need to seek advice from an attorney about any other potential risks, if any, of moving out of your marital home, especially when it comes to the divorce.

Should I take any precautions to protect our joint finances during the divorce?

Here is the thing, when it comes to joint accounts, any partner can withdraw money from them. The problem is, when you are divorcing, your partner may likely take advantage by going ahead to withdraw some or all the money in that account, and even take out a loan using the same account, all without your consent, or agreement. What’s worse is that for any debt associated with that account, you will be held liable jointly. So, if you are worried that your spouse may do this while the divorce is still going on, you may want to take some precautions to prevent it from happening. The best decision, in this case, would be to close the account, and if there is any other form of joint borrowing or spending facility, you should have them closed as well. Now, the problem comes if the money in the joint accounts is what he or she relies upon to fund his or her daily living. If such an account is frozen, your partner may apply to the court to have an interim financial order given. Also, when it comes to your marital house, if your partner is the sole owner, of course, he or she can sell it whenever he or she wants. So, if you don’t want this to happen, you should also apply to the Land Registry to register an interest in the house. This way, your family home can’t be sold behind your back, or without your consent.

Can the reason for divorce affect how property is divided?

Rarely! The thing is, according to the law, divorce settlements should be fair to both parties and most importantly, the children’s needs and welfare must be given priority. Whatever led to the fallout and ultimate downfall of your marriage doesn’t change this at all. What this behaviour might affect is the decision on who takes care of the children, plus whether or not they will be allowed to maintain contact with them, especially if the children’s well-being is negatively affected. However, if the behaviour in question is extreme, like violence that did leave a lasting impact on the partner or one partner was deliberately trying to sabotage the financial situation of the other partner, the judge may consider such behaviour when dividing the assets.  

What happens to maintenance payments if the divorced spouse dies?

Other than the properties and other assets that get split in a divorce, we also have to look at the maintenance payments that the court may order the financially stable partner to make to the other partner who is not well off. The judge can order for these payments to be made for a specific amount of time, or until the ex-partner remarries. But you may wonder, what happens if, after the divorce, the ex-partner, who has been making the payments dies? Now, if this happens, of course, the payments will stop, but you want to be safe, financially, even after, so there are a few things that you can do to ensure your finances will be secure when this happens. One of the things is to take out a life insurance policy on your ex-spouse life. As part of the divorce settlement with your spouse, you can reach an agreement that your partner be making the premiums to this policy. If he or she is paying child support, you can have an arrangement where an insurance cover could cover these payments as well. Now, if something happens and your partner is no longer able to make the payments, maybe because he or she lost their job, or becomes bankrupt, you should also have a plan for it. So, you need to speak to your financial adviser on what steps you can take, and figure out how the insurance covers will be affected. The simplest thing you can do to avoid all these hurdles is to negotiate for a ‘clean break’ settlement, where you split the assets, and probably the partner makes a one-off lump sum payment as maintenance, and then both of you go your separate ways.

What happens to the divorce settlement when one of you remarries?

For starters, if you remarry without having reached a financial settlement with your ex-partner, you will lose any right to make a claim, but if your ex-partner remarries, you still can make a claim just as before – and vice versa. Also, if you had reached a clean break settlement, remarriage or cohabitation won’t affect anything. Now, other than remarriage, if you, as the recipient of the maintenance payments, start cohabiting with someone else, your former spouse may apply to the court to have the payment stopped or significantly reduced on the basis that there no longer exists any financial need to warrant the payments.

Also, if the financial situation of the partner to whom the maintenance payments are made improves, the other partner can apply to have the payments stopped or significantly reduced. 

Can I be forced to give up my marital home when divorcing?

Let’s get one thing straight here first, rarely will you ever find a court kicking one partner out of their marital home and leaving him or her homeless, as it always aims to reach a settlement that is fair to everyone involved. On the other hand, since you are divorcing, you can’t live in the same home, which makes this matter a bit complex. Now, when there are no children, whether or not you end up retaining the marital home will depend on how you divide the other matrimonial assets. The main point to note here is that nobody will force the other partner out of their home since regardless of the divorce process going on, both partners do retain their marital home rights. This is until both of you reach a fair settlement with regards to the house. Now, if you have enough money or assets, both of you could agree that one keeps the home, but the other receives a larger share of the other assets that corresponds to the value of the home, to enable him or her to get a new home. But if your assets are limited, you both could agree to sell the marital home and then split the proceeds, which each one of you will use to get a smaller and less expensive property. If there are kids, and you have agreed on a co-parenting plan, you will ensure that you will get houses of similar sizes to be able to accommodate them.    

What happens to the business assets during a divorce?

Family businesses are often seen as income-generating ventures that can maintain the families, and are, therefore, not assets that could be shared or sold. This is to tell you that the businesses might be treated a little bit differently from other assets. Now, what happens is that the partners could come to an agreement, like one partner retains the ownership of the business, but pay a maintenance fee from the business proceeds to the other partner. Or, one partner retains the business, but then pays the other partner a significant lump sum, based on the value of the business. One thing to keep in mind though is that it doesn’t matter who built the business to where it is, in the eyes of the law, the partner who has been running it, and the one who has been taking care of the home and the kids have equal rights to the business. And so, in most cases, you will find each partner can claim about half of the company’s value.       

What about matrimonial assets held in trusts, pensions, and insurance policies?

Depending on the circumstances, divorcing partners are expected to disclose any available trusts that they stand to benefit from in the future, or are already benefiting from. Even though trusts might be a bit complex, it is crucial to have this information available during divorce settlements. You may find that one of the spouses had previously put certain assets into a trust either right before he or she got married, or even during the marriage, and especially when the marriage started to break down. You may have a claim towards such assets, but for that claim to go through, your partner must have been listed as a beneficiary of the trust. And if not, if one can prove that the partner did put assets into a trust to hide them from divorce settlements, you can apply to a court to have these assets included in the divorce settlement.     

With regards to pensions, we can certainly classify them as a marital assets, just like your matrimonial home and other assets. The value of the pension will be taken into account during settlement and could result in the following solutions:

• The pension fund could be split into two, one for each spouse.
• They could also decide to offset the value of one partner’s fund by paying a lump sum or transferring other assets equivalent to this value to the other spouse.
• Or, when the pension is due to be paid, a proportion of it is paid to the other spouse.

For life insurance and endowment policies, there are also taken into account in a divorce settlement. Policies are different, as some can be cashed, and others have no value unless a specific event happens, like when the insured individual dies. Both of you should be able to agree on how you will handle any of these policies, if available, i.e, whether you will continue to pay premiums for some of them, or whether there will be a need to change the beneficiaries of the life insurance covers. Also, for joint covers, you may need to transfer them into one individual’s name, but you must remember that doing this might attract tax consequences, and could also result in a sharp fall in the expected value.

The tax factor in divorce settlements

In a divorce settlement, there is a lot of selling and transfer of assets, and as such, one may wonder about the tax treatments for all these. Now, ordinarily, if you sell or dispose of any assets, then you may need to pay capital gains tax on the gain in value. But if the asset was just transferred to the other spouse, then any tax liability might be rolled over to a later date. The relief will apply during the tax year in which the divorce took place, but after that, the transfer will be treated just like a sale and could be subjected to capital gains tax. A marital home that has been transferred to the other spouse is exempted from this tax.

With regards to maintenance payments, for spouses who are over 70 years old, only limited tax relief is available on the payments they make, but the younger folk doesn’t qualify for the relief. As for the income tax, since maintenance payments are made from net earnings, which have already been taxed, no more tax cut is made.   

The main rules of division of assets in a divorce

Fair division – the main aim during a divorce process is to ensure that everyone gets what he or she deserves in terms of assets and financial help. This is why the matrimonial assets must be divided fairly. We have to mention one thing though – fairness, in this case, doesn’t always mean equal division. What it means is that both parties must be left in a position of equal standing and that the role each partner played, whether the breadwinner or the homemaker, should be regarded as equal, and should not be the basis of financial settlement in the divorce.

The children’s welfare – when it comes to settlement during a divorce, the needs of the dependent children must be given first priority. So, in terms of accommodation, the court must ensure that the children and the parent who will be taking care of them are properly sheltered, most likely in the matrimonial home. In fact, if the situation allows, the court will ensure that both partners have accommodation, as that will facilitate a proper and efficient co-parenting relationship. That being said, in any divorce settlements, the children must always get their fair share as well.

Section 25 of the Divorce Act factors – according to the law, the court must consider all the circumstances in determining divorce cases. Now, there is a list of factors (discussed above) that they must consider in these cases, especially in the division of assets.

Future needs – the main aim of divorce settlements is to ensure that everyone involved gets a fair share of the matrimonial assets, which will ensure a smooth transition from the marriage life. In most cases, the court seeks to ensure that all the future financial needs of both parties and the children are considered and taken care of. So, if this means considering even the non-marital assets, it will consider them.

Final thought

When it comes to divorce settlements, we can comfortably say that it is not as straightforward as most people would like to think, nor is it a 50/50 split of the assets. There is a lot that needs to be considered, and the best way to ensure that you get a fair settlement is to hire a reputable and experienced family attorney to guide you through the entire process.