One of the unique qualities of marriage is that any asset, whether it is in the joint names of both spouses or in the sole name of one, can be divided between them both. Certain factors such as when an asset was acquired, from where the asset was acquired and the circumstances surrounding the acquisition of an asset means some assets may be able to be treated as non-matrimonial assets.
The common assumption is that matrimonial assets will be shared equally, and non-matrimonial assets will be owned solely by the person in whose name the asset is held. This can inevitably cause disagreements when deciding what constitutes a matrimonial asset and what doesn’t.
When divorce proceedings commence the division of matrimonial assets will be equal 50/50, however it rarely ends up this way. The equal division of matrimonial assets is based on what is known as the ‘sharing’ principle, however the Courts can sometimes decide to divide the assets differently based on the ‘compensation’ principle or the ‘need’ principle which takes precedence.
One of the many financial matters to consider during a separation or divorce is deciding what to do with any property.
The family home is often at the centre of any discussion regarding the division of matrimonial assets and not only is it often the most valuable asset that a couple owns but it also provides a home for one or both spouses and possibly children too.
There are various ways in which the family home can be dealt with but what is certain is that at some point the property will cease to be occupied by both individuals together.
Factors that can affect what happens with the family home includes whether there are any dependent children, the length of the marriage, the contributions made by each party, whether there are any other significant assets aside from the house and an individual’s ability to borrow by way of mortgage. This is not an exhaustive list and there may be other relevant factors to consider.Depending on the circumstances, there are several possible outcomes. The family home could be sold, and the net proceeds divided, although not necessarily equally. It could be transferred from joint names into the sole name of one spouse in return for a payment to the other, either at the time of transfer, or at a specified future date. Unfortunately, it is not always possible for there to be an outcome that satisfies both parties or sometimes, even of one of them. However, what it is important to remember is that the outcome will be based on the practical needs of each party and what is realistic to achieve by way of borrowing and payment to the other spouse.
How is a pension split in divorce?
Pensions are always in the name of one person and are never a joint asset. However, when married a spouse’s pension is usually treated as a matrimonial asset.
How and when pensions are valued and the way they are divided between the parties, if at all, depends on the circumstances of you and your family.
The length of the marriage may be a significant consideration. If you have been married for only a short period of time and didn’t live together for long prior to getting married, and there are no children involve, the division of pensions may be less likely.
In a divorce the pension of one spouse can be shared with the other. However, any sharing of a pension must be in the form of pension funds. Alternatively, if there are other assets in the marriage and the spouse with the greater pension provision wishes to keep their pension intact, that spouse could allow the other spouse a greater share of a different non-pension asset.
What happens with other assets, including savings, investments and liabilities?
As with all matrimonial assets it is important to establish what assets there are and how much they are worth. If there are savings, investments and investment property, their values should be ascertained and agreed. The same applies to any liabilities such as car loans, hire purchase and credit card debts. The sooner after the separation that these values are agreed the better. This will enable the spouses to attempt to reach an agreement about how they should be divided. The more time that passes after the separation, the more chance there is for assets and liabilities to fluctuate in value and that might give rise to an unfair outcome for one or the other spouse.
If you are a business owner, partner within a business, or a Director or Shareholder, your business interests will also be taken into consideration. We can provide expert help to ensure that your business interests are addressed correctly within your divorce. Much will depend on the type of business and whether the business has appropriate terms in the Partnership Deed or Shareholder Agreement. It may also be important to establish whether the business has a value or whether it is simply a tax efficient way of securing an income for the business owner. Accountancy advice may be needed. Whatever the business interests are they will be considered with all of the other matrimonial assets.
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At Lawson West our Family Law team deal with a variety of cases that vary in complexity and cost. The following case study is based on a separation where one party earns considerably more than the other, it looks at what factors are important when considering the division of matrimonial assets and in this case, how they are divided.
Settling finances as part of a divorce can be complex. A Financial Remedy Order covers the financial aspects of your divorce including the house, the car, the savings, the pensions, the bank accounts, the contents of the house, the debts, the income, the outgoings, etc…
