19 June 2024

Divorce; Splitting Assets In The UK | Family Law Advice | Kew Law

When going through a divorce, it is necessary to resolve the ‘matrimonial finances’. This will involve splitting assets during your divorce in the most fair way possible in the eyes of family law in the UK. Read on to discover what the courts consider during this time.

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Section 25 of the Matrimonial Causes Act

The Court is bound by the Matrimonial Causes Act 1973 (‘MCA 1973’) to consider ‘all the circumstances of the case’ (section 25(1)) in order to make a decision on what is a fair division of the assets in a divorce. This means that the Court must consider all of the relevant issues in each case.

The Court is guided by the ‘section 25 factors’ in the MCA 1973 to make the decision for the parties, as follows:

  1. The income, earning capacity, and other financial resources of each of the parties;
  2. The financial needs, obligations and responsibilities of each of the parties (any minor children are the first consideration of the Court);
  3. The standard of living enjoyed by the family before the breakdown of the marriage;
  4. The age of each party and the duration of the marriage;
  5. Any physical or mental disability of either of the parties;
  6. The contributions each of the parties has made, or is likely to make in the foreseeable future for the welfare of the family (financial and non-financial contributions);
  7. The conduct of the parties, if it would be unfair for the Court to disregard it;
  8. The value of each of the parties to the marriage of any benefit that the party will lose the chance of acquiring as a result of the dissolution or annulment of the marriage.

As well as considering the above factors in each case before the Court, it is also the duty of the Court to consider whether there is a possibility to achieve a clean break (section 25A). This essentially means whether an order can be granted to end the parties’ financial obligations to each other.

Should assets be split 50/50 in a divorce?

However, the Court is also guided by case law (decisions made by Judges in key cases) to help their decisions. One landmark decision is White v White [2000] UKHL 54, whereby the Court determined that the starting point for all divorces and division of the matrimonial pot is to check against the “yardstick of equality”, and by that notion, consider should assets be split 50/50 in a divorce, or is it appropriate to depart from such equality when considering the needs of the parties and any minor children. This case also determined that non-financial contributions should be considered as well as financial contributions in a marriage.

The decision to depart from equality of division of assets can be necessary when, for example, there is a party who is a lower-earner or primary care-giver for the parties’ children, and therefore will require assets split in their favour in order to allow them to financially move on following the divorce and meet their needs. However, this is always considered on a case-by-case basis.

Oftentimes, questions can arise about assets gained by parties prior to the marriage, after separation, and anything that did not arise as a result of the marriage (such as inheritance). The Court will take this into account, and arguments can be made about ring-fencing such assets as being ‘non-matrimonial’ in nature, and in turn not being shareable. However, in very rare cases, the Court can consider sharing non-matrimonial assets if there are insufficient assets within the matrimonial pot in order to meet the needs of the parties.

The Court’s goal is to ensure that at the end of any proceedings, the matrimonial pot has been divided in accordance with the needs of the parties and any minor children, taking into account the above factors. Should there be a level of surplus assets, the Court is bound to divide these equally, even if the needs of the parties necessitated that there should be a departure from equality. However, surplus assets can often be seen in higher-net worth cases. In most matters, the Court may be grappling with assets that may be just sufficient to meet the needs of the parties alone.

How is a fair decision made when splitting assets in a divorce?

It is vital that the parties offer up full and frank disclosure of their finances to allow the Court to reach a fair decision in how to divide the matrimonial pot. Should there be non-compliance in respect of this, the party who has not conducted themselves in accordance with the Court’s requirements can risk an order made against them, and therefore can risk skewing the division of assets in favour of their spouse who has complied with Court directions.

 

 

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