Divorce can be emotionally and financially tumultuous, with one of the most complex aspects being the division of assets. So, how are assets split in a divorce?

In England and Wales, the legal framework surrounding the division of assets during divorce proceedings is guided by a combination of statutory law and judicial discretion.

The process of asset division in a divorce involves a multifaceted approach that considers various factors. This includes the duration of the marriage, the financial contributions of each spouse, their future needs, standard of living enjoyed and earning capacities, as well as any agreements made prior to or during the marriage.

While there are legal principles in place to guide this process, each case is unique, and outcomes can vary significantly based on individual circumstances.

How are assets split in a divorce? – The process

While a 50/50 split of assets is often considered an ideal outcome in divorce proceedings, it’s not always the standard practice, nor is it guaranteed in every case.

The process of splitting assets in a divorce can vary depending on the specific circumstances of the couple. However, in general, the process typically involves the following steps:

Gathering financial information:

As a starting point, both spouses are required to provide full and accurate disclosure of their financial circumstances. This includes assets, income, debts, and expenses. The process often involves exchanging financial documents such as bank statements, tax returns, property valuations, and pension statements.

Identifying marital assets:

Matrimonial assets are those acquired during the marriage and are subject to division upon divorce. These assets can include the family home, vehicles, bank accounts, investments, pensions, business interests, and personal belongings.

Valuation of assets:

The next step is to determine the value of each marital asset. This may involve obtaining professional valuations for properties, businesses, or other significant assets to ensure an accurate assessment of their worth.

Consideration of financial contributions:

Courts will consider the financial contributions made by each spouse during the marriage. This may include income earned, property acquired, and any financial sacrifices made for the benefit of the family.

Assessment of non-financial contributions:

Non-financial contributions such as homemaking, childcare, and support of a spouse’s career may also be taken into account when determining the division of assets.

Future needs and circumstances:

Courts will consider the future financial position and needs of each spouse, including their earning capacity, health, age, and the care of any dependent children.

Negotiation or mediation:

In many cases, spouses will attempt to voluntarily agree on how to divide assets through negotiation or mediation. This can involve discussions between the parties and their legal representatives to find a fair and mutually acceptable outcome. Parties should seek a consent order to make their agreement legally binding.

Court intervention:

If the parties are unable to reach an agreement, or if there are complex financial issues to be resolved, the court may intervene to make a decision on the division of assets. In such cases, the court will consider all relevant factors and make orders based on what it deems to be fair and equitable.

Implementation of financial orders:

Once an agreement is reached or a court order is issued, the division of assets outlined in the financial agreement or order must be implemented. This may involve transferring ownership of assets, dividing bank accounts, or making pension arrangements as specified in the agreement or court order.

What is financial relief?

Financial relief, also known as ancillary relief, refers to the legal provisions and processes through which financial matters are resolved between separating spouses or partners.

It encompasses the division of assets in the matrimonial pot, payment of maintenance, and any other financial arrangements necessary to ensure both parties can meet their financial needs following the end of the relationship.

Financial relief proceedings typically occur when couples are unable to reach a voluntary agreement regarding financial matters. Financial relief is governed by the Matrimonial Causes Act 1973 (for married couples) or the Civil Partnership Act 2004 (for civil partners).

These laws grant the courts broad discretion to make financial orders, taking into account various factors. This may include the parties’ financial resources, income, earning capacity, financial needs, standard of living, contributions to the marriage or partnership (both financial and non-financial), and the welfare of any children.

Financial relief proceedings can involve negotiations between the parties, mediation, or ultimately, resolution through court proceedings if an agreement cannot be reached voluntarily.

The objective is to achieve a fair and equitable division of assets and financial resources to ensure both parties can move forward with financial stability post-separation.

Financial relief orders can include lump sum payments, property transfers, orders for the sale of assets, pension sharing orders, and ongoing maintenance payments.

Overall, financial relief provides a legal framework to address the financial consequences of relationship breakdown, aiming to achieve a fair outcome for all parties involved in a divorce settlement.

What is a clean break order?

A clean break order is a legal arrangement that formally severs financial ties between divorcing spouses or civil partners. This order aims to provide finality and closure to the financial aspects of the relationship, allowing both parties to move forward independently without ongoing financial obligations to each other.

Key features of a clean break order include:

• Termination of financial claims: A clean break order extinguishes all future financial claims that either party may have against the other, preventing either spouse from making further financial claims in the future.
• Finality: Once a clean break order is made, both parties are legally bound by its terms, and neither can seek financial support or a redistribution of assets from the other at a later date, except in specific circumstances such as fraud or non-disclosure.
• Financial independence: By severing financial ties, a clean break order enables both parties to achieve financial independence and autonomy. This can be particularly important for individuals who wish to start afresh and move on with their lives following the divorce.
• Certainty and peace of mind: A clean break order provides certainty and peace of mind to both parties, knowing that their financial obligations to each other have been clearly defined and legally enforced.

Clean break orders can cover various financial matters, including the division of assets, payment of lump sum settlements, transfer of property ownership, and termination of spousal maintenance or ongoing financial support.

It’s essential to seek legal advice when considering a clean break order to ensure that the terms are fair and reasonable and that both parties fully understand the implications of the order. Additionally, clean break orders are typically drafted and approved by the court as part of the overall financial settlement process in divorce proceedings.

How can ARC Costs assist?

At ARC Costs, our team of expert Costs Draftsman and Costs Lawyers can assist in the recovery and negotiation of your family law and divorce legal costs.

Moreover, if you require assistance in applying for a financial order/ancillary relief, we have a network of solicitors who can assist on your case.

Our overriding objective is to seek the best cost outcome for our clients and whether you require the production of a costing instrument such as a Bill of Costs, or advice on negotiations, or advocacy in court, we can be of service.

If a party to your proceedings is behaving unreasonably, we can provide advice on the chance of success when seeking a costs order. Alternatively, we can also provide aid if you have had a costs order served upon yourself and as independent costs experts, we can represent either Paying or Receiving Parties.

To find out more about how we can help you with legal costs in Ancillary Relief Proceedings, please contact us at 01204 397302. Our experts are also available via email at info@arccosts.co.uk.

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