Family Law Insights: Division of Assets in Divorce Cases

Amelia Bunce, Trainee Solicitor

Amelia has been supporting John Randle in the family team, dealing with all aspects of family law, specialising in high-net-worth divorces. She also works on contentious and non-contentious employment matters, and personal injury claims – including those arising in connection with historic child abuse.

One of the most common questions posed by divorcing couples is “How will our assets be split?” While courts will typically aim for a “fair” split, generally a 50/50 division of assets, this is not always the case.

The Process for Dividing Assets

The family courts will aim to ensure that the outcome of any financial settlement or other order made by the court is fair for both sides. While the starting point is generally a 50/50 split, it is important to understand that a fair division of assets is not the same thing as an even division of assets. If awarding a greater share of the marital pot to one side is deemed fairer, the court must justify why it has chosen to depart from an equal split.

In the case of couples with children under 18, the court’s primary consideration will always be the welfare of the children. For example, if one party has primary care responsibilities over the children the court will deem it fair for that party to have a larger share of the available assets.

The court must consider the ‘Section 25 factors’ (Matrimonial Causes Act 1973) to help inform any decision as to what constitutes a fair division of assets. The relevant factors are:

• The income, earning capacity, property and other financial resources which the parties have or are likely to have in the foreseeable future;
• The financial needs, obligations and responsibilities which the parties have or are likely to have in the foreseeable future;
• The standard of living enjoyed by the family before the breakdown of the marriage;
• The age of the parties and the duration of the marriage;
• Any physical or mental disability of either party;
• The contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family;
• The conduct of each of the parties (only where it would be unfair to disregard it); and
• The loss of any pension benefits.

What happens to the family home?

For the majority of divorcing couples, the biggest asset is the family home. Knowing how it will be treated in divorce is a question that must considered at the outset of any divorce proceedings. The court will need to decide what percentage of equity (i.e., the value of the property at current market prices less the outstanding mortgage owed) should be awarded to each party. As the first consideration is providing for children, the court may deem it beneficial to avoid unnecessary disruption by allowing the children to remain in the family home. This may mean that the primary carer of the children is awarded the right to remain in the family home, with other assets typically being offered to the other party to offset their share of equity.

Once the court has decided on the most suitable way to divide the family property, couples generally have three options:

• Sell the house and divide the proceeds in accordance with the decided split; or
• One party to buy the other party’s share in the property.
• The non-occupying partner receives their share of equity at a future date, e.g. when the children reach 18.

What assets are not split in divorce?

Some assets are understood by the courts as “non-matrimonial assets”, meaning they were acquired prior to or outside of the marriage. Precisely what constitutes an asset acquired “outside of marriage” is not determined by any rigid rules, but may include inheritance, gifts or valuable heirlooms that are understood to be the sole property of one party. Likewise, there is no set formula for determining how the courts will treat assets acquired prior to marriage. For instance, if one party purchased property before the marriage, but that property was subsequently used as the family home, it will likely be divided as a joint or matrimonial asset.

Whether assets are “matrimonial” and capable of being shared, or “non-matrimonial” and not subject to the sharing principle, can cause animosity between the parties and involve substantial legal costs. These are complex legal matters and you will need advice from a specialist financial remedies expert.