What are my financial rights in a divorce?
Your financial rights in a UK divorce include claims for property, lump sums, pensions, and spousal maintenance. Under the Matrimonial Causes Act 1973, the court will consider whether the assets should be divided equally or whether there needs to be a departure from this. Reasons to depart would be to meet needs (capital/housing and income), and also if there are assets either party considers should be ringfenced and kept out of the ‘pot’ for division. This may include assets acquired prior to the relationship and/or post-separation gains. Any outcome must ensure the welfare of any children involved is always prioritised.
Both spouses have equal rights in the divorce process. It is often thought that a wife has ‘better’ rights, but this isn’t the case.
The Matrimonial Causes Act 1973 states that married couples have certain legal rights to ask the court for a share of the other’s assets, income, or pensions upon divorce. Also known as financial claims, these include:
- Claims for periodical payments, like maintenance
- Claims against property
- Claims for lump sums, like when selling property
- Claims against pensions
The law in England and Wales means that both parties have the right to pursue these financial claims.
When negotiating my financial settlement, is there anything I am entitled to?
In terms of any assets you are entitled to, typically, all wealth and assets are ‘fair game’ during the negotiations in order to reach a fair settlement. The longer the marriage, the more intertwined lives and assets have become and the harder and less realistic it would be to distinguish who owns what. However, the Supreme Court’s ruling on Standish vs Standish has meant that courts can direct that non-matrimonial assets (assets obtained prior to marriage) are ringfenced and left out of agreements, depending on the circumstances and whether needs are otherwise met.
Nowadays, the court uses a qualitative assessment to see if assets were truly intended to be matrimonialised, rather than kept as non-matrimonial, to ensure fairness is maintained.
Before negotiations are started for the divorce financial settlement, parties are entitled to a full and frank disclosure of their spouse’s wealth and assets. This is usually done using a Form E, the court form for preparing financial disclosure. This requires parties to list and provide supporting evidence in respect of their assets, including:
- Bank statements
- Pension valuations
- Business accounts
- Property valuations
If your spouse is refusing to disclose their finances, the court can direct them to comply and there are serious penalties for failure to disclose or providing incomplete disclosure.
If you believe your ex is hiding assets or refusing to disclose their wealth or assets, our solicitors can help. Reach out to our team today for expert legal advice.
In divorce proceedings, how long do I have the right to make financial claims against my spouse?
You can negotiate and make financial claims at any point during the divorce process. However, a common misconception is that these rights automatically end when the marriage is legally over. Technically, your financial claims against each other remain open even after you have applied for a Final Order in your divorce and it has been granted.
The only way to permanently sever your financial connection is to have a judge approve a Financial Consent Order (often called a Clean Break Order).
Solicitor’s tip: It’s essential your Financial Consent Order is legally sound. If not, your ex-spouse could make further claims against your wealth in the future years after the divorce is finalised.
What is the percentage split to create a fair divorce settlement?
The starting point for a divorce financial settlement is a 50/50 split – however, it rarely ends like this. This is because the court assesses each party’s needs vs sharing in the financial settlement, considering:
- Each party’s standard of living
- Assets each party had prior to the marriage
- Shared assets
- Any savings and investments
- Each party’s income and earning capacity
- Pension pots
- Each party’s contributions to the marriage and family
- Any businesses
- Potential future earnings
- Each individual’s financial obligations, needs, and responsibilities
- The duration of the marriage
If you have any children, their needs are also paramount to the decision-making process.
If you want to find out more about how a financial settlement works, make sure to read our latest advice.
What right do I have to my spouse’s pension in a divorce settlement?
Each party has a right to part of their spouse’s pension during a divorce. Depending on how the family home has been split, the court may try to balance the asset division through pension pots. This can be done via:
- Pension sharing
- Pension earmarking
- Pension offsetting
The court will look at the pension valuations and the potential pension income. This is because they want to ensure that both parties can maintain an appropriate standard of living in retirement, not just an equal share of the current pot, to maintain fairness.
It’s important to note that each case is different. Although the Court approaches all divorce settlements with the same set of rules and guidelines, how assets are split in a divorce is unique to each individual circumstance.
How does spousal maintenance affect a financial settlement?
Spousal maintenance impacts a divorce settlement as one party may need to pay for the other to meet their needs. Typically, the court aims for a Clean Break, so you are financially independent from each other. However, if one party cannot meet their needs, spousal maintenance could be required to ensure they can afford to live.
In most cases, the court will provide a specific end date for the payments so that full financial separation is achieved. This could be when the youngest child turns 18 or finishes high school – as above, this is unique to each couple’s situation.
What right do I have to the family home in a divorce?
As per the court’s approach, both parties have equal rights to the family home during the divorce process, even if one party’s name is not on the deeds, as it is considered a matrimonial asset. In a settlement, the court may decide that the party with a higher income and/or savings would be able to raise a larger mortgage, and, therefore, would need less of the equity from the house (a smaller lump sum). With this in mind, the other party may get the greater share of equity or get to keep the family home entirely, providing the ‘leaving’ party with a lump sum in recognition of their share of the equity.
If children are involved, the court will prioritise their housing situation. The parent the children live with most of the time may have a greater need for keeping the family home or a larger share of equity.
To find out what happens to the joint mortgage when you separate, check out our latest advice.
Can one party get everything in a divorce?
Technically, yes, one party could get everything in a financial settlement, but this is incredibly rare. It would be in extremely rare circumstances that this would occur and even where one party is in prison, they usually get some part of the ‘pot’. The court’s goal is always fairness, rather than one person taking it all.
The sharing principle strives to ensure the parties’ wealth and assets are split equally. This is true whether you are the stereotypical breadwinner, homemaker, or a combination of both roles. The court recognises all contributions. Therefore, even if you have not financially contributed during the marriage, you are still entitled to half of the assets in accordance with the sharing principle, at least as a starting position.
Typically, if one party has a greater financial need than the other – maybe if they are taking care of the children – the division of assets and overall financial settlement will be adjusted to reflect this.
Hear from our divorce expert
Rebecca Bridson, an Associate at our London law office, says:
“The best way to ensure a fair outcome is achieved is that both parties engage in and complete full and frank disclosure.
“This way, a clear picture of their assets can quickly be built, and they can take advice on sensible settlement proposals as soon as possible.”
