How is property divided in a divorce?

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Divorce is a challenging and emotional process, and one of the most significant aspects is the division of assets. Family law governs the distribution of property, taking into account various factors. When facing a divorce, many will ask the question “how is property divided in a divorce?

So, how is property divided in a divorce?

When dividing assets, a number of key factors will be considered, including:

Earning capacity:

Earning capacity plays a pivotal role in the division of assets. The court considers both parties’ financial contributions to the marriage, including income, assets, and potential future earnings. This ensures a fair and equitable distribution based on each spouse’s financial standing.

Standard of living:

The standard of living established during the marriage is a critical factor. The court aims to maintain a similar standard of living for both spouses post-divorce. It will consider factors such as lifestyle, amenities, and overall financial stability.

Length of the marriage:

The duration of the marriage is another significant consideration. Longer marriages may lead to a more substantial financial settlement. This is because the court recognises the deeper financial entanglements and contributions made over an extended period.

Assets in a divorce:

Marital assets include property, savings, investments, and any other shared financial interests. These assets are subject to division, but individual assets acquired before the marriage may be treated differently.

Seek Legal Advice:

It is crucial to seek legal advice when navigating the division of assets. Family law professionals can provide guidance tailored to individual circumstances, ensuring a comprehensive understanding of rights and responsibilities.

Agree on how to divide assets:

Spouses are encouraged to reach an amicable agreement on how to divide their assets. Negotiating and settling out of court can save time, costs, and emotional stress. Mediation is often employed to facilitate constructive communication and compromise.

Legally binding financial agreement:

To make the division of assets legally binding, spouses can enter into a financial agreement. This document outlines how assets will be divided and can be presented to the court as part of a divorce petition.

Civil partnership:

The principles of asset division also apply to the dissolution of civil partnerships. Similar considerations, such as financial contributions and standard of living, guide the division of assets in these cases.

Sale of the house:

In some cases, the family home may need to be sold to facilitate the division of assets. The proceeds are then divided according to the agreed-upon or court-determined distribution.

Children involved:

When children are involved, their welfare is a primary consideration. The court may take into account the financial needs of the children when determining the division of assets.

Will all property be divided?

In a divorce, the property that needs to be divided typically falls into two categories: marital property/ matrimonial assets and separate property.

Marital property:

Marital property includes assets acquired during the course of the marriage. This can encompass a wide range of items, such as:

  • Real estate: The family home and any other properties acquired during the marriage.
  • Financial assets: Bank accounts, investments, retirement accounts, and pensions accumulated during the marriage.
  • Personal property: Vehicles, furniture, electronics, jewellery, and other possessions acquired during the marriage.
  • Business interests: If either spouse owns a business established during the marriage, its value may be subject to division.

Separate property:

Separate property generally includes assets owned by one spouse before the marriage or acquired through inheritance or gifts during the marriage. Separate property might include:

  • Pre-marital Assets: Any property or assets owned by either spouse before they got married.
  • Inheritance: Property received through inheritance by one spouse.
  • Gifts: Assets given as gifts to one spouse, provided they were intended for that individual and not for the couple jointly.

In England and Wales, the approach to splitting assets in a divorce is based on the principles of fairness and needs rather than a strict division of marital and separate property.

The focus is primarily on the “matrimonial assets.” This will include all the financial resources that have been built up during the marriage. This encompasses not only the assets acquired during the marriage but also the financial contributions and efforts made by both spouses during that time.

The court aims to achieve a fair outcome, taking into account the needs of both spouses and any dependent children. This means that the starting point is not necessarily an equal division but rather what is considered fair based on the specific circumstances of the case.

While the concept of separate property exists, the distinction is not as rigid as in some other legal systems. Generally, pre-marital assets, inheritances, and gifts may be considered during the division of assets, but they are not automatically ring-fenced. The court has the discretion to include them in the overall financial settlement based on the needs of the parties involved.

What is a “Clean Beak Order”?

In some cases, the court may issue a “clean break order,” which aims to sever financial ties between the divorcing couple. This order may specify the division of assets, ongoing financial support (if any), and other financial arrangements.

How is property divided in a divorce using ancillary relief?

Ancillary relief, now often referred to as financial remedy, pertains to the legal process by which financial matters are resolved in divorce or dissolution of civil partnerships. It involves determining how the matrimonial assets should be distributed between the parties.

Key Steps in Ancillary Relief (Financial Remedy) Process:

Filing a divorce petition:

The process typically begins with one spouse filing a divorce petition. Ancillary relief proceedings are not dealt with during divorce proceedings as they are a separate matter; however, they may run at the same time as the divorce proceedings.

Financial disclosure:

Both parties are required to provide full and honest disclosure of their financial circumstances. This includes details of income, assets, debts, and other financial resources. The court relies on this information to make informed decisions.

Negotiation and mediation:

Before heading to court, couples are encouraged to explore negotiation and mediation to reach an amicable agreement on the division of assets. Mediation involves a neutral third party facilitating discussions between the spouses.

Court application:

If an agreement cannot be reached through negotiation or mediation, either party may apply to the court for a financial remedy order. This application is made on a Form A.

First Appointment (FDA):

The court sets a First Appointment to review the case, identify key issues, and explore possibilities for settlement. The court may give directions for further evidence or suggest mediation.

Financial Dispute Resolution (FDR) Hearing:

The FDR is a crucial stage in the process. It is a court hearing where a judge provides an indication of what they believe would be a fair settlement. This can encourage the parties to reach a final agreement without the need for a full trial.

Final Hearing:

If an agreement is not reached at the FDR, a final hearing may be necessary. During this hearing, both parties present their cases, and the judge makes a decision on how the assets should be divided.

Financial Remedy Order (Consent Order):

If an agreement is reached, whether through negotiation or court decision, the terms are formalised in a Financial Remedy Order or Consent Order. This order is legally binding and outlines the agreed-upon financial arrangements.

How can Expert Family Law’s panel of solicitors help with the division of property?

Our panel of solicitors can deal with all aspects of a divorce, including ancillary relief and the splitting of assets between parties to a divorce.

The breakdown of a marriage is never easy, and we aim to ensure the process of obtaining ancillary relief is as stress free as possible.

We ensure that the divorce solicitors on our panel have the skills and experience required to assist on your legal case. We can assure you that your case will be dealt with in a compassionate and understanding manner.

The solicitors on our panel can assist you through the process of divorce, including the application, as well as assisting you with child arrangements, financial settlements and ancillary relief following the termination of your marriage.

Get in touch today using the form at the top of the page to find out if a divorce solicitor from our panel could help on your case.

Please note we are not a firm of solicitors. We maintain a panel of trusted and regulated legal experts. If you contact us in relation to a case, we may pass your case on to a panel firm in return for a fee from our panel firms. We will never charge you for passing on your case to a panel firm.

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