A Guide to Money and Property When You Divorce
Going through a divorce is one of life's most challenging experiences, and understanding how money and property will be divided can feel overwhelming. This comprehensive guide will help you navigate the complex world of divorce financial settlements, explaining who gets what in a divorce and what you can expect throughout the process.
Understanding Divorce Financial Settlements
When a marriage ends, one of the most significant concerns is how your finances will be divided. A divorce financial settlement encompasses all decisions about splitting assets in divorce, from your family home to bank accounts, pensions and personal belongings. Understanding your rights and entitlements is crucial for protecting your financial future.
The court's primary focus when determining money and property when you divorce is fairness rather than a simple 50/50 split. This means the final settlement will depend on your unique circumstances, including the length of your marriage, your respective incomes, and your future needs.
What Assets Are Included in a Divorce Settlement?
During a divorce, the financial settlement considers both shared and individual assets. Understanding the distinction between matrimonial and non-matrimonial assets is key to knowing what may be included.
Matrimonial Assets
Matrimonial assets are those acquired during your marriage and typically include:
The family home and any other properties
Joint bank accounts and savings
Pensions accumulated during the marriage
Investments, stocks, and shares purchased together
Vehicles, furniture, and household items
Business interests developed during the marriage
Valuable items like jewellery, art, or collectibles
Non-Matrimonial Assets
These are assets acquired before or after your marriage, including:
Property owned before marriage
Inheritances received by either spouse
Gifts from family members
Assets acquired after separation
Pre-marital savings and investments
It's important to note that non-matrimonial assets aren't automatically excluded from settlement negotiations. If these assets have been used for matrimonial purposes or have become intermingled with marital assets, they may be considered part of the matrimonial pot.
Understanding Who Gets What in a Divorce
Several factors influence who gets what in a divorce:
Children's welfare: The needs of any children from the marriage are given priority in settlement decisions.
Financial needs and resources: The court considers each spouse's current and future financial situation, including earning capacity and financial obligations.
Standard of living: The lifestyle maintained during the marriage influences expectations for post-divorce financial arrangements.
Age and health: These factors affect earning potential and future financial security.
Contributions to the marriage: This includes both financial contributions and non-financial contributions like childcare and homemaking.
Length of marriage: Longer marriages typically result in more equal asset division, while shorter marriages may see more assets returned to their original owner.
What Happens to the House in a Divorce?
The family home is often the most valuable asset and the most emotionally significant. What happens to the house in a divorce depends on several factors, including whether children are involved, how the property is owned, and the financial circumstances of both parties.
Common Options for the Family Home
Sale and division: The most straightforward approach where the property is sold and proceeds divided according to the court's determination or mutual agreement.
Transfer to one spouse: One party may keep the house, often offset against other assets like pensions or savings. This frequently happens when children need stability.
Deferred sale: The house may remain unsold until a later date, such as when children reach 18 or finish education, with one parent remaining as the primary occupant.
Continued joint ownership: Less common but possible, where both parties retain ownership with specific arrangements for occupation and maintenance costs.
The decision often prioritises the needs of any children involved, with the primary caregiver frequently remaining in the family home to provide stability. For unmarried couples, different legal principles apply when it comes to property ownership.
How Are Child Arrangements Decided During Divorce?
Child arrangements, such as where a child lives and when they see each parent, are handled separately from financial matters and may require a separate court application. The court’s main priority is always the child’s welfare.
Below, we explore how child contact and financial arrangements may be considered during divorce.
Financial Settlements
The parent who becomes the primary caregiver often receives a larger share of matrimonial assets to ensure the children's needs are met. This can affect:
Housing arrangements: The family home frequently remains with the primary caregiver to provide stability for the children, even if this means an unequal division of assets.
Ongoing financial support: Child maintenance calculations consider both parents' incomes and the custody arrangement, with the non-resident parent typically paying maintenance to support the children's daily needs.
Future financial planning: Courts consider the long-term financial impact of childcare responsibilities, including reduced earning capacity for the primary caregiver.
Child Contact
Child arrangements cover where a child lives, when they spend time with each parent, and how major decisions about their upbringing are made. These are not determined as part of the financial settlement and may require a separate application to the court.
Common types of arrangements include:
Lives with / spends time with: One parent may be named as the parent the child "lives with", while the other has regular, scheduled contact.
Shared care arrangements: In some cases, children spend significant and roughly equal time with both parents. This doesn’t always mean a 50/50 split, but it reflects joint responsibility and involvement.
Flexible arrangements: Depending on the child’s age, needs, and the parents’ circumstances, more flexible or informal agreements can be made and formalised if needed.
If you're unsure how to approach child arrangements or financial matters during divorce, RJS Family Law is here to help with clear advice and compassionate guidance tailored to your situation.
Financial Considerations for Child Arrangements Order
The non-resident parent typically pays child maintenance calculated using the Child Maintenance Service formula, considering both parents' incomes and the number of nights children spend with each parent.
Beyond basic maintenance, parents may need to agree on sharing costs for:
School fees and educational expenses
Healthcare and medical costs
Extracurricular activities and hobbies
Holiday and travel expenses
Clothing and equipment needs
Working parents may need financial arrangements for childcare, nursery fees, or after-school care, which can be factored into maintenance calculations.
Impact on Property Division
Children's needs significantly influence property decisions:
School catchment areas: Maintaining children's school stability may influence which parent keeps the family home or where the primary caregiver relocates.
Space requirements: The primary caregiver may need a larger property to accommodate the children, affecting the overall asset division.
Proximity arrangements: Parents may need to consider maintaining homes within reasonable distance to facilitate contact arrangements.
Divorce and Inheritance Explained
Whether inherited assets are included in divorce settlements depends on timing, use, and how they were managed during the marriage.
Inheritance is more likely to be shared if it was received early in a long marriage, used for joint purchases like the family home, or mixed with matrimonial finances. To protect inherited assets, keep them completely separate from joint finances and maintain clear records of their source.
Dividing Pensions in a Divorce Financial Settlement
Pensions often represent one of the most valuable assets in a marriage and are automatically considered part of the financial settlement. There are several ways pension assets can be handled:
Pension sharing transfers a percentage directly to your ex-spouse, creating separate pension pots and complete financial independence.
Pension offsetting balances the pension's value against other assets - one spouse keeps their full pension while the other receives more property or savings.
Pension attachment requires the pension holder to pay their ex-spouse a portion of income when they retire, maintaining ongoing financial connection.
The choice between these options depends on factors like age, other assets available, and the desire for financial independence post-divorce.
Splitting Assets in Divorce
Understanding how assets are divided in divorce requires recognising that courts aim for fairness rather than mathematical equality. The process typically follows these steps:
Full financial disclosure requires both parties to provide complete details of all assets, debts, income, and financial commitments.
Asset valuation involves professional assessment of property, businesses, pensions, and valuable items to determine accurate values.
Needs assessment considers each party's housing requirements, income needs, children's requirements, and future financial security.
Fair distribution balances all factors to create a settlement that meets both parties' reasonable needs, which may not be mathematically equal.
Practical Steps for Protecting Your Interests
Taking early, informed action can make a significant difference in securing a fair divorce settlement. From gathering financial information to planning for the future, the following steps can help you protect your interests and feel more in control during the process.
Gather Financial Documentation
Start by compiling all relevant financial records. This will form the foundation of any discussions around asset division:
Bank statements for all accounts
Property deeds and mortgage statements
Pension statements and valuations
Investment portfolios and statements
Business accounts and valuations
Credit card and debt statements
Consider Mediation
Mediation is often a more cost-effective and less confrontational route than going to court. It allows both parties to have a say in the outcome, encourages cooperation, and can reduce emotional strain, especially where children are involved.
Seek Professional Advice
Getting the right professional support early on can save time and prevent costly mistakes:
Family law solicitors for legal advice
Financial advisors for pension and investment guidance
Accountants for business asset valuation
Property valuers for accurate home valuations
Plan for the Future
It’s important to think beyond the immediate settlement and consider your longer-term needs:
Can you maintain your lifestyle on the proposed settlement?
Will your pension provide enough for retirement?
How will your children’s future needs be covered?
Are you prepared for potential changes in circumstances, such as health or income?
Moving Forward with Confidence
Dividing money and property in divorce can be complex, but understanding your rights is the first step toward securing your future. Every situation is different, so it’s important to get tailored advice that reflects your needs.
For clear guidance and expert support, speak to RJS Family Law — we’re here to help you protect what matters most.
FAQs
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Not always. Options include selling the property and dividing the proceeds, one spouse buying out the other, or deferring the sale until a later date (such as when children reach adulthood). The court will consider what’s fair and what supports any children’s best interests.
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There’s no set formula for dividing assets in a UK divorce. While a 50/50 split is often the starting point, the final outcome depends on each party’s financial needs, the welfare of any children, and factors like income, contributions, and future earning capacity. Settlements are based on fairness, not strict equality.
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Not always. Although courts may begin with the idea of a 50/50 split, they will adjust this if one party needs a larger share to meet their needs, particularly where children are involved. The goal is to achieve a fair outcome, which may mean a different division depending on your circumstances.
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No, many couples resolve financial matters through mediation or solicitor-led negotiation. However, if an agreement can’t be reached, a court may need to decide.
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Savings built up during the marriage are usually considered matrimonial assets and can be subject to division. If the savings were acquired before the marriage or from an inheritance, they might be treated differently, especially if they haven’t been mixed with joint finances. However, they can still be considered if needed to meet either party’s reasonable needs.
Author: Rachel McGrath
Rachel is a family solicitor and heads up the RJS team. Rachel has been qualified for almost 22 years and as a specialist in family law, Rachel is a family accredited solicitor with the ‘Law Society’ as well as being a member of ‘Resolution.’ Resolution is a body of family lawyers committed to resolving family disputes in a constructive and non-confrontational way.