Dividing Finances on Divorce: How do the UK Courts Decide?

Making the decision to end a marriage is difficult on both an emotional and financial level. The first thing to be aware of is that there’s no standard formula for calculating financial provision on divorce. Instead, the aim is to achieve a fair outcome.

The Court has a duty to consider all the financial circumstances of your case and its first consideration must be the welfare of any child under 18 years old. It will then consider a range of statutory factors, found in section 25 of the Matrimonial Causes Act 1973 (section 25 factors, see below).

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Section 25 Factors include:

      • The financial history of the marriage
      • The present earning capacity, income expenses and assets of each party
      • Pensions, inheritances and other foreseeable future gains
      • Needs, both present and future
      • The length of the marriage
      • The age and health of the parties
      • Contributions made by either party (including non-financial contributions such as bringing up children).

A Judge will decide on the fairest way to divide your financial resources and they have a lot of discretion. However, a standard approach has developed, with a starting point of equal division of assets acquired during the course of the marriage.

Where there aren’t enough financial resources to adequately meet both you and your spouse’s needs, then the Court may divide the financial resources unequally or delay equal division. A classic example of delaying equal division can occur where the matrimonial home may not be sold until any children reach the age of 18 - at which point the proceeds of the sale are divided.

What Counts as an Asset Acquired During the Marriage?

As the Court must first address the needs of you and your spouse, the distinction between financial resources acquired during the course of your marriage or pre-acquired and/or inherited assets may be of little significance. If you and your spouse’s needs can be met by the financial resources available, then the Court will look at the facts of your case, such as the length of the marriage, to determine entitlement to assets acquired outside the marriage.

Generally, the matrimonial home is seen as a shared asset to be divided equally, although in a small number of cases this can be departed from, for example, where the marriage has been a short one and there are no children.

It may be that you and your partner can come to an agreement as to how to divide your financial resources when you divorce. A Divorce Solicitor or mediator can assist you in such an agreement and prepare the necessary documents to make the agreement legally binding. If you can’t reach an agreement, then financial remedy proceedings may need to be issued.

For related information see Divorce Financial Orders and Financial Settlements.

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