How the court divides assets and income on divorce

Divorce Solicitor in Sussex

What are the matrimonial assets?

Generally, all property acquired after the marriage or civil partnership including pensions, unless it is non-matrimonial property. Non-matrimonial property is usually property inherited by a party or received by that party as a gift, as well as pre-marital property (although property acquired during  period of cohabitation could be taken into account by a court). Both parties on divorce usually have a strong claim to share (equally) in all matrimonial property built up during the marriage, which normally includes the former matrimonial home regardless of when or how it was acquired or which party acquired it.

You would have a weaker entitlement to a share in non-matrimonial property that is:

  • Acquired before the marriage
  • Brought into the marriage from an external source without any contribution from the other party
  • The result of your ex’s sole endeavours or special contributions.
  • However, in cases where the court is required to address the parties’ needs, those needs have priority over the alleged non matrimonial status of any property.

Is there a standard formula  for calculating the division of matrimonial assets?

No. Instead, the court has a duty to consider all the circumstances of the case and to take into account the factors set out in section 25 of the Matrimonial Causes Act 1973 – these are known as “section 25 factors”.

What about the children of the family?

Before considering the individual section 25 factors, the court first considers the welfare of any child(ren) of the family under the age of 18. The needs of the children will be given a large amount of importance by the court.

 

Section 25 factors

The court will refer to the section 25 factors when deciding what the division of the matrimonial assets will be.

The section 25 factors can be summarised as follows:

  • The capital and income resources available to the parties, either existing now or reasonably foreseeable.

Details of the financial needs of the parties, including:

  • their standard of living;
  • their ages and the length of the marriage; and
  • any disabilities of either party

The court also considers the following additional factors:

  • the respective contributions of each party;
  • the conduct of each party (although only in exceptional cases); and
  • any benefit either party will lose as a result of the divorce (such as a spouse’s pension).

How will the court divide our matrimonial assets?

When considering the section 25 factors, different judges may reach a range of different solutions based on identical facts, all of which would be within their discretion. However there is a standard approach the courts use when giving consideration to an application for a financial order upon divorce.

Will everything be split down the middle?

Very often no. However, the starting point is that assets generated during a marriage are divided equally, and the guiding principles applied are ”equal sharing”, ”needs” and ”compensation”.  

  • Needs- this refers to the income and capital needs of the parties, but there is no mathematical formula for calculating the way these will be divided
  • Compensation – for relationship-generated disadvantage, for example, because the wife has given up a successful career to look after children
  • Sharing principle – this comes for the idea that the parties to a marriage are equal and should therefore “share the fruits of matrimonial partnership” equally. This means in practice that the starting point for a financial settlement upon divorce is a 50/50 division of the matrimonial assets.

Cases that do not involve matrimonial assets of a very high value are generally resolved with reference to the needs of the parties and the existing resources (capital and income) are divided to allow the needs of each party to be met. In these cases there is little room for the application of the sharing principle. The ”Needs” principle will normally ensure that the origin of the parties assets, for example, those assets inherited or acquired before the marriage or a period of cohabitation, will have little relevance.

The matrimonial home is normally considered a matrimonial asset, so it could be divided equally between the parties even if it was owned by one of them before the marriage.

 

When is an equal division of the matrimonial assets likely?

Where an equal division of all assets accrued during the marriage adequately provides for the capital and income needs of each party and any children, then the family court is likely to regard an equal division of the matrimonial assets as the appropriate outcome.

 

When is an unequal division of matrimonial assets a likely outcome?

If the needs of the parties and any children cannot be adequately met by an equal division, the family court may decide that an unequal division of assets is appropriate instead. In these cases, needs are likely to dictate how capital and income are divided. Inherited assets, or assets introduced by one party during the marriage, may count for little. However, where possible, the court tries to ensure that if you inherited or introduced a particular asset then you can keep it as part of the resources to meet your own needs (even if this means allocating a larger share of the matrimonial assets to your ex).

In some cases, the sharing principle may be applied at a later date, with a division of matrimonial assets in the future. For example, one party might have a “deferred interest” in the former matrimonial home that will be realised once any children either finish their secondary education or their tertiary education up to first degree level. At one of these points the matrimonial home could then be put on the market and once sold the equity could be divided between the parties, for example.

Will the court consider a Clean break?

Where possible, the court seeks to achieve a clean break between parties on divorce. This means that that “the financial obligations of each party towards the other will be terminated as soon [after the divorce] as the court considers just and reasonable”. In other words there would be a final division of matrimonial assets with no further obligations between the parties so that they can move on with their lives.

Will an order for Spousal Maintenance be made?

If there are insufficient assets to achieve a clean break, one party (the payer) may pay ongoing maintenance to the other (the payee). This maintenance usually stops when one of the following triggers occurs:

 

  • The payee remarries.
  • The payee dies.
  • Further order of the court.

Sometimes, the court awards maintenance for a fixed period of time. Maintenance for life is now very unusual.

When deciding the level of maintenance to award, there is no standard formula but the court will consider all of the following:

 

  • The (credible) needs specified by the payee in a written budget.
  • The standard of living during the marriage – the court will seek to replicate this as much as reasonably possible – but this won’t always be possible.
  • The payer’s ability to pay – the payer should be left with enough to meet his needs.

 

What happens when the parties assets exceed their needs?

Where the parties’ resources exceed their needs, applying the sharing principle generally leads to an equal division of the matrimonial assets.

Are there any exceptions to this?

Where significant matrimonial assets have been generated by the special contribution of one party (that is, by their exceptional talents or efforts that are greater than the contribution of the other), the court may provide the other party with a less than equal share to reflect this. However, the court rarely makes orders of this kind.

What happens to inherited property?

The sharing principle does not apply to property that is inherited or introduced by one party during the marriage. The exception is where such property has become part of the matrimonial assets, for example, by being put into joint names or converted into a different type of property enjoyed by the family (such as an inherited car sold and put towards buying a new family home).

 

What if all the assets are non-matrimonial?

Where assets are entirely, or largely, non-matrimonial, the division of resources may be determined entirely by the claimant’s needs. These are generously interpreted. The financial provision may also include compensation for relationship generated disadvantage (for example, because the party has given up a successful career to look after children).

How can Lincolns Family Law help me?

If you are planning to negotiate a financial settlement upon divorce or intend to initiate court proceedings for a financial order we can provide  legal advice and representation tailored to your own particular circumstances. We offer a no obligations free enquiry or alternatively you can call to arrange a fixed fee initial consultation, which will not be time limited, so you will have enough time to discuss your situation with us in detail.

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