Divorce is the legal ending of a marriage, and for many people it is also necessary to separate financial arrangements. Divorce itself does not necessarily deal with the financial position – if you want to have a “clean break” then finances need to be agreed upon separately.
Separation of assets can be a straightforward, if both parties agree the position and there are no children involved. But where there are family interests to consider, or a difference of opinion on how property should be split, this may not be so clear cut. Even if the split is agreed, the financial position should still be formally documented to prevent claims in the future.
If agreement cannot be reached, then it may be necessary to apply to the courts for a decision.
Please note, although we may refer to ‘marriage’ and ‘divorce’ here, the process for dividing finances when ending a civil partnership is broadly the same and the information on this page should therefore still apply.
Sharing assets on divorce
List your assets – this will include any property, savings, investments, endowment or life insurance policies, pensions etc. Whether the ‘Assets’ are in joint or sole names they should be included at this stage. You should also include any vehicles or other possessions which have a value of more than £500.00.
Work out the short term living arrangements – it is more expensive to live apart than to live together. If the split is amicable, then some choose to co-habit (space permitting) in order to put them in the best possible financial position moving forwards.
Review financial needs – the types of factors taken into account are:
Who will be primary carer of the children?
What are your respective housing needs?
What is your income and income capacity?
What are your financial obligations?
How old are you?
What contribution (financial or otherwise) has been made to the marriage?
Do you have any illness or disability?
What was your standard of living during the marriage?
If you agree on a reasonable division of assets, that is usually enough for the courts to approve the agreement. However, if you cannot agree you can apply to the court to decide.
How do you make the division legally binding?
A consent order is used to make your agreement legally binding – unless and until you receive a consent order from the court, any agreement you make with your spouse remains informal and open to dispute.
Solicitors can draft a Consent Order for you.
Is it necessary to make it legally binding?
Pension Funds usually require a formal consent order before they can divide the fund.
With other assets it is strongly advised to have a Consent Order in place. You may have seen in the press articles written about people claiming from former spouses who have won the lottery years later. If they had put a Consent Order in place this would not be possible.
Divorce and finance FAQs
Children and Divorce
Children are a significant factor and influence the division of assets and finances during a divorce. The children are a primary concern and it needs to be considered whether one party can remain in the family home or whether alternative accommodation needs to be obtained. Financial provision also needs to be put in place for the primary carer.
Behaviour is not generally a factor when considering financial agreements. This is why it can be helpful to have an independent mediator to assist, where one party feels wronged.
Property is a special consideration, as you will both need somewhere to live after the divorce. If children are involved, housing them will be a priority.
Do we need a financial agreement if we have no property?
Even if you have no assets at the time of the divorce, if you have assets at a later date your ex-spouse may still be able to make a claim for those assets to be divided between you. By entering into a ‘clean break consent order’ now you will be able to dismiss any future claims that your spouse has on your finances, this will ensure that any future assets e.g. an unexpected inheritance or a lottery win are safe from a claim.
Do we have to use a mediator?
Mediation is only mandatory if you are considering making an application to the court. Before you can make an application to the court, you must attend a Mediation Information and Assessment Meeting (‘MIAM’) with a mediator (unless you fit into one of the exemptions). This does not mean that you must enter into full mediation with your spouse, but you must attend the MIAM.
Do we have to go to court?
You will need a court to approve your Consent Order, but that does not mean that you need to attend court in person. Most Consent Orders will be approved on the basis of the paperwork submitted and your attendance will not be required.
If you cannot agree on the division of your finances then you may need to make an application to the court for a decision to be made, you will need to attend court in this instance.
How much will it all cost?
A clean break, consent order, upon which you are both agreed as to the contents and split cost £500 + vat. The court fee is £50.00.
If matters are not agreed, we will assess your case and give you an estimate of our likely charges. Each case is different and will require varying time to be spent on the matter – but the more that can be agreed and the more information that you are able to supply the lower the cost.
The information provided in all of our blogs reflects only a narrative of some elements to consider on the topic. The blogs do not contain considered legal advice and should not be relied upon as advice. Please see our website terms and conditions for full details of our disclaimer. If you are interested in obtaining advice, please contact one of our lawyers who will be happy and able to advise you on your own particular circumstances.