Dividing assets in a divorce

Dividing assets in a divorce: A comprehensive guide

One of the most common concerns that people have when getting divorced is what happens to any assets, they hold whether shared or not. Separation and divorce can be very distressing, particularly when it comes to considering how you should separate your finances.  

The current law as to what factors are taken into account in determining how assets should be divided is governed by the Matrimonial Causes Act 1973, which is old legislation. The statute sets out the types of orders that can be made and the factors that should be considered when deciding how assets are to be divided.

Understanding both your financial position and your ex-partner’s will provide clarity and help you understand each other’s commitments. If you are transparent with your finances, it can be easier to come to a conclusion which suits both of you.

Divorce and asset division

Contrary to popular belief, there is no formula for working out how assets should be divided in a divorce. The current law in England and Wales is discretionary meaning the court can take both parties needs into account and vary the division of assets based on this. Every case is different. In order to achieve a fair outcome, all factors and circumstances need to be taken into account.

Assets are not always split 50/50 in the UK. There are several variables that can affect what a divorce settlement looks like. When dividing the matrimonial assets, the aim is to achieve fairness. Every divorce case is different and, based on what is fair, it may be possible that you or your ex-partner may be entitled to more than the other.

The Court must apply the statutory criteria set out in Section 25 of the Matrimonial Causes Act 1973 in order to arrive at a fair outcome. These are set out below.

1. 1. 1. Dependent children
      2. The financial needs and responsibility of both parties
      3. The standard of living before the marriage broke down
      4. The age of yourself and your partner
      5. The duration of the marriage, including any time spent living together before the marriage
      6. Any disabilities or health concerns that impact your day-to-day life
      7. The role each party played in the marriage, such as primary caregiver, and breadwinner/ primary wage earner

When applying these criteria, the Court looks at what the needs of the parties are in terms of housing, income, and pension, and also the needs of any dependent children. This means that the split of capital may not be an equal one if the needs of one party are greater than the other, taking into account all the circumstances of your case, or if the Court accepts that certain assets should be treated differently and not automatically split if the needs of the parties are met.

What is matrimonial asset and non-matrimonial asset, by definition?

A matrimonial asset is an asset with any financial value that either you or your spouse (or both of you together) have accrued or obtained during your marriage.

Non-matrimonial assets refer to anything that was accrued or obtained outside of the marriage – e.g.: the period prior to the marriage and/or the time that has passed since separation. Non-matrimonial assets may include gifts or inherited assets. However, it is possible for non-matrimonial assets to be considered and deemed as a matrimonial asset and pre-nuptial agreements are important to consider.