How are finances split in a divorce? - HRJ Foreman Laws Solicitors

05 Aug How are finances split in a divorce?

Posted at 00:00h in Family Law by martin@beacondigital.co.uk

The financial impacts of a divorce are often one of the biggest concerns. It is natural to worry about how you will manage the financial needs of the children and the home. There is often uncertainty about how assets will be divided, and if there be enough money to meet the day-to-day needs.

Katharine Scoot, Family Solicitor and partner at HRJ Foreman Laws Solicitors discusses some of the key things you need to know about managing finances during a divorce.

Obtaining a Financial Consent Order

Let’s start with the end goal which is to reach an agreement about the division of finances. When this is achieved it’s important to make it legally binding with a Financial Consent Order. The settlement will consider all the assets and debts of the parties. Pensions are often one of the largest, yet most overlooked, assets – their valuation and how they should be divided often require specialist advice. Businesses, trusts, and inherited wealth are also included.

Without a Consent Order approved by the court, an ex-partner could potentially make a financial claim against you in the future, even years after your divorce is finalised. This is why obtaining a Financial Consent Order is the only way to ensure a clean break and provide true peace of mind about your future.

Full and frank financial disclosure

Before you negotiate a settlement you need to have a clear understanding of each other’s finances. This means disclosing everything – assets (property, pensions, savings, investments, businesses, vehicles, inheritances) and liabilities (mortgages, loans, credit card debts). Failure to provide full disclosure can lead to significant delays, increased legal costs, and potentially penalties from the court.

Are pre-marital assets included in a divorce settlement?

If there isn’t a pre-nuptial or post-nuptial agreement in place, then yes, they can be. While assets you brought into the marriage are initially considered separate, the court will consider all the assets and debts of both parties, regardless of when they were acquired. Whether a pre-marital asset is included in a divorce settlement often depends on:

How the asset has been used – If a pre-marital asset has been “mingled” with matrimonial assets (e.g., a pre-marital savings account was used for a house deposit or to fund family life), it can be treated as part of the total matrimonial pot.
The needs of the parties – The court’s priority is ensuring the financial needs of each party and any children are met. If the total matrimonial assets are not sufficient to achieve this, the court can use pre-marital assets to make a fair provision.

Does everything get split 50/50 in a divorce?

While the starting point for asset division may be 50/50, the court will always seek to find a ‘fair’ outcome, for all parties. A range of factors are considered, including:

- The needs of any children.
- The income, earning capacity, property, and financial resources of each party.
- The financial needs, obligations, and responsibilities each party has or is likely to have.
- The standard of living enjoyed during the marriage.
- The age of each party and the duration of the marriage.
- Any physical or mental disability.
- Contributions made by each party (financial or non-financial, e.g. childcare).
- The conduct of each party (only in very exceptional circumstances).

What is spousal maintenance vs. child maintenance?

Child Maintenance is a regular payment from one parent to the other for a child’s everyday living costs and is often calculated by the Child Maintenance Service (CMS).

Spousal Maintenance is paid by one ex-spouse to the other if there is a significant difference in income and one party cannot meet their reasonable needs. Unlike child maintenance, there is no set formula for its calculation. Instead, a judge looks at the overall circumstances of the case to decide how much should be paid and for how long. Payments are usually for a defined period or until a trigger event, such as a new marriage.

When making a decision, a judge will consider a wide range of factors. These include each person’s needs and financial resources, their income and earning potential, along with the standard of living they enjoyed during the marriage. A judge also considers the age and length of the marriage, the contributions each person made (both financial and non-financial like caring for children), and the welfare of any children under 18. The behaviour of each party may also be considered, but this is only in very rare and exceptional cases where it would be unfair to ignore it.

Reaching an agreement through negotiation or through the Court

There are several ways to agree on financial matters, with the aim of resolving things as amicably and efficiently as possible. The first route is to seek an agreement through negotiations outside the court, which can take several forms.

You and your ex-partner can negotiate through your solicitors, who will provide professional advice and work to find a fair solution on your behalf.

Another option is mediation, where a neutral third party helps to facilitate discussions between you, enabling you to work together to reach an agreement.

A third choice is collaborative law, which involves a series of face-to-face meetings with both you and your ex-partner, all committed to resolving the issues without going to court.

If an agreement cannot be reached through any of these methods, the court can make a final financial order. However, this is always considered a last resort due to the significant time, cost, and stress involved, and because it takes the final decision out of your hands.

Work with an experienced family law solicitor

Consulting a specialist solicitor is more than just a formality, it’s about protecting the long-term interests of you and your family. Our experienced family law solicitors will ensure the terms are fair, that all legal requirements are met, and that your Financial Consent agreement is properly drafted and approved by the court.