In the UK, the starting point or default position for dividing assets during a divorce is 50/50. Most ex-spouse’s would agree that they want an equitable split of their shared matrimonial assets, or the financial product that has been built up during the marriage and belongs to both parties. However, equitable does not mean even; it means fair and impartial, and a fair distribution of assets may not be a 50/50 one. Typically, if it can be shown that one spouse would suffer financial hardship if the assets were split equally, then a 50/50 split would not be advisable or agreed to by a court.
When dividing how marital assets will be split in a divorce, a court will take several issues into consideration
These issues include:
- The income and earning capacity of each spouse
- Property and other financial resources each spouse is likely to have in the foreseeable future
- The financial needs, obligations, and responsibilities each spouse has or will likely have in the future
- The standard of living held by the family before the divorce
- The age of each spouse
- The duration of the marriage
- Any physical or mental disabilities of either spouse
- The contributions each party made to the welfare of the family. In situations where one spouse was the main wage earner while the other was the homemaker, this is often considered an equal contribution
- The conduct of each spouse, if it’s relevant to the opinion of the court
As you can see, several different circumstances could impact whether a 50/50 split of assets is truly equitable. The best way to ensure you’ll be able to maintain your standard of living after your divorce and are getting a fair and impartial split of your assets is to use the guidance of a Financial Adviser. A Financial Adviser can help deduce what is a truly equitable split of your assets and, if required, provide evidence of this to a court.
To deduce what an equitable split of assets would be, your Financial Adviser will consider several factors:
1. If you’ve been financially dependent on your spouse
There are many reasons why one party in a marriage may be financially dependent on their spouse. This could be due to their age, their health, or family circumstances like one spouse sacrificing their career to take on the responsibility of raising children.
If you’ve been financially dependent on your spouse, it may be in your best interest to seek a lump sum payment order or spousal maintenance, which is periodical payments either for a defined number of years or the remainder of both parties’ lives.
The goal of a court during divorce proceedings is to reach a settlement where you and your ex-spouse will be independent of each other as soon as possible. If you’ve been financially dependent on your spouse, it will naturally take you longer to become financially independent and a 50/50 split would not be reasonable.
2. If circumstances, like health or caring for young children, prevent you from having an earning capacity
In a divorce, both you and your ex-spouse have a duty to try to be self reliant as soon as possible. This usually means maximising or at the very least maintaining the income you had during your marriage.
However, certain circumstances like mental or physical health conditions could impact your future earning capacity. If you’re taking on majority or full custody of children after a divorce, your earning capacity will also be affected.
If you do not have an equal earning capacity as your spouse, it would not be reasonable to accept an equal split of marital assets.
3. If you owned a home with your ex-spouse
Marital homes are often one of the greatest assets accrued during a marriage, both financially and emotionally. When considering what will happen to the family home after a divorce, there are several possibilities:
- Sell and Split: You may decide to sell your marital home and split the money in some way with your spouse. Just as with other matrimonial assets, an equitable split of this money would depend on several factors, including how much each of you contributed to the initial purchase.
- Buying Out: One of you may seek to be the sole owner of the marital home by buying out your ex-spouse. This payment could be made all at one or over several years.
- Mesher Order: This order, which is exclusive to England and Wales, would mean that the sale of a family home could only happen after a determined trigger point, for example when the youngest child moves out.
- Indemnify Liabilities: Your bank or lender may refuse to release you or your ex-spouse from the mortgage. The person staying in the marital home may then decide to indemnify the other from liabilities and take on the full mortgage payment themself.
Don’t lose out on what is fairly yours
Divorces are incredibly stressful. If, for any of the reasons mentioned above, you believe you’re due more than a 50/50 split of assets, it’s important that you have the guidance and support to help you get what’s fairly yours.
A Financial Adviser can help you achieve financial fairness by considering all your past and current circumstances and guiding you towards your future goals. At Robson Laidler Wealth, we value family harmony, financial confidence, and achieving fair resolutions through the turbulent emotions you may be experiencing. Get the help you deserve today by booking an appointment with us here.