How do you Split Assets in a Divorce in the UK?

How do you Split Assets in a Divorce in the UK

How do you Split Assets in a Divorce in the UK?

Family home, pensions, inheritances, business assets, there’s a lot to think about. And is it matrimonial or non matrimonial property?

The starting place is a fifty/fifty split but there are considerations under s.25 Matrimonial Causes Act –

  • the welfare of any children
  • income, earning capacity, property
  • financial needs
  • standard of living
  • ages and length of marriage
  • disabilities
  • contributions
  • conduct if inequitable to disregard it

How do we reach an agreement about assets?

If you can reach an agreement, well done, but run it past an experienced family lawyer to make sure it’s fair. If you can’t agree try –

Whichever method you will need to give full and frank disclosure of your finances. See my blog Financial Disclosure on Divorce, 10 things you need to know. And you need a Court order to protect you. See my blog How do I get a Consent Order? A Simple Guide

What about my home?

The options are –

  • one of you buys the other out, or
  • you sell and divide the proceeds, or
  • one of you keeps the house and the other has an interest in it which they realise in the future. This is called a charge.

What is a charge on the home?

This works well if there are children. You can’t afford to buy each other out and a sale won’t realise enough to house you both. Perhaps there’s only a tiny equity. But how is this fair for the parent who won’t live there and won’t be receiving any cash? The answer is an interest in the property, a charge representing a certain percentage of its value. This means in the future you will get capital from the property.

When do I get the money from the charge?

There are various ways it can be worded. For example, when the children turn eighteen years of age or when the parent living there remarries or cohabits for a certain period.

What about pensions?

Pensions can be significant especially if one of you works in the public sector. In the heat of the moment one of you might say, Keep the pension, I want the house! But this isn’t always wise. It might be better to sell the house, split the proceeds and downsize so you can have a pension sharing order to provide you with income in retirement. See my blog Pensions on Divorce, what can you expect.

How will the assets be split in my case?

It really is impossible to generalise but I can give you a couple of examples.

Sue and John – older couple, no mortgage, no kids

So you’re both in good health and you have a range of assets – nice house, couple of cars, pensions, savings. You are likely to come away with half each, a fifty/fifty split. How this is achieved is up to you. One of you buys the other’s interest in the house. Or you sell it and split the proceeds. You could say, I’ll have the yacht, you have the timeshare. Tot it up so you make sure you’re getting equal value. Don’t forget to get a Consent Order – see my blog How do I get a Consent Order? A Simple Guide

Emma and Mike – two kids, big mortgage, little equity

This is more tricky. The top priority is a home for the children and the only option is the family house. A transfer of the house to Emma with a charge to Mike might be the answer.

Olivia and David – short marriage, no kids

The rules are different for short marriages, see my blog Short marriages, 10 things you need to know.

What about my inheritance?

It depends on –

  • when you received it
  • whether you mixed it with the matrimonial assets or kept it separate
  • whether there are enough non-inheritance assets to provide a fair settlement

See my blog How to protect inheritance on divorce.

I have a business, what will happen to that?

See my blog How to protect business on divorce

But I contributed everything to this marriage!

Sometimes you can keep non matrimonial assets out of the pot for division. These include –

  • Assets built up before the marriage
  • Inheritances
  • Businesses

But non matrimonial assets will go into the pot if this is the only way for example to answer the children’s need for housing. See my blog Ring fence and protect assets on divorce.

What is a clean break, can I still get maintenance?

See my blog Maintenance and clean break on divorce.

How do you Split Assets in a Divorce in the UK?

Contact Family Lawyer Joanne Houston on 01962 217640 for an initial free of charge consultation on the question How do you Split Assets in a Divorce in the UK. In this 20 minute session she will review your situation and how you can achieve your objectives.

JUST FAMILY LAW are specialist divorce and family lawyers. We offer Pay as you go costs. We offer Collaborative law solutions tailored to your family’s needs.

The topics covered in this blog post How do you Split Assets in a Divorce in the UK? are complex. They are provided for general guidance only. If any of the circumstances mentioned in this blog apply to you, seek expert legal advice.

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Make A Fresh Start In 2018?

The New Year is the opportunity to sweep your life clean, throw out bad habits and make a fresh start with the promise of a more fulfilling future. But if your marriage is in trouble, the Christmas holidays might have been the final straw. Is there anything to be done? There can be tremendous benefits from coaching and counselling if the festive season has put your relationship under pressure.

But if you’ve decided to draw a line under your marriage and to start your divorce, we can help.

Have you decided what you want for yourself, and your children?

We Can Help With Your Divorce …

… and guide you through the procedures and advise you how to stay out of Court.

We can advise you what is likely to happen.

You may be worrying about the family home and savings. And how pensions, or debts, or inheritances are dealt with. Perhaps you are keen to ring fence assets. Or maybe there’s a family business. So make sure you pick the right solicitor, a properly qualified professional who specialises in family law. A good indication is if they are a Resolution member.

What You Can Expect From Your Solicitor

In the long run a good family solicitor will save you time and money, and will obtain a better settlement for you than you can get on your own.

Contact Joanne Houston on 01962 217640 for free advice on divorce. In this 20 minute session we will:

* Scroll down to sign up for Emails from our expert Solicitors to keep up to date with these important issues *

JUST FAMILY LAW are specialist divorce and family law solicitors offering personalised legal solutions. We offer collaborative law which is especially relevant in providing solutions tailored to your family’s needs. This includes same sex couples and their families.

Visit our website just-family-law.com

The topics covered in this blog post are complex and are provided for general guidance only. Therefore if any of the circumstances mentioned in this blog have application to you, seek expert legal advice.

image: Jumping Woman by Exey Panteleev on Wikimedia Commons

 

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Ring Fence and Protect Assets on Divorce

Ring Fence and Protect Assets On Divorce
Ring Fence and Protect Assets On Divorce

Is it possible to ring fence and protect assets on divorce, to keep certain assets out of the pot for division? Yes, you can sometimes protect assets but it depends on all the circumstances. In this blog we consider the following vital questions and some prudent steps you can take. Scroll down to find the answers:

  • Is it a matrimonial or a non matrimonial asset?
  • Is it possible to protect inheritances?
  • Can a business be ring fenced?
  • Is transferring assets to someone else the answer?
  • How are assets split on divorce?
  • What’s the best way to ring fence and protect assets?

Let’s start with an example …

I have a friend who’s a magician. She puts on brilliant shows, and her husband of ten years is her glamorous assistant. But now he’s saying he’s fed up with sharing the limelight with a bunch of rabbits. He wants a divorce and furthermore he wants half of everything.

Is it a matrimonial or a non matrimonial asset?

I advise her that non matrimonial assets can sometimes be kept out of the pot for division. So what are ‘non matrimonial’ assets? They can include:

  • Assets built up before the marriage
  • Inheritances
  • Businesses

But if there aren’t enough matrimonial assets left to fulfil her husband’s needs for example for housing, non matrimonial assets can be used to plug the gap.

Is it possible to ring fence and protect inheritances?

My friend throws up her hands with relief. “Thank goodness!” she cries. “I won’t lose my magic cabinet.” She’s particularly fond of this extraordinary antique as her grandfather left it to her in his will. Her magician ancestor, The Great Mirando, is famous for disappearing within the depths of this very cabinet during a lost weekend in Blackpool.

In this particular case it may be possible to ring fence and protect assets on divorce. This is because she has never used her valuable inheritance in her business and she has never allowed it to be used as a matrimonial asset.

If she had sold it, for example, and bought the family home with the proceeds this would be an entirely different question. Her husband would have a much stronger claim.

Read my recent blog on Protecting Inheritance On Divorce for some helpful tips.

Can a business be ring fenced?

I advise my friend that her husband might make a claim over her business if it has any value.

She laughs. She tells me her assets comprise trick cards and table clothes, magic chains and manacles, and, of course, three rabbits and a rather malodorous hat. They really have no value at all. And as for income, there isn’t any. She does it all for charity. My friend and her husband live off their wages from their respective jobs. He works in a shop. She works in an office.

In this case, the business has no value either in terms of assets or income. What would happen if it did? See my recent post about Protecting Your Business On Divorce.

How about transferring assets to someone else?

My friend has a savings account and some shares. She’s thinking of transferring them to her sister.

Not a good idea. She risks a court order freezing her assets and a hefty costs order. And if she hides assets this could lead to imprisonment for contempt of court. Both she and her husband must give full and frank disclosure of their finances (how to do this is explained in my recent blog).

Even though my friend has taken a course in advanced escapology it’s advisable not to run this kind of risk.

How are assets split on divorce?

What will happen to their house, their savings and pensions, and their caravan in Morecambe?

I advise her the starting point for division is a fifty fifty split although there are special considerations. These include the care of children, the extent of the couple’s wages and their earning capacity. Also their standard of living during the marriage, and their ages. The length of the marriage is important, too. As is their health. Lastly what the couple put into the marriage financially, and their individual financial needs.

What’s the best way to ring fence and protect assets on divorce?

The good news is she has met someone new, a fellow magician. It’s early days, and she wants to get her divorce sorted out first, but who knows, this could be the real thing.

I advise her if they decide to tie the knot, she ought to think about a prenuptial agreement. She says she will certainly keep this idea up her billowy sleeve along with her magic cards and scarves.

Contact  Joanne Houston on 01962 217640 for free advice on ring fencing and protecting your assets on divorce. In this 20 minute session we will review your matrimonial financial situation and how you can achieve your objectives.

See my blog about how to get the best financial settlement on divorce.

Did you know there are different rules for Short Marriages?


JUST FAMILY LAW are specialist divorce and family law solicitors offering personalised legal solutions. We offer collaborative law which is especially relevant in providing solutions tailored to your family’s needs. This includes same sex couples and their families. Visit our website just-family-law.com The topics covered in this blog post are complex and are provided for general guidance only. Therefore if any of the circumstances mentioned in this blog have application to you, seek expert legal advice.

image credit: Ungár Anikó bűvész by Fortepan/Urbán Tamás on Wikimedia Commons

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How To Protect Inheritance On Divorce: is a Prenuptial or Postnuptial Agreement the answer?

Protect Inheritance On DivorceSophie has contacted me for urgent advice. She wants to know how to protect inheritance on divorce. Her partner, Bob, has whisked her away to Rome for the weekend, gone down on one knee, and proposed. But she’s having cold feet because what happens if it doesn’t work out? She doesn’t want Bob to get his hands on the fortune she’s inherited from her family.

On marriage breakdown every asset is up for grabs. 
But it has to be a "matrimonial asset" unless there is a strong case based on need.
It is sometimes possible to protect inheritance on divorce.

Is An Inheritance A Matrimonial Asset?

It depends.

Often an inheritance is regarded as non matrimonial and so not up for grabs, particularly if it’s a short marriage. And timing is important. Was the inheritance received before or during the marriage, or as the couple separated? Even though Sophie inherited before getting married it could be bad news if she and Bob split up after a long marriage. It depends on what happens to the inheritance in the meantime. Will the couple mix it with their matrimonial assets? Will they keep it separate?

The more separate it’s kept the better, but still that’s no guarantee.

What About “Needs” When Assets Are Divided On Divorce?

The starting point for division of matrimonial assets is an equal split but certain circumstances are taken into consideration including:

  • The Children’s Welfare
  • Income and Earning Capacity
  • Financial Needs
  • Standard Of Living
  • Your Ages, And Length Of The Marriage
  • Physical Or Mental Disabilities
  • Contributions To The Marriage

What if an equal division doesn’t provide enough for a suitable home for one of the couple? They are likely to get a larger share of the assets. And if there aren’t enough matrimonial assets? Non matrimonial assets can be thrown into the melting pot to meet needs. This includes an inheritance.

The Millionaire Who Lived In A Three Bed Semi

A Court case in 2011 throws some light on how to protect your inheritance on divorce. It’s called K v L. We don’t know the couple’s names or where they lived as the Court agreed to protect their anonymity for the simple reason that they wanted their three children to lead normal lives.

This is the story of an extremely wealthy wife. 
Neither of the couple ever needed to work but despite the wife’s millions 
they lived modestly in a three bed semi worth £225,000. 
They ran an inexpensive car and no single item in their home was worth more than £500.

The wife had inherited shares in an Israeli company when she was fifteen. When the couple first cohabited in 1986 the shares were worth £300,000. When they married in 1991, £700,000. When they separated in 2007, £28m. By the time of the court hearing in 2011, £57m.

After twenty one years of marriage the wife left the husband in 2007 taking the children with her. She bought another modest property in the same London suburb, close to the husband who remained in the family home.

The husband told the court he wanted £2m to buy a house in central London, and £450k to buy a house in Israel. Also £60k to buy a new car. And maintenance. All in all he claimed £18m. But the court said the wife’s inheritance was a “non matrimonial asset” and on a generous assessment of his needs he would only get £5m. He was not otherwise entitled to share in her inheritance.

Will A Prenuptial Agreement Protect Inheritance on Divorce?

K v L was an unusual case and relied heavily on the modest lifestyle of the couple. I told Sophie not to worry. She could take steps to protect her inheritance on divorce with a prenuptial or post nuptial agreement. She liked the idea and said she would talk it over with Bob. I have written an earlier blog on the topic of agreements.

How To Protect Inheritance On Divorce

Contact  Joanne Houston on 01962 217640 for free advice about how to protect your inheritance on divorce. In this 20 minute session we will review your situation and how you can achieve your objectives.


JUST FAMILY LAW are specialist divorce and family law solicitors offering personalised legal solutions. We offer collaborative law which is especially relevant in providing solutions tailored to your family’s needs. This includes same sex couples and their families. Visit our website just-family-law.com The topics covered in this blog post are complex and are provided for general guidance only. Therefore if any of the circumstances mentioned in this blog have application to you, seek expert legal advice.

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