When a couple gets divorced there are many important issues to resolve, from where the children are going to live and with whom to how any financial assets from the marriage will be divided up. It is always best to try and come to an amicable agreement with your former partner, however, this cannot always be possible. A divorce solicitor or mediator can help separating couples agree on how best to reach a resolution.
When faced with the prospect of getting divorced, you should contact a solicitor straight away, who will be able to help you work out what you want to happen next, and what you are entitled to. If you are able to agree on how to handle issues around raising your children, establishing maintenance payments and deciding how to split your money and matrimonial assets without going to court, this can save time and money and often avoid a great deal of tension.
If you cannot agree, however, there are processes in place to help. You are entitled in most cases to use a mediator to help you reach an agreement. A mediator is an unbiased third party, trained in resolving marital disputes, who will meet with the divorcing parties and help them negotiate a way forward that everyone can accept and adhere to. In some cases, legal aid may be available to help meet the costs of undergoing mediation.
In cases where disputes cannot be resolved by a mediator, you are entitled to apply for a court hearing to seek legal help in reaching an agreement. Both parties present their case to a judge, who deliberates on the evidence before making a decision. The judgements from such a hearing are legally binding and must be adhered to. Prior to attending court, you are entitled to engage the services of a solicitor, who will advise you on likely outcomes, inform you about what you are entitled to, by law, and help you present your side in the best possible light.
You are normally expected to attempt mediation wherever possible before applying for a court hearing. There are some legal exceptions to this, including cases which have involved domestic violence or intervention from social services.
What are matrimonial assets?
During divorce proceedings, you will be asked to agree on what happens to the matrimonial assets that have been amassed during your marriage. However, what does this term actually cover in reality? Matrimonial assets are resources, property and belongings that have been purchased or brought into the marital home during the marriage. These can include larger ‘items’ such as the home itself, as well as boats, cars and other vehicles, any investment properties that have been bought or inherited during the marriage, shares, bonds and other financial savings, including money invested in pensions. Matrimonial assets can also include businesses that have been set up during the marriage, as well as salaries earned by either party and money that has been placed in a savings or current bank account or kept as cash elsewhere.
Resources, property or belongings that have been bought or acquired in the sole name of just one partner in the marriage can also be considered a marital asset, depending on the circumstances in which they have come into their owner’s possession. Your solicitor will be able to advise on specific cases and what counts as matrimonial and non-matrimonial assets for the purposes of your divorce settlement and individual circumstances.
For most couples, the matrimonial home is the largest matrimonial asset that needs to have its future agreed upon during a divorce. Some couples may prefer to sell up and split the profits between them, after mortgages and other loans secured on it have been paid off. This approach has the advantage of allowing each party a brand-new start and draws a line under the past. Each party can take their share and use it to rent or buy a new home in which to start a new life.
In other cases, one party might offer to buy the other out of their share in the matrimonial home as part of the overall settlement. This can be for all kinds of reasons. Some may wish to stay on and live there alone, or with any children from the marriage. This enables continuity after what can be a highly stressful time and offers a stable base for any children and dependents involved. It is clearly desirable that everyone’s behaviour when it comes to finalising what happens to the family home places the welfare of any children and dependents involved at the heart of any and all decisions made.
The process of deciding what to do with matrimonial assets starts with the identification of the assets themselves. These must then be valued to establish the amount of money involved in the settlement arrangements. For larger, or more valuable assets, such as property or expensive antiques, it is wise to employ the services of a professional valuer – perhaps even two or three valuers to provide a fuller, unbiased picture.
The UK does not currently have a rigid formula on how to divide matrimonial assets, but a common starting point for negotiations tends to sit around 50:50. When agreeing on the division of property, a judge will take several factors into account, including the health, ages, professions and ongoing financial or caring obligations of the parting couple.
What doesn’t count as a matrimonial asset?
Most divorcing couples will have a mixture of matrimonial and non-matrimonial assets to divide between them. Broadly speaking, non-matrimonial assets are those items or property that were purchased acquired by just one party, prior to the marriage taking place. These should normally be treated separately from the jointly-acquired property and not considered when decisions are being taken on how to split marital property. Typically, non-matrimonial assets might include a house or flat that was purchased before a marriage takes place and that only has one party named on the deeds or mortgage. Other things include a business, share portfolio or other financial interest in a business that was in one sole person’s possession prior to the marriage, or perhaps an inheritance, pension or savings fund acquired under the same circumstances – ahead of the marriage.
In cases where a pre-nup or pre-nuptial agreement exists, there may also be other property that has been specifically identified in writing as being outside of the marital assets and therefore not available to the other party in a divorce settlement or agreement. Pre-nups are not currently legally binding in England and Wales, but they will normally be taken seriously when included in a divorce hearing and the judge will read them very carefully when considering how to split the contents specified within them.
The law surrounding marital and non-marital assets in a divorce is not always straightforward. Even in the absence of a pre-nup agreement, either party can make a formal request for certain assets to be disregarded from the settlement arrangements. This kind of situation can come into play when sentimental items are being assessed, such as jewellery, artwork or souvenirs from your offspring’s childhood that cannot be replaced or easily divided between the two partners.
You may also find that the splitting of just your matrimonial assets is not sufficient to ensure that both parties will have enough to live on after the divorce. In that case, a court can rule the inclusion of non-marital assets to make up any shortfall in the interests of fairness.
Mortgages and divorce
It is very important that a couple going through a divorce continues to ensure that the mortgage gets paid on any property that is jointly owned. This is true even if one or both of you have moved out of the property in question. If your name is on the deeds of the property or the mortgage lending agreement, you are still responsible for ensuring that mortgage payments are still made. Failing to do so can seriously damage your credit history, along with your ex-partners. You can even lose your home entirely, or your share of any money that might have been made on its sale, if the property is repossessed through defaulting on mortgage payments.
If you are still paying off a mortgage on your marital home, you must inform your lender as quickly as possible that you are intending to separate. This is especially important if you anticipate either party finding it a struggle to maintain their share of the payments. Mortgage lenders are often sympathetic to problems such as these and keen to work with clients to ease the financial strain. Many lenders can offer support such as agreeing to a temporary payment holiday, however, this will only work out if you keep your lender informed and stay in touch throughout the process. Remember that payment holidays and similar short-term arrangements are exactly that – a short-term breathing space to enable you to work out how to manage the rest of your mortgage commitments in the long run.
The next step is to work out what you want to do with the property. You have several options, from selling up and dividing the profits to continuing to pay the mortgage and retain ownership. If you choose to sell up and split profits, remember that you will only receive your share after the existing mortgage has been paid off and any other loans secured against the property have been settled. This may leave you with less money than you might have originally calculated.
Another option is to have one party buy the other out. This often happens when one person is choosing to stay in the family home, e.g. to raise children there and provide an element of stability. In this case, the couple must reach a mutual agreement as to how much the person buying out their ex-partner needs to pay. After the agreement has been made, the contract drawn up and the funds transferred, the person retaining the property will become solely responsible for servicing the mortgage until it is paid off in full. A word of warning, however – lenders are under no legal obligation to switch a joint mortgage into just one name if they believe the new sole owner will struggle to meet the payments. You will need to provide evidence in this case that confirms your ability to service the mortgage alone.
If you remain on good terms with your former partner, you may decide to carry on paying off the mortgage jointly and even to carry on living in the property together. This can be a sensible option if there is not long to go on a mortgage agreement, or if your current mortgage rate is fixed and you would find it hard to find a comparable quote elsewhere.
If your home is in negative equity when you split, your lender may agree to you splitting the outstanding debt between you until it is paid off. Your solicitor and/or mortgage lender will be able to advise you on your specific circumstances. If you are concerned about managing debts after a divorce, there are charitable organisations that can offer you advice. Speak to Citizen’s Advice or Relate in the first instance. Contact a property or family specialist solicitor too, to makes sure that your rights are protected, and that you understand your responsibilities too. What can seem like a lot of daunting red tape and major decisions to be made, can herald the start of a new life and a more positive future for all involved.