How are assets divided on divorce?

The law relating to the division of assets in divorce is very complex. One of the main reasons for this is that a Judge has a great deal of flexibility and discretion to make whatever order is deemed to be a fair divorce settlement on the particular facts of each case.

The law merely provides a list of what the Judge must consider when deciding the division of assets on divorce. This list is contained in Section 25 of the Matrimonial Causes Act 1973 (or “s25 MCA 1973” for short). That is why, even if you provide the identical set of facts to 3 different Judges, each of them may order a different asset division and divorce settlement outcome. However, broadly the outcomes should be within an approximate range and not completely different from a similar case.

Even if you are involved in your own divorce settlement negotiations (rather than going through Court), the Section 25 factors still matter, as the Judge has to approve your final divorce settlement (even if it was negotiated between yourselves).

A Judge will not approve a divorce settlement if they do not think it is fair. And, when deciding whether it’s fair or not they must consult… the Section 25 factors.

The Court’s first consideration is the welfare of any children involved. Alongside that, when determining an appropriate division of resources, a Judge must consider the following factors:

• each person’s income, earning capacity, property, and other financial resources, available now or in the foreseeable future, including earning capacity;
• each person’s financial needs, obligations, and responsibilities relevant now or in the foreseeable future; 
• the standard of living enjoyed by the family before the breakdown of the marriage; 
• each person’s age and the length of the marriage; 
• any physical or mental disability; 
• contributions made or likely in the foreseeable future to make to the welfare of the family, including any non-economic contribution; 
• the conduct of each of the parties, if that conduct is such that it would in the opinion of the court be inequitable to disregard it (although it is rare for conduct to be taken into account and the reason for the marriage or civil partnership breakdown is very unlikely to be a conduct issue for the purposes of a financial application), and; 
• the value of each of the parties to the marriage of any benefit which that party will lose the chance of acquiring.

In determining how to apply these factors, a Judge will have fairness as its overarching objective, and will apply the Section 25 factors according to the principles of “needs”, “sharing” and “compensation”.  It is likely that fairness will be seen to suggest an equal division of all the matrimonial assets with first consideration going to any minor children and their carer. However, there may be a departure from an equal division if it is necessary to do so in exceptional circumstances, for example:

1. If the marriage has been very short;
2. If one party has made a contribution which substantially outweighs that of the other party. The extra contribution has to be in the significant;
3. If a 50% spilt will not meet the needs of one of the parties, with primary consideration going to the primary carer of any children of the family.

The main rules and principles in deciding cases for financial settlement on divorce or dissolution can be summarised as follows:

On divorce or dissolution, the aim is to divide the assets fairly.

But what is a fair and how is a divorce settlement calculated?

Fairness does not necessarily mean an equal division. What it does mean is that marriages and civil partnerships are seen as a shared enterprise and there must be no discrimination between the respective roles of breadwinner and homemaker both of which are regarded as equal.

First consideration must always be given to the needs of the dependent children.

In practical terms, this usually means that a home must be provided for the children and their carer. Ideally if the available assets permit, the Court will always look to accommodate both parties.

The starting point is an equal division of the assets.

This is often referred to as the ’50/50 starting point’. The law will seek to divide your assets (and debts) equally, unless there is a good reason not to do so. The Court is under a duty to consider all the circumstances of the case and in particular the Section 25 factors and then apply these to the facts of the particular case. Having considered the Section 25 factors, the Court may order an unequal division of the assets in reaching a divorce settlement. However, the general rule is that assets should be divided equally unless there is a good reason to the contrary.

First and foremost, the Court will always look to meet the needs of each party.

Needs should be met at a level as close as possible to the standard of living enjoyed during the marriage. A court may depart from the 50/50 starting point if one spouse’s financial needs are not met.

Once the reasonable needs of each party have been met, if there are any extra money or assets, then these any surplus assets may be divided unequally to take into account any unequal contributions. Surplus assets will be divided taking into account their origin. This requires dividing the assets into matrimonial and non-matrimonial property.

Matrimonial property comprises those assets that have been acquired during the marriage from the joint enterprise of both parties. Most assets in most divorces comprise entirely of matrimonial property, and pensions.

Non-matrimonial assets are those assets that have accrued outside the marriage i.e., assets brought into the marriage by either party at the outset, assets that have accrued post separation or those assets that have been received during the marriage from a source wholly outside to the marriage. Examples of this include gifts and inheritances received from one side of the family.

Wherever practical, the Court will seek to achieve a financial separation between the parties.

This is called a clean break. This means that there will be no ongoing financial links between the parties except for child maintenance.

If a clean break cannot be achieved immediately, then the Court has the power to order spousal maintenance for a fixed period to achieve a clean break in the future.

Frequently asked questions

Does the length of a marriage affect how assets are divided in a divorce?

The length of a marriage does affect the division of assets in divorce. While there is no specific legal definition of a long or short marriage, a marriage of less than 5 years is generally considered short. Each case is unique and the duration of the marriage is just one of various factors considered when determining a fair settlement.

I am in my mid 50’s and getting divorced – will a court take into account my age?

Age is one factor that a court will take into account when determining a financial settlement in your divorce. A court recognises that a person in their mid 50’s has fewer working years ahead to rebuild their finances or advance their career.

A court will also look closely at both party’s pensions, and how they should be divided. A court will want to ensure both parties have adequate resources for retirement and financial security in their retirement years.

I gave up my career to raise our son – how will I house myself after divorce?

The starting point in every case is an equal split of the marital assets. If 50% is not enough to meet your needs, you may be awarded more to rehouse yourself. The law takes into accounts various factors such as your contribution to the family, your earning capacity, and any disadvantage suffered by giving up a successful career. You may also be entitled to spousal maintenance.

Is bad behaviour taken into account in divorce?

Bad behaviour is rarely taken into account when determining financial settlements in divorce. The bar for considering misconduct is very high and it must be “gross and obvious” and be inequitable to disregard. Examples include attempted murder, grievous bodily harm, incest, or hiring a contract killer. Financial misconduct like gambling away life savings, fraud, or reckless spending can be taken into account, but still rarely. The conduct must be extreme and proven to have a significant impact on the financial situation.

Does an adult child living at home have rights in a divorce?

With many young adults being unable to afford to rent or purchase their first home, more and more adult children are remaining at home with their parents. What happens if their parents are divorcing? An adult child living at home typically does not have significant rights in a divorce. The law does not impose an ongoing obligation on parents to maintain their adult child or provide a home for them beyond the age of 18, except in specific circumstances such as when the child has a disability and cannot live independently, or remains in education.

I have been a stay at home mum during our marriage – Will I receive less in a divorce?

All contributions to the marriage are taken into account, not just financial. This includes the contribution made in looking after the family home or caring for children. The aim of any financial settlement is fairness and to meet the needs of the parties’.

Are debts divided on divorce?

Debts are considered as part of a divorce financial settlement regardless of whose name the debt is in. Debts include mortgages, credit cards, overdrafts, and loans. Joint debts are typically shared equally, while individual debts may be assigned to the spouse who incurred them. The law aims to achieve a fair division of assets and liabilities, taking into account the needs of both parties and any children involved.

My spouse has quit their job in the middle of our divorce – Is this taken into account?

The law takes into account earning capacity and any increase in that capacity which a party to the marriage can take steps to acquire. If your spouse has intentionally quit their job to gain an advantage, this can be taken into account and a notional earnings amount can be set for mortgage and income purposes.