Divorce laws in the UK are complicated, but there are some basic rules about who gets the house and how your money may be split.
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. Divorce lawyers say it’s one of the most common questions but – unfortunately – there’s no easy answer (except in Scotland, where the guidelines are more closely adhered to). However, there are some basic principles about the way your home, money, savings, pensions and other assets you own could be divided.
If you have children
Children come first in a divorce and the first priority of the courts will be to make sure that they are provided for.
After that the idea is to make sure you and your ex husband will have enough to pay for the essentials (such as housing).
Once these ‘needs’ have been catered for, 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.
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.
If one of you has always been a much higher earner than the other, he or she may have taken it upon themselves to make decisions about how ‘their’ money is invested. 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 28 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.
You also have to give information about how much money you require for yourself and your children. Some people find this form hard to fill in, not because the questions are particularly difficult, but because it can be hard to concentrate on financial matters at such an emotional time. If you’re struggling, get a friend – preferably one who’s not fazed by forms – to help you.
If you cannot 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. A judge can also suggest what they think would be an appropriate settlement before a final hearing is set. 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
While the courts take particular factors into account, it doesn’t mean that they will necessarily come up with a particular solution (except in Scotland). There may be two or three different options that would achieve the same outcome. If you and your ex have a preference for one way of dividing up the assets the courts would certainly listen to what you wanted.
You can read more about how to split up the family home in our article Splitting the family home and mortgage during divorce, dissolution or separation, and how to divide your possessions in our article How to divide your things when you divorce or separate.
What the courts take into account
The factors the courts take into account include:
how long you have been married.
how old you and your ex are.
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).
the earning capacity of each of you.
your standard of living while you were married.
the contribution that each of you made to the family.
how much money each of you needs and what your financial commitments are.
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 are considered assets in Scotland?
In Scotland, the date of separation is important 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.
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). They include:
whether one party suffered economic disadvantage from being married or bringing up children, or if one party gained an economic advantage from the contributions of the other.
who has the economic burden of caring for children under the age of 16 and making sure that is shared fairly by both parties.
whether provision needs to be made to offset the effects of serious financial hardship that will result from divorce.
whether one party has been dependent to a substantial degree on financial support from the other.
Clean break settlements in Scotland
Scotland favours clean break settlements and it is unusual for there to be any support paid after divorce. But if it is to be paid, it must be necessary for at least one of three reasons:
because the economic burden of childcare needs to be shared equally.
because one party has been dependent to a substantial degree on the other.
because one party is likely to suffer serious financial hardship as a result of divorce.
Just because one or more of these factors exists does not mean that support, called ‘periodic allowance’, will be paid. The court can only make an award for periodic allowance in Scotland if it believes that ordering a lump sum to be transferred wouldn’t be appropriate or wouldn’t be sufficient.
In most cases periodic allowance is paid on the basis that one party has been substantially dependent on the other, in which case it can only be paid for up to three years from divorce to enable them to look for work and, if necessary, retrain.
Have you recently divorced and did you find it easy or difficult to reach a financial agreement with your former partner? We’d be interested in hearing from you. You can join the money conversation on the Rest Less community or leave a comment below.