One of the key elements of any divorce or civil partnership dissolution is how the assets will be divided, or simply put, “who gets what?”
It may sound like it should have a straightforward answer, but it rarely does, even if both partners agree about the separation.
Many people assume that dividing assets is a simple process of splitting everything down the middle. Others assume that if an asset is in their sole name, or they owned it before the marriage, it will automatically remain theirs.
In reality, the answer usually sits somewhere between those two positions.
The family courts in England and Wales look at the circumstances of each case before deciding what would be fair. That means understanding what assets exist, where they came from and, perhaps most importantly, what each person will need moving forward.
Our recent blogs have looked at specific areas such as inherited property in divorce, pension sharing orders, and the impact of important cases including Potanina v Potanin and Standish v Standish.
In this article, our family law team brings those principles together to explain how financial settlements are approached as a whole.
Is There an Automatic 50/50 Split?
One of the biggest misconceptions surrounding divorce is that all assets are always divided equally.
Although an equal division is often the starting point, it is not a rule that applies in every case.
The court’s aim is to reach a fair outcome, and in order to do that, it considers a number of factors, including:
- the length of the marriage
- each person’s income and earning capacity
- the financial needs of both parties
- the standard of living enjoyed during the marriage
- the welfare of any children
- contributions made by each spouse, both financial and non-financial
Every family is different, which is why financial settlements are never decided by a simple ‘one-size-fits-all’ formula.
What Assets Are Considered in a Divorce?
When reaching a financial settlement, the court will consider the couple’s overall financial position and their responsibilities to any dependants.
This can include:
- the family home
- savings and investments
- pensions
- businesses and business interests
- rental properties
- shares
- valuable possessions
- debts and liabilities
Some assets may clearly have been built up during the marriage. Others may have existed long before the relationship began.
That distinction can sometimes become important, but it is only part of the overall picture.
Matrimonial and Non-Matrimonial Assets
Recent court decisions have helped clarify the distinction between assets created during the marriage and those originating elsewhere.
Assets accumulated together during the marriage are generally regarded as matrimonial assets and are usually available for sharing.
Assets owned before the marriage, or received through inheritance or gifts from family members, may be considered non-matrimonial assets.
However, that does not necessarily mean they are completely protected.
As we discussed in our article, Inherited Property in Divorce: When Does It Stop Being Yours?, inherited assets can become part of the financial settlement, depending on how they were treated during the marriage and whether they are needed to achieve a fair outcome.
Why Standish v Standish Matters
The recent Supreme Court decision in Standish v Standish has provided welcome clarity for both families and family lawyers.
The case reinforced that simply transferring ownership of an asset does not automatically mean it becomes a matrimonial asset.
Instead, the court will look carefully at where the asset originally came from and how it was used throughout the marriage.
That approach provides greater certainty, particularly where significant pre-marital wealth or inherited assets are involved, but it does not remove the court’s discretion to reach a fair outcome based on the individual circumstances of each case.
Don’t Forget About Your Pension
Pensions are frequently overlooked during divorce, despite often being among the most valuable assets a couple owns.
Unlike savings or property, they are not immediately visible, which can make them easy to ignore during negotiations.
As we detailed in our recent guide, How Are Pensions Split on Divorce? Pension Sharing Orders Explained, there are several ways pensions can be dealt with during a financial settlement, depending on the circumstances of the case.
Failing to properly consider pensions can significantly impact long-term financial security, particularly after retirement.
A Financial Settlement Does More Than Divide Assets
A financial settlement is not simply about deciding who keeps what today. It also provides certainty for the future, warding against any further claims.
Without a legally binding financial order approved by the court, financial claims between former spouses can remain open long after the divorce itself has been finalised.
That issue was highlighted by the well-known case of Potanina v Potanin, which demonstrated how financial disputes can continue years after a relationship has ended if matters have not been properly resolved.
Bringing financial claims to a formal conclusion helps both parties move forward with greater certainty and reduces the risk of future disputes.
Getting Advice Early Makes a Difference
No two financial settlements are ever the same, so each should be approached differently.
The value of the assets, the length of the marriage, whether children are involved, future earning capacity and individual financial needs can all influence the outcome.
Obtaining advice at an early stage helps you understand where you stand, identify potential issues before they become disputes and work towards a settlement that reflects your own circumstances.
Speak to Our Family Law Solicitors
Whether your finances are relatively straightforward or involve pensions, inherited wealth, business interests or significant assets, obtaining clear legal advice at an early stage can make the process much easier to manage.
Our family law solicitors are accredited members of Resolution and are committed to the Resolution Code of Practice, promoting a constructive approach to family issues that considers the needs of the whole family. Whatever your circumstances, our team is here to guide you through the process with clarity, sensitivity, and practical advice. Get in touch with us today for a confidential discussion about your circumstances.
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