Navigating a divorce can be an overwhelming experience, especially when it comes to splitting finances. Here’s our guide to the legal side of dividing money (and debts) post breakup.
What is financial separation?
When a marriage, civil partnership or cohabitating relationship ends, financial separation makes sure that assets, income, pensions and property are divided fairly. This split of finances is often formalised through a Separation Agreement or court approved Financial Order (where appropriate).
How are financial settlements decided?
There’s no defined formula for splitting assets in a relationship breakup. Instead, various considerations are used to determine what is fair, including:
- Financial needs: The current and future financial requirements of both parties are evaluated – including housing, child support, and other living expenses
- Income and earning capacity: The current and potential future income of both parties
- Contributions: Considers both financial and non-financial contributions to the relationship (such as caregiving or homemaking)
- Standard of living during the relationship: Where possible, the goal is to maintain a similar lifestyle
- Age and health: The age and physical condition of each partner is considered, especially where health issues might affect earning potential.
While court involvement may be necessary in some situations, these factors can also be used to guide private negotiations (when supported by appropriate legal advice).
What is a Financial Order?
Under the Matrimonial Causes Act 1973, a judge can issue a range of legally binding orders to specify how assets, property and money are divided post separation. These vary depending on individual circumstances, but can include:
- Lump Sum Payments: A one-off payment from one spouse to the other
- Property Adjustment Orders: Such as changes to ownership of property, Orders for sale, or Mesher Orders (which defer the sale of a property and allow one party to remain in the home until a specified condition is met e.g. the children of the relationship reach 18 years of age)
- Spousal Maintenance: Regular payments from one spouse to the other, typically where one partner earns significantly more (this is the rarest type of order)
- Pension Sharing Orders: Division of pension rights built up during the marriage
- Clean Break Orders: The most common orders within financial proceedings. They sever all outstanding financial ties between spouses allowing for a “clean break” and financial independence moving forward.
Do I need legal support?
Financial settlements can be complex, and reaching a fair agreement may feel daunting – so it’s important to approach these decisions with the right guidance. The Bath Family Law team can help you understand how to calculate what you are legally entitled to, what outcomes are realistic, and how to approach negotiations effectively. Book a FREE initial consultation with one of our family law experts today and start your journey to a secure financial future.
