Divorce is an emotionally challenging process that involves many complex legal considerations. One of the most significant aspects being the division of property.

The laws governing this aspect of divorce are designed to ensure a fair and equitable distribution of assets. They take into account the unique circumstances of each case. Understanding these laws is crucial for anyone going through a divorce, as it impacts financial stability post-separation.

How is property divided in a divorce: Legal Framework

Splitting assets and property property in a divorce in England and Wales is primarily governed by the Matrimonial Causes Act 1973. This family law legislation provides the legal basis for dealing with financial and property matters following the dissolution of a marriage or civil partnership.

The Act emphasises the court’s discretion in dividing assets in a divorce. It allows the court to tailor decisions to the specific needs and circumstances of the family involved.

The guiding principles for property division include fairness and the need to consider various factors. These include the length of the marriage, the welfare of any children involved and the financial needs and obligations of each spouse. The standard of living enjoyed during the marriage, and the contribution each spouse made, including non-financial contributions, will also be considered.

Courts have wide discretion in applying these principles. They aim to achieve an outcome that is just and equitable for both parties. The process involves identifying the matrimonial assets, valuing them, and then deciding on the most appropriate way to divide them.

Types of Property Considered in Divorce

In divorce proceedings, virtually all assets owned by either or both spouses can be considered for division. These assets are typically categorised into marital and non-marital assets.

Marital assets include any property acquired during the marriage, regardless of whose name it is in. This can include the family home, other real estate investments, pensions, businesses, and even personal belongings.

Non-marital assets, such as property acquired before the marriage or inheritances received by one spouse, may also be considered. This is especially true if they have been mixed with marital assets or used for the family’s benefit.

Real estate property is often the most significant asset to be divided, with the family home at the forefront of negotiations. Pensions are also crucial, as they represent a form of long-term savings and financial security.

Businesses owned by one or both spouses require careful evaluation to determine their value and how they should be treated in the division process.

Personal belongings, while usually of lesser financial value, can hold significant emotional importance and must be dealt with sensitively.

How is property divided in a divorce?

The court considers several key factors when deciding on property division in a divorce. The duration of the marriage can significantly influence decisions. Longer marriages are more likely to lead to an equal division of assets.

Contributions made by each spouse, both financial and non-financial, are carefully evaluated. This includes not only income and assets brought into the marriage but also domestic contributions and the raising of children.

The future needs of each spouse and any children of the marriage are paramount. This includes considerations of housing needs, income requirements, and the ability of each spouse to sustain a standard of living reasonably comparable to that enjoyed during the marriage. They are likely to consider whether the sale of the house is practical and fair at the time of divorce.

The court also considers the age and health of each spouse, their earning capacities, and any benefits (such as pensions) that one spouse will lose the chance to acquire as a result of the divorce.

Common approaches to property division

The principle of equal division serves as a starting point in property division; however, the court’s ultimate goal is to achieve fairness based on the circumstances of each case.

In some instances, an equal division may not be considered fair, and the court may decide on a different allocation of assets.

A needs-based approach is commonly applied, especially in cases where there are insufficient assets to ensure both parties’ financial independence. Here, the focus is on ensuring that the basic needs of both spouses and any children are met, possibly resulting in an unequal division of assets.

Other approaches include offsetting, where one spouse retains a larger share of a particular asset (like the family home) in exchange for another (like a larger portion of the pension).

Lump-sum payments and property adjustments are also tools the court can use to achieve a fair outcome, allowing for a clean break between the parties.

How is property divided in a divorce: FAQs

What happens if we can’t agree on the division of property?

 

If spouses can’t agree on how to divide property, the case will likely proceed to court, where a judge will decide based on the factors outlined in the Matrimonial Causes Act 1973. The financial settlement process can be lengthy and involve detailed assessments of each party’s financial needs, contributions, and future requirements. Seeking mediation before going to court is often encouraged to find a mutual agreement.

Can a Prenuptial Agreement affect the division of property?

In England and Wales, prenuptial agreements are not automatically legally binding, but they are taken into consideration by the courts as part of the circumstances of the case.

If the agreement is deemed fair and both parties entered into it freely with full understanding, it can influence the division of property. It is important that both parties seek legal advice before entering into a prenuptial agreement.

How are debts handled in divorce?

Debts are treated similarly to assets during a divorce. The court will consider debts that are in both names or in the name of one spouse if they were acquired for joint purposes or for the family’s benefit. The division of debt will be based on each party’s ability to pay and their overall financial situation post-divorce.

Does fault in the marriage affect property division?

The grounds for the divorce, such as adultery or unreasonable behaviour, typically do not impact the division of property directly.

The focus is on ensuring a fair and equitable distribution based on financial needs, contributions, and the welfare of any children, rather than on penalizing either party for the breakdown of the marriage.

Can the division of property be modified After Divorce?

Post-divorce modifications to property division are generally rare and can only be considered under certain circumstances. This may include a significant change in one party’s financial circumstances or if the original agreement or order was based on fraudulent information. Any application for modification would need to be made to the court, and the party seeking the change would need to provide substantial evidence to support their case.

How is property valued during divorce?

The valuation of property, including real estate, businesses, and personal assets, is a critical step in the division process. Professional valuations may be required to ensure an accurate and fair assessment of each asset’s worth. Both parties should agree on the choice of valuers to avoid disputes and ensure transparency in the valuation process.

What is a financial agreement?

Financial agreements, often referred to as financial orders in the context of divorce, or prenuptial and postnuptial agreements outside of divorce proceedings, play a critical role in managing the financial aspects of relationships and their dissolution.

These agreements serve to clarify and legally bind how assets, debts, income, and other financial responsibilities are allocated between parties.

Can parties agree to an asset split without initiating legal proceedings?

Yes, parties can agree to an asset split without initiating formal legal proceedings, such as court litigation. This process is often referred to as a “private agreement” or an “informal settlement.” This is common in amicable separations or divorces where both parties are able to negotiate and agree on how to divide their assets and liabilities without the need for court intervention.

Once an agreement is reached, it is important to document the terms in writing. This document typically outlines the division of assets, liabilities, and any spousal or child support arrangements.

Even if the parties reach an agreement independently, it is wise to have the agreement reviewed by separate solicitors for each party. This ensures that the agreement is fair, meets legal requirements, and protects each party’s interests.

Although it is not always required, parties may choose to have their agreement formalised by the court through a consent order. This makes the agreement legally binding and enforceable, similar to a court order. It provides legal certainty and can help prevent future disputes.

How can ARC Costs assist?

Although our team are unable to directly assist with these matters, we can introduce your case to a solicitor in our network.

At ARC Costs, our team of expert Costs Draftsman and Costs Lawyers can assist in the recovery and negotiation of your financial relief costs.

Our overriding objective is to seek the best costs outcome for our clients and whether you require 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, please contact us at 01204 397302. Our experts are also available via email at info@arccosts.co.uk.

We may receive payments from third party solicitors on our panel to whom we may refer your claim. We will never charge you for any referrals made to our panel of third parties.