Divorce Financial Settlements

Contrary to popular belief, a 50:50 split of matrimonial assets is not an automatic rule in divorce settlements. While it may serve as a baseline for a financial settlement on divorce in the UK, the court’s main objective is to ensure a fair division of assets. This means that an equal distribution may not always be the outcome, depending on the circumstances.

Whether the court is involved in deciding the outcome of your divorce financial settlement, or you are negotiating between yourselves, it is crucial to consider the factors outlined in Section 25 of the Matrimonial Causes Act 1973.

These factors serve as a checklist to guide the determination of a fair and equitable division of assets and, ultimately, should play a key role in deciding how a divorce settlement is calculated.

The factors outlined in Section 25 of the Matrimonial Causes Act 1973 are:

• Income and Earning Capacity: The court examines the income and potential earning capacity of both parties, considering their present financial resources and future prospects.
• Financial Needs and Responsibilities: The financial needs, obligations and responsibilities of each party are taken into account, ensuring that both individuals can maintain a reasonable standard of living post-divorce.
• Standard of Living: The lifestyle enjoyed by the couple during the marriage is considered, as it may influence the division of assets and support arrangements.
• Age and Duration of the Marriage: The age of the parties and the length of the marriage are factors that contribute to the court’s decision. Longer marriages and older parties may have different considerations when it comes to asset division and support.
• Financial needs of children: the court will consider the financial needs of any children involved, as well as their physical and educational needs.
• Mental and Physical Disabilities: If either party has mental or physical disabilities, the court takes this into account to ensure appropriate provisions are made to support their unique needs.
• Contributions to the Family: The contributions made by each party to the welfare of the family, both past and future, are considered. This includes financial contributions, homemaking, childcare and any sacrifices made for the well-being of the family.
• The conduct of each party: if required, the conduct of both parties can be taken into account, however this is normally only under exceptional circumstances.
• Loss of Benefits: The value of any benefits that a party will lose due to the dissolution of the marriage, such as pensions, is taken into account to ensure fair compensation or arrangements are made.

If you are wondering ‘Who gets what in a divorce settlement?’ and would like some expert guidance on the likely outcome, our Divorce Financial Settlement Solicitors will be happy to advise.

Whilst it is possible to divorce a spouse without obtaining a divorce financial settlement agreement, it is not recommended This is because if you do not address finances when you separate, the right of spouses to bring financial claims can continue long into the future, whilst becoming more complicated as things change over time. Divorcing couples are nearly always encouraged to reach a financial settlement either through alternative dispute resolution methods such as negotiation or with the aid of a third-party mediator.

If the parties are not able to reach an agreement privately, they have the option of going to court. The court has the authority to make decisions regarding financial matters and will consider each partner’s financial and personal circumstances before making their decision, however, this route can often take much longer and incur higher legal fees.

Whilst there can potentially be some exceptional circumstances in which a financial settlement is not required, this is generally not the case. It is highly recommended that you obtain a formal financial settlement as part of your divorce process. In doing so, you will ensure the fair division of assets and providing a clean break, as well as clarity and stability for yourself and your ex-partner going forward.

There are several options available when splitting pensions during a divorce:

Pension Offsetting

One of the most common strategies for handling pensions during divorce. It entails one spouse giving up their claim to the other’s pension in exchange for a larger share of other shared assets in the settlement. This approach is highly regarded by separating couples as it allows for a clean break, eliminating financial ties and streamlining the process.

Pension Sharing Orders

Another method of dividing pensions during a divorce, this involves transferring a percentage of one spouse’s pension benefits to the other spouse. This can be done by setting up a new pension or adding to an existing one.

Pension Attachment Orders

On the other hand, Pension Attachment Orders attach a portion of one spouse’s pension payments to the other. Unlike pension sharing, the receiving spouse does not have a separate pension but receives a percentage of their ex-spouse’s pension each time it is paid out. This method is less common today due to its inflexibility and the reliance it places on the ex-spouse’s pension for support.

Our Solicitors will be happy to explain every aspect of pension division to you in detail, so you are clear of your entitlements before deciding whether to proceed with your divorce.

Many people do not realise that their former spouse may be able to make a financial claim against them, even many years after they separate. To avoid this, it is important to apply for a Clean Break Order from a court, which is often done in tandem with applying for a Consent Order to make a voluntary settlement legally binding.

A divorce financial settlement underpinned by a Clean Break Order is sometimes referred to as a ‘clean break divorce settlement’. Once a Clean Break Order is in place, your former spouse will have no legal right to make a financial claim against you in future.

The simple answer is, no, the issue of “fault” should have no impact on the divorce settlement. While it can be tempting to want a better settlement where you feel the divorce was your spouse’s fault, the important thing is to focus on your needs and the needs of any children. This can give you the best chance of securing a fair settlement as quickly and with as little stress as possible.