What is a divorce settlement?

Divorce settlements set out what is to happen to all of a couple’s finances and a property on divorce. They will normally list out all the marital assets the couple has, and dictate the terms on which they will be split, and even when they must be sold off, for example the family home. 

Divorce settlements don’t have to be formally agreed. However, if one spouse later decides to dispute the informal agreement that was created, there is nothing to stop them from doing so.

A formal divorce settlement will normally contain a clause to prevent this from happening.

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. The applicable assets are known as marital assets. Marital assets are the assets which you and your spouse have purchased or gained during the marriage. Marital assets can include any of the following:

  • Properties
  • Pensions
  • Savings
  • Cash in the bank
  • Vehicles
  • Furniture and appliances
  • Stocks, bonds and mutual funds
  • Businesses (even if one partner has no involvement in the business)

Furthermore, another marital asset which is commonly overlooked is debt. Any debts incurred during the marriage will also need to be split and paid off in the divorce financial settlement. Marital debts include mortgages, loans, overdrafts etc.

What about assets gained before marriage?

These are known as non-marital assets. They are normally treated differently when it comes to the divorce settlement.

However, in some cases, non-marital assets can be brought into the divorce settlement. For example, if you had money saved up from before the marriage, which you spent on a joint property during marriage. In this circumstance, the property would be considered 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 a 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, may be 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.
Family home which is coming into question in the divorce settlement

How is the family home divided?

During a divorce, the family home can spark a whole array of questions. However, one of the most common questions is regarding the division of the family home.

When a couple is getting a divorce, there are a few options available to divide the family home. These options include:

  • Sell the property and split the money.
  • One party buys the other out of there percentage share of the property.
  • Transfer part of one party’s share into the other party’s name. The departing spouse would then own a smaller share of the house. In this instance, the sale of the home will mean the party with a share will receive their cut.
  • Leave ownership unchanged. In this instance, one partner continues to live in the house, but actual ownership of the property remains shared.
  • Mesher order. This order allows the sale of the family home to be deferred for a certain amount of time or a specific event. For example, the sale of the family home may be deferred to when your children leave school.


When does a divorce financial settlement need to be reached?

There’s no set time that the divorce financial settlement is due. However, our solicitors recommend coming to an agreement before the divorce proceedings or through mediation. If an agreement isn’t come to through these means, it will result in complications, delays and further legal costs.

Simultaneously, if there are negotiations and court hearings over the financial settlement, the marital assets will likely deplete through funding these extensive legal fees. In some cases, disputing the financial settlement results in both sides walking away from the divorce financially worse off than they would if they just came to an initial agreement.

On of our solicitors in Brighton working on a case