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Separation and divorce can unfortunately be a very stressful situation. A major concern when a dispute arises in connection with a divorce is what will happen to the assets owned between the parties. This is as the assets are often split in the event of a divorce. How these assets are to be split will often depend on how the court exercises its discretion, by upholding what is considers to be ‘fair’ in light of the circumstances of the case.
This article will set out how assets are divided in the event of a divorce in England and Wales and how the court may exercise its discretion in such cases.
What assets are included in a divorce?
The court will look at s.25 of the Matrimonial Causes Act 1973 (‘MCA’), which sets out the factors that the English and Welsh courts will take into account when deciding how the assets are to be divided. Further, the court will need to place particular importance when there are children under the age of 18 involved, as the court is to prioritise welfare and needs of the child(ren).
Matrimonial assets are assets with any financial value which either you, your spouse, or you and your your spouse jointly have obtained in the in the course of your marriage. They could include:
- The family home
- Savings and investments
- Pensions
- Cars, valuables and personal belongings
- Businesses and shares
- Debts and liabilities
The key factors the court considers when dividing the assets in a divorce (s.25 factors):
Section 25 of the MCA sets out the issues the court will take into account. The are as follows:
- Welfare of the children – their needs are of the highest priority (s.25 (1) MCA), especially in terms of housing and stability.
- The financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future (s.25 (2) (a) MCA) – current and future needs of both parties, for example housing, bills and childcare.
- The standard of living enjoyed by the family before the breakdown of the marriage (s.25 (2) (c) MCA) – this helps to assess what is fair.
- The age of each party to the marriage and the duration of the marriage (s.25 (2) (d) MCA) – long marriages often lead to a 50/50 split; shorter ones might result in less sharing.
- Any physical or mental disability of either of the parties to the marriage (s.25 (2) (e) MCA).
- The contributions made by each of the parties to the welfare of the family, including any contribution made by looking after the home or caring for the family (s.25 (2) (f) MCA) – this includes both financial and non-financial contributions.
In applying the criteria, the court will look at what the needs are of the parties as well as the needs of any dependent children. This can potentially result in an uneven split of assets, where in taking into account the circumstances of the case, the needs of one party are greater than the other.
How assets are split:
The court will exercise its judgement based upon the circumstances of the case at hand and what it considers to be ‘fair’ in light of the needs of the parties. The court can make the following:
- Equal split (50/50): A common starting point in long marriages is that the court will order an equal split, particularly where both partners contributed equally to many different assets.
- Unequal split: An unequal split is likely to be granted where one party has significantly greater needs than the other, such as caring for children.
Can I protect my assets during a divorce?
The timing of making efforts to protect the assets will be a very important question for the court to consider. This is because it is possible to transfer assets into your sole name before, or during the divorce. If the assets are transferred into a person’s name before the divorce was even in the contemplation of the parties, it is likely the court will not object or have any problems with this disposition.
However, issues may arise where a party transfers assets into their sole name during the divorce proceedings. This is as the inference can be drawn that the party may be transferring the asset(s) into their own name to prevent them being a part of the divorce settlement. This is often referred to as ‘putting assets beyond a person’s reach.’ If this is found to be done, maliciously with no good faith, then this can be seen as misleading the court.
A party who misleads the court can be held in contempt of court, which can be punishable by fines, imprisonment (up to 2 years) and even the confiscation of assets. Therefore, it is advisable a party does not make a disposition of assets in their sole name during the divorce proceedings.
Conclusion:
To conclude, the division of assets in a divorce settlement will not necessarily be equal. The court will essentially determine how assets are to be divided by exercising its discretion to uphold what will be perceived to be fair and reasonable. This will differ from case to case as the court will deal with such disputes based on the facts and circumstances of each case, taking into account the provisions of s.25 MCA to help make its decision.
Lawdit Solicitors are specialists in family law, with extensive experience in divorce settlements and the division of assets. If you are seeking expert legal advice on divorce or any other family law matters, our dedicated team is here to help. Please don’t hesitate to contact us or book a consultation today.
This article was written by Sarabjit Roath, a work experience intern at Lawdit Solicitors.
