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What constitutes a marital asset?
When it comes to a divorce settlement, one of the first questions that springs to mind is what assets come into the settlement. These applicable assets are referred to as marital assets. Marital assets are the assets that you and your spouse have purchased or gained during the marriage. Marital assets can include any of the following:
- Cash in the bank
- Furniture and appliances
- Stocks, bonds and mutual funds
- Businesses (even if one partner has no involvement in the business)
Furthermore, another marital asset that is commonly overlooked is debt. Any debts incurred during the marriage are split and paid off in the divorce financial settlement. Marital debts include mortgages, loans, overdrafts etc.
What about assets gained before marriage?
Assets gained before marriage become non-marital assets. They are usually treated differently when it comes to a divorce settlement.
However, in some cases, non-marital assets are involved in a divorce settlement. One example is if you had money saved up from before the marriage which was then spent on a joint property. Circumstances like this would classify as a marital asset.
Must you declare all assets in a divorce settlement?
Yes – it’s compulsory to declare all your assets when it comes to a divorce settlement. If a spouse has taken unethical steps to hide assets, they are susceptible to punishments. In this instance, the court will take a dim view of a spouse’s unethical behaviour and this could potentially result in a large fine.
If you suspect your spouse may not be declaring all their assets don’t worry. There are several ways that you can tackle this. A top solicitor can offer tailored legal advice on the best course of action to uncover any hidden assets.
Are marital assets always split 50/50 in the divorce settlement?
In short, no. It’s a common misconception in the UK that assets are automatically split 50/50. While most negotiations start at a 50/50 split, multiple factors can and will alter the division of marital assets in the divorce settlement.
From the perspective of the UK courts, their overarching aim is to divide the assets equally and fairly depending on each spouse’s needs. Equally and fairly doesn’t necessarily mean 50/50.
A few factors the court will consider in the division of assets are:
- Relative needs of each party. An economically weaker spouse may receive a larger portion of the financial assets.
- Child custody. The judge may award a larger amount to the party who has to look after the children. The justification of giving a party a larger share in this instance is to ensure the protection of the children’s wellbeing.
- Future earnings. A party who has sacrificed a career progression, and therefore future earnings, is often entitled to more in the divorce financial settlement to compensate for this sacrifice.
- Domestic violence. If extreme domestic violence was prevalent and resulted in a lasting impact on one party’s health and ability to work the judge may alter the division of the assets in favour of the victim.