Divorce is one of the most financially significant events in a person's life. Understanding the basic framework helps in navigating the process more effectively.
- How assets are divided
- The matrimonial home
- Pensions — the often-overlooked asset
- Financial clean break
How assets are divided
England and Wales use a principle of fairness rather than strict 50/50 division. Courts start from equality but can depart based on length of marriage, financial contributions, earning capacity, housing needs, and non-financial contributions such as raising children. All assets are considered — savings, property, investments, business interests, and pensions.
The matrimonial home
Options include one spouse buying out the other, selling and dividing proceeds, or a deferred sale arrangement. Decisions made here affect finances for years.
Pensions — the often-overlooked asset
Pensions are frequently overlooked in divorce settlements, particularly by women. Pension sharing orders allow a percentage of one spouse's pension to be transferred to the other. Given the long-term importance of retirement income, professional advice on pensions in any settlement is essential.
Financial clean break
A clean break order prevents ongoing financial claims between former spouses. Without one, a former spouse can make financial claims even years later.
Bottom line
Get legal advice early. Use a solicitor, consider mediation to reduce costs and conflict, and ensure pensions are properly addressed in any settlement.