Divorce Settlement Advice UK

Sorting out how you split the equity in the family home can be tricky. It can be a lot harder to reach a divorce settlement when you are also trying to agree on who pays the bank loan and credit cards, what happens to the pensions, and whether one of you should pay spousal maintenance and for how long.

In this blog, our family law solicitors answer your questions on divorce financial settlements. 

Call us for expert family law advice or complete our online enquiry form. 

Reaching a divorce settlement 

In the UK, divorce settlements are discretionary and based on reasonable needs. The statutory factors make it hard for couples to reach a financial agreement as English family law doesn’t say that a husband and wife must split their assets equally or that a wife must return to full-time employment when the youngest child is 11 or that a husband will always keep a family business owned before the marriage or even that the divorce court must follow a prenuptial agreement.

If there are no hard and fast rules, how are divorce settlements reached? Ultimately, if a husband and wife can’t agree, it is down to a family court judge to decide what happens to each asset and make a financial court order. The judge will look at statutory criteria and case law when making the order. When a divorce solicitor advises on likely divorce settlement outcomes, they base their advice on their experience in negotiating settlements and representing spouses in contested financial court proceedings. 

Divorce settlement advice  

If you need divorce settlement advice, it’s crucial to speak to a divorce lawyer. The solicitor will talk to you about your circumstances before offering advice. Examples of why information and talking are important include:

• It is often assumed there should be a 50/50 split of assets after a long marriage. However, that assumption could be displaced for several reasons, such as the wife can’t get a mortgage and needs more than 50% of the assets to buy a new family home for herself and the children or most of the assets were inherited by the husband before the marriage and the wife can comfortably rehouse herself and meet all her other needs with 30% of the total assets. Alternatively, the couple may have signed a prenuptial agreement to ringfence inherited money
• Clean breaks should be achieved to end any financial or other ongoing ties between husband and wife. However, if the family home is sold, the equity won’t be enough for either the husband or wife to buy another property, so both parents will be stuck renting. Maybe the parent who is the primary carer of the children should stay in the family home until the youngest child is 18. The house can then be sold, and the proceeds of the sale can be split in percentages fair to the ex-husband and wife  

Discretion and how it works with divorce settlements

Family law solicitors will outline the discretionary factors the court applies when making a financial court order after a contested final hearing of a financial application. The factors are just as relevant if you are negotiating an agreement through family mediation, solicitor negotiations or trying to do a deal at a financial dispute resolution hearing.

The discretionary factors are contained in Section 25 of the Matrimonial Causes Act 1973. The lawyer shorthand for them is ‘Section 25 criteria’.

The court’s first concern should be the welfare of any dependent children and how the children’s needs will be met. The court should then consider the Section 25 criteria:

1. The income, earning capacity, property, and other financial resources that the husband and wife have or are likely to have in the foreseeable future. With earning capacity, this includes any increase in that capacity which it would, in the opinion of the court, be reasonable to expect a husband or wife to take steps to acquire
2. The financial needs, obligations, and responsibilities that the husband and wife have or are likely to have in the foreseeable future
3. The standard of living enjoyed by the family before the breakdown of the marriage
4. The age of the husband and wife and the length of the relationship 
5. Any health issues affecting either the husband or wife or their children  
6. The contributions made by the husband or wife or likely to be made in the foreseeable future to the welfare of the family, including any contribution as a homemaker or stay-at-home parent 
7. The conduct of the husband or wife if that conduct is such that it would, in the opinion of the court, be inequitable to disregard it
8. The value to the husband and wife of any benefit (for example, a pension) that they will lose the chance of acquiring because of the divorce

With this list of factors, it is easy to see how, in some situations, a judge may order a different financial settlement from another judge. However, the difference in judicial view should be within a band of reasonableness. For example, it would be unreasonable for one judge to say an equal split of equity in the family home and for another one to say a 90/10 split of the equity in the family home would meet the Section 25 criteria.

With the uncertainty of judicial discretion, most divorcing couples prefer to try to negotiate a divorce financial consent order based on their family lawyer’s assessment of the Section 25 criteria.

How to get the best divorce settlement 

Some people think the only way to get the best divorce settlement is to apply to the court for a financial order.  They may be right. For example, if their former spouse is refusing to provide financial disclosure, is transferring assets to friends or family or is refusing to agree to a valuation of the family home or business. In other situations, a divorcing husband or wife must weigh up the costs and time in making a financial application against the benefits to be gained. 

A family law solicitor will tell you that if your ex-spouse is only offering you 10% of the family assets, you need to go to court. It is far harder to advise on the decision to start financial proceedings if your former spouse is offering you 45%. The decision may then come down to the value of the 5% of the assets you may be losing out on balanced against the costs of going to court. Things are often more complicated than that, as you may also dispute your ex-spouse’s valuation of his business or home, or you may argue that your ex-partner is offering you assets that are not as valuable to you as the ones you want. For example, they may be proposing that they will keep all the equity in the family home and you keep all your pensions, but that deal doesn’t give you the capital to rehouse yourself even though it will provide you with an income in eventual retirement.

At Evolve Family Law, our North West divorce solicitors focus on finding out what your ideal divorce settlement would look like and why. We then work on discovering the full extent of the family assets and any property that might be classed as non-family assets. We can then have an informed discussion with you about your realistic settlement options so you can weigh up the pros and cons of court proceedings over family mediation or arbitration or weigh up the advantages of spousal maintenance over a bigger share of equity in the family home. Having the right expert support behind you can give you the confidence to say yes or no to what is on offer from your ex, knowing that your lawyers have a strategy to get you the divorce settlement you need.

Call us for an appointment to discuss your divorce settlement or complete our online enquiry form.