Reaching a fair financial settlement is often the most complex and emotionally charged part of a divorce. Unlike the divorce itself – which since April 2022 follows a relatively straightforward no-fault process – dividing finances involves a much wider range of factors and rarely follows a fixed formula.
Here we explain how courts approach the division of finances in a divorce, what the key considerations are and why taking early legal advice can make a significant difference to the outcome.
Is there an automatic 50/50 split?
No and this is one of the most common misconceptions about divorce. While an equal division of assets is often a starting point, it is not a rule. Courts have wide discretion to depart from equality where the circumstances justify it, and in many cases the outcome will be different from a straight 50/50 split.
The starting point in most cases is to identify all of the matrimonial assets – everything accumulated during the marriage – and consider how they should be divided to meet the needs of both parties and any children.
What assets are taken into account?
Courts will consider all of the following when assessing the financial position of both parties:
- The family home and any other property
- Savings, investments and cash
- Pension funds – often one of the most significant assets in a marriage
- Business interests
- Debts and liabilities
- Income and earning capacity
Assets brought into the marriage or received as gifts or inheritance may also be relevant, though the court has discretion over how much weight to give them depending on the circumstances.
What factors does the court consider?
When making a financial order, the court must have regard to all the circumstances of the case, with the welfare of any children under 18 as the first consideration. Beyond that, the key factors set out in the Matrimonial Causes Act 1973 include:
- The income, earning capacity, property and financial resources of each party
- The financial needs, obligations and responsibilities of each party
- The standard of living enjoyed during the marriage
- The ages of the parties and the length of the marriage
- Any physical or mental disability
- Contributions made to the welfare of the family, including caring for children or the home
- The conduct of each party, where it would be inequitable to disregard it
- The value of any benefit – such as a pension – which either party will lose as a result of the divorce
What orders can a court make?
Lump sum orders – requiring one party to pay a specified sum to the other, either immediately or in instalments.
Property adjustment orders – transferring ownership of property from one party to the other, or ordering the sale of a property and division of the proceeds.
Pension sharing orders – dividing pension funds between the parties, giving each a separate pension entitlement.
Maintenance orders – requiring one party to make regular payments to the other, either for a fixed period or on an ongoing basis. Spousal maintenance can be varied or brought to an end if circumstances change significantly.
Clean break orders – where the court dismisses all future financial claims between the parties, giving both a complete financial separation. This is generally the preferred outcome where circumstances allow.
Do we have to go to court?
No – and in most cases it is better to reach an agreement without going to court. Negotiation between solicitors, or with the help of a mediator, is usually quicker, less expensive and gives both parties more control over the outcome.
Any agreement reached should be recorded in a consent order, which is then approved by the court. Without a court order, either party could make a financial claim against the other at any point in the future – even years after the divorce is finalised. A consent order makes the agreement legally binding and provides certainty for both parties.
What about cohabiting couples?
The law treats cohabiting couples very differently from married couples. There is no equivalent of the financial settlement process for unmarried couples – each party’s legal entitlement depends on what they own individually or jointly, rather than what they contributed to the relationship. If you are separating from a long-term partner you were not married to, the legal position can be significantly more complex and taking advice early is particularly important.
Get advice from Oxford family law solicitors
Every financial settlement is different and the outcome depends heavily on the specific facts of your case. Taking early legal advice helps you understand what a reasonable settlement looks like, protect your position during negotiations and avoid agreeing to terms that may not serve your long-term interests.
At Challenor Gardiner our family law solicitors in Oxford offer a fixed-price initial consultation of up to one hour for £150 + VAT. All initial enquiries are without cost or obligation.
Call us on 01865 721451, email info@challenor-gardiner.co.uk or contact us online.
Find out more about our divorce and family law services
Find out more about what happens to the family home in a divorce
This article is intended for general information purposes only and does not constitute legal advice. You should seek professional legal advice tailored to your specific circumstances before taking any action.