Our family law expert Chris Brown discusses the key areas to consider when dividing matrimonial assets in divorce proceedings to ensure a fair settlement can be reached for both parties.
What are matrimonial assets and non-matrimonial assets?
When you are thinking of getting a divorce, it is important to understand the difference between matrimonial assets and non-matrimonial assets.
Matrimonial assets are the financial assets that you and/or your spouse have acquired during your marriage. In law, it doesn’t matter who contributed financially towards the assets, as in England and Wales the law will consider assets acquired by either party during the course of marriage also belong to the spouse. Examples include:
- Family home
- Pensions and savings
- Other properties
- The cash available in your bank account
- Stocks, bonds and any other mutual funds
Non-matrimonial assets are the assets that you and/or your spouse obtained before your marriage or after your divorce such as:
- Family businesses
- Property purchased before the marriage
How are matrimonial assets divided in a divorce?
The starting point for dividing matrimonial assets in divorce settlements in the UK is 50/50 for both parties. However, the court will take into consideration the individual circumstances and the different needs of both parties in a divorce settlement. This leads to the financial settlements differing in each divorce case.
Most matters can be settled without the need to go to court and this is generally a better and less expensive route for both parties.
If there is a need to settle a matter in court, then the court will aim to divide assets so that it is fair and equal for the parties involved this does not mean that all assets will automatically be split in half for each spouse. Find out more about how marital assets are divided here.
Non-matrimonial assets can be more complicated to divide. You can ask for them to be excluded from a financial settlement, however, this is not always granted. There might be circumstances where non-matrimonial assets such as an inheritance have been used to purchase something such as the family home during the course of the marriage and therefore will now be counted as matrimonial assets. A solicitor can talk you through how your assets are likely to be viewed and how best to achieve a fair financial settlement.
Who will keep the family home?
The family home is usually one of the biggest assets a divorcing couple may own and the decisions around the division of the home can be stressful for both parties. The couple may consider the following options:
- Selling your home –The money will be divided and (usually) used towards buying separate homes.
- Buying your partner out – One spouse will be able to keep the home by paying their former partner’s share of the property and taking over any mortgage.
- Transfer but retain interest – The property may be transferred from one spouse to the other but the transferee will retain an interest in the property, to be paid at a later date.
- Ownership remains the same – The ownership of the property will be shared by both parties until some set time or trigger although only one spouse will continue living in the home.
How are pensions considered in divorce settlements?
Divorcing couples often prioritise splitting property and savings and making arrangements for children without considering pensions. Women can be disproportionately disadvantaged by this approach due to pay inequality and taking time off from work to raise children. These factors can impact their ability to save for their retirement which may then be compounded by a failure to take pensions into account on divorce.
Pensions are varied and complex and this may be one of the reasons they are so often overlooked or ignored. To ensure a fair settlement is given for both parties, divorcing couples should provide full financial disclosure to each other so that a fair settlement can be reached. Additionally, seeking advice from a ‘Pension on Divorce Expert’ (PODE) can ensure that all pension options have been considered before a settlement is finalised.
What will happen to existing debts?
If you have and your spouse have accumulated any debts in your names during your marriage, they will also be divided along with the matrimonial assets as a part of the financial settlement.
Pre-nuptial agreements may assist couples in reaching a fair settlement in divorce proceedings. A properly drafted pre-nuptial agreement can influence a court’s decision on how assets are divided when a relationship breaks down. Your solicitor should also have a copy of your pre-nuptial agreement.
Talk to our family team for more information about pre-nuptial agreements.
Do I have to appoint a solicitor to achieve the best outcome in my divorce settlement?
It is better to instruct a solicitor for initial advice at an early stage so that you can discuss your options and assess how complex your situation may be.
If your case is straightforward, you may be able to manage the majority of it yourself and you may require support from a solicitor with certain aspects, such as drafting letters, completing forms or an explanation of technical terms. If your case is not straightforward and involves complex legal or financial issues, it is better to seek advice from a solicitor to ensure you receive a fair outcome as it is difficult to resolve issues further down the line.
Our experts are here to support you
At Hegarty Solicitors, we understand that dealing with the practical arrangements for divorce can be challenging. Our family law experts can talk you through the process and discuss the available options to help you achieve the best outcome possible.