One of the biggest financial worries couples face when they get divorced is what it will mean for them; where will they live and who will get what. There’s no hard and fast rule, but there are some basic principles about the way your home, money, savings, pensions and other assets could be divided.
Divorce in England and Wales
If you’re getting divorced in England or Wales, if you have children, they come first in a divorce and the first priority of the courts will be to make sure that they are provided for.
- The next priority is ‘needs’ Here the idea is to make sure you and your ex husband will have enough to pay for the essentials (such as housing etc.).
Anything else will be divided between you. Any money and property that’s left and that you’ve both acquired during your marriage will be divided. If one of you is relatively wealthy compared to the other it’s likely that some of the money and savings you have will be transferred to the other. This isn’t limited to money and property that you’ve acquired while you’re married or in a civil partnership.
The financial settlement may include ongoing maintenance. Courts in England and Wales will aim for a ‘clean break’ settlement. However, if there isn’t enough money for one partner (normally the husband) to pay the other a lump sum, ongoing maintenance may be paid. In Scotland, clean break settlements are the norm. In rare cases, maintenance may be paid but normally only for a maximum of three years.
Where to start
If you have no idea how much you’re worth between you or how the family finances are run, you should try and get up to speed – and quickly. Often in a relationship one partner will make more of the day-to-day financial decisions than the other.
SAVVY TIP: Whatever your circumstances, it’s vital that you get an accurate picture of your financial worth as a couple.
In England and Wales divorcing couples have to spell out what they have and what they owe in a document called ‘form E’. It’s quite a lengthy form (around 25 pages) which asks questions about everything from the value of your property and any mortgage secured on it to how much you owe in credit card debts and bank loans.
SAVVY TIP: Some people I’ve spoken to found the form hard to fill in, not because the questions are particularly difficult, but because it was hard to concentrate on financial matters at such an emotional time. If you’re struggling, get a friend – preferably one who’s not frightened by forms – to help you.
In Scotland there’s no form E but couples still have to be open and honest about money and assets that they’ve acquired during marriage.
If you can’t agree
If you cannot agree how the assets should be divided it will be down to the courts to decide so a divorce lawyer will always give you advice based on what the courts would do. However, in England and Wales, they have a fair amount of discretion about how a financial settlement is achieved although that’s not the case in Scotland.
The courts take particular factors into account, but it doesn’t mean that there’s only one solution. There may be two or three different options that would achieve the same result.
SAVVY TIP: If you and your husband or civil partner had a preference for one way of dividing up the assets the courts would certainly listen to what you wanted.
What the courts take into account
The factors the courts take into account include:
1. How long you have been married;
2. How old you and your husband or civil partner are;
3. How healthy you are: if you are not in a position to work and support yourself that would affect how your joint wealth was divided;
4. The earning capacity of each of you;
5. Your standard of living while you were married or in a civil partnership;
6. The contribution that each of you made to the family;
7. How much money each of you needs and what your financial commitments are;
8. How much you would give up as a result of the financial settlement. For example, if you had to share your pension with your ex, that would reduce your own pension.
What counts as assets in Scotland
In Scotland, the date of separation is key and as far as the courts are concerned, property, money or other assets that you or your husband bought, inherited or acquired either before you married or after the date of separation are largely irrelevant.
SAVVY TIP: Although the Scottish courts only take account of ‘matrimonial property’, (money and property etc that you’ve acquired after you married and before you separated), there are exceptions.
- If you bought a house or flat before you got married but it was bought for you to live in as a family home, it’s counted as matrimonial property.
- Anything inherited or received as a gift other than gifts you gave each other are not matrimonial property.
- If pensions or savings were started before the marriage, the proportion that relates to the period before marriage is also not counted as matrimonial property.
How assets are divided in Scotland
The courts in Scotland will usually divide everything built up during marriage equally, but can deviate from that in some circumstances. To do so they will look at various factors (some of which will also form the basis for deciding if there should be any support paid after divorce).
1. whether one of you suffered ‘economic disadvantage’ from being married or bringing up children, or if one of you gained an economic advantage from the contributions of the other;
2. who has the ‘economic burden’ of caring for children under the age of 16 and making sure that is shared fairly by both of you;
3. whether provision needs to be made to offset the effects of serious financial hardship that will result from divorce;
4. whether one of you has been dependent to a substantial degree on financial support from the other.
I’ve written a guide to the basics of the financial implications of divorce called Divorce, how to help yourself and your finances.
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