One of the most difficult and headache-inducing aspects of divorce is the division of finances and property. Many seek out ‘family mediators near me’ in order to save time in seeking settlements before going to court.
In the UK, there is no fixed formula for dividing assets: the aim is to achieve what the courts call a ‘fair’ outcome according to the circumstances of each case.
According to the latest figures from the UK Ministry of Justice, more than 59,000 applications for financial settlements were made to the family courts, demonstrating the prevalence of such disputes.
The principle of fairness in UK divorce law
The fundamental idea in financial settlements after divorce is fairness, not equality. According to section 25 of the Matrimonial Causes Act 1973, the courts must consider all the circumstances of the case in order to reach a fair result, which often – but not always – results in an approximately equal distribution of matrimonial property.
Key principles Courts follow
Depending on the case, judges have several factors to determine what is fair and what is not when dividing assets.
Needs
Financial needs often take priority, especially those relating to housing or maintenance. If one spouse has primary custody of the children, his or her needs often take precedence.
Contributions
Another factor that is taken into account is contributions. Both financial (wages) and non-financial (raising children).
Standard of living during marriage
Courts try, as far as possible, to maintain the standard of living achieved during the marriage, which influences decisions on alimony and division of property.
Age, health, and earning capacity of each spouse
Age can also play a role in making a decision. Judges tend to favour older people, as you have less earning capacity than a younger person.
Welfare of children
When children are involved in a divorce, their welfare is always paramount. Therefore, the custodial parent usually receives a higher compensation and division of assets.
What counts as a ‘Matrimonial Asset’?
Matrimonial assets are, as the name suggests, those assets that have been acquired during the marriage and are subject to distribution. Among them we can find:
- Property, regardless of who paid for it
- Savings and investments, in joint or individual accounts.
- Pensions, representing up to 40% of a couple’s total assets.
- Vehicles
- Businesses and companies
- Debts, such as mortgages, personal loans or credit cards.
Non-matrimonial assets
Non-marital assets are those that are left out of the distribution because they were acquired before or after the marriage. For example, inheritances or personal gifts can be treated as non-matrimonial property as long as they have not been used for joint benefit.
How to reach a financial settlement
There are two ways to reach an agreement and make the divorce more manageable and beneficial to both parties.
Family mediation
MIAM mediation services are a voluntary process where agreements are negotiated more quickly and inexpensively than a traditional trial. According to the Family Mediation Council, 70% of couples who try mediation reach an agreement.
Court decision
If mediation is not possible or fails (e.g. in cases of domestic violence), the court may impose a resolution. This implies higher costs and longer times: a court proceeding for economic sharing can take more than 12 months to resolve.
