How will my assets be divided?

It is often the most important question in the mind of anyone facing divorce: how will their assets be divided?

Whether you are extremely wealthy and wish to preserve as much of that wealth as possible or, at the other end of the scale, you are simply anxious to keep what few assets you possess, you will want to know the answer to the question.

And to provide the answer we must look at the law that the court will apply when deciding how to divide the assets.

The starting-point is that, when coming to its decision, the court must have regard to all of the circumstances of the case, the first consideration being given to the welfare while a minor of any child of the family who has not attained the age of eighteen.

Thus, the fact that there is a dependent child will have a bearing. And in a case involving modest assets, it might be decisive. If, for example, the child is to live with one parent then that parent may need the lion’s share of the assets, in order to provide the child with suitable accommodation.

Most cases, however, are not so straightforward.

But saying that the court must have regard to “all of the circumstances of the case” is not very informative.

Thankfully, parliament has provided some assistance by setting out a list of matters to which the court should in particular have regard.

And there are also other principles that the courts themselves have devised to assist in the decision-making process.

We will begin by looking at the matters to which the court should in particular have regard.

Matters to which the court should in particular have regard

Parliament has set out a statutory list of eight such matters, as follows:

1. The income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future, including in the case of earning capacity any increase in that capacity which it would in the opinion of the court be reasonable to expect a party to the marriage to take steps to acquire. Obviously, the court will need to know what assets each party possesses, before it can make a decision as to how the assets should be divided. And it is also obvious that if a party already has significant assets of their own then, all other things being equal, they are likely to receive less of the other assets of the marriage.

2. The financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future. The two main such needs in most cases are income and housing needs. Many cases, especially those involving more modest assets, will be decided upon the basis of needs. Thus, for example, if one party’s needs are greater than the other party’s needs then the party with the greater needs may be awarded a greater share of the assets.

3. The standard of living enjoyed by the family before the breakdown of the marriage. If the parties enjoyed a high standard of living during the marriage then the court will attempt to divide the assets so that they can each continue to enjoy the same standard of living after the marriage. Of course, this may not be possible in many cases, with the same assets having to support two households, rather than just one.

4. The age of each party to the marriage and the duration of the marriage. Age can obviously be relevant to the question of needs, especially if a party is over, or approaching, retirement age. The duration of the marriage will, generally speaking, have little bearing upon how the assets are divided, although if it was a very short childless marriage then the court could take the view that the parties should simply be returned to the position they were in before the marriage took place.

5. Any physical or mental disability of either of the parties to the marriage. This could obviously be relevant to the needs of the disabled party.

6. The contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family. Note that ‘contributions’ does not just refer to financial contributions. Note also that there is a general principle of non-discrimination between the different roles assumed by each party during the marriage. Thus, the financial contribution of a money-earning party will not usually be considered to be more valuable than the contribution of a ‘hone-maker’ or a ‘child-carer’. Even a very substantial financial contribution is unlikely to entitle the party who made it to more of the assets, unless that contribution was truly exceptional (such a situation is extremely rare, and would only be likely to occur in very big-money cases).

7. The conduct of each of the parties, if that conduct is such that it would in the opinion of the court be inequitable to disregard it. It is quite often the case that one party to a divorce will be aggrieved at the conduct of the other party, and will consider that the conduct should result in the other party receiving less of the assets. However, to have a bearing upon the financial settlement the conduct will have to be of a particularly serious nature. Conduct is therefore very rarely a factor in the division of the assets.

8. Lastly, in the case of proceedings for divorce or nullity of marriage (i.e. not in the case of a judicial separation), the value to each of the parties to the marriage of any benefit which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring. The main such benefit will be in relation to the other party’s pension. Pensions will usually be dealt with by way of a pension sharing order, whereby all or part of one party’s pension will be transferred into a pension belonging to the other party. They can also be dealt with by an off-setting arrangement, whereby one party keeps their pension and the other party receives a greater share of other assets, in compensation. Pensions are usually divided in the same proportions as other assets, so that if the other assets are divided equally then the pensions will also be divided equally.

The principle of ‘matrimonial assets’

As mentioned above, there are other principles that the courts use to decide how to divide assets on divorce. One of these is the principle of ‘matrimonial assets’ (or ‘matrimonial property’).

‘Matrimonial assets’ are the assets that will always be divided between the parties on divorce. Non-matrimonial assets will usually not be divided, (save as mentioned below), and will therefore remain in the possession of the party who owns them.

The matrimonial assets are those assets that were acquired during the marriage, through the joint efforts of the parties to the marriage. Accordingly, assets acquired before the marriage, or after the parties separated, are considered to be ‘non-matrimonial’, as are inheritances and gifts to one party.

The exception to the rule that non-matrimonial assets will not be divided is where they are required to meet the needs of a party. In such cases that party may be awarded a share of the other party’s non-matrimonial assets.

The sharing principle

Another principle that the courts use to decide how to divide assets on divorce, and perhaps the most important principle of all, is the ‘sharing principle’.

The sharing principle states that, as a general guide, an equal division of assets between husband and wife should be departed from only if, and to the extent that, there is good reason for doing so.

Many cases are decided by the application of the sharing principle, with the matrimonial assets simply being divided equally between the parties.

The question then is: what is a good reason to depart from the sharing principle? Well, the most common reason is needs. Where the needs of one party are greater than the needs of the other party then the party with the greater needs are likely to receive more than half of the assets.

So how will my assets be divided?

The above summary sets out the most important matters and principles that affect how assets are divided on divorce.

As will be seen, there is no formula to decide how assets are divided. Each case will be decided upon the basis of its own facts. Further, the law is designed to give judges some leeway, so that there is often no definitive answer to the question.

It is therefore impossible in an article like this to provide a conclusive answer to the question, although hopefully we have provided some useful guidelines.

For a more full answer as to how you assets are likely to be divided on divorce you will need the advice of a specialist family lawyer, tailored to your particular case. We can provide you with such advice. To speak to one of our specialist lawyers, complete the form on this page.