Worried about what divorce could mean for your home, savings or pension? Understanding your financial position before agreeing to a settlement can help you make informed decisions and plan for the future.

Many people assume that divorce means dividing everything equally. In England and Wales, however, there is no automatic rule that every asset must be split 50/50. The outcome depends on your circumstances, the resources available and the needs of your family.

Farhad Islam, Head of Family Law, explains what can be included in a divorce settlement and the steps you can take to protect your position.

For advice about your circumstances, call 01245 228 106, email familyenq@gepp.co.uk.

Is everything divided 50/50 in a divorce?

Not necessarily. Equal sharing is generally the starting point for matrimonial assets: broadly, assets built up through the marriage partnership. However, the overall settlement must be fair, and meeting financial needs can justify a different division.

Under section 25 of the Matrimonial Causes Act 1973, the court considers all the circumstances, giving first consideration to the welfare of any child of the family under 18.

Relevant factors include each person’s:

  • Income, earning capacity, property and other financial resources.
  • Financial needs, obligations and responsibilities.
  • Age and the length of the marriage.
  • Physical or mental disabilities.
  • Contributions to family life, including caring for children and looking after the home.

The court also considers the standard of living during the marriage, benefits lost through divorce and, in exceptional circumstances, conduct that it would be unfair to disregard.

Earning more than your spouse does not automatically entitle you to a larger share. Contributions through childcare and homemaking are recognised alongside financial contributions.

What assets are considered in a divorce settlement?

A settlement should be based on a full understanding of both parties’ finances. Assets and liabilities that may need to be considered include:

  • The family home: its value, outstanding mortgage and available equity.
  • Other properties: including rental properties, holiday homes and other property interests.
  • Savings and investments: bank accounts, ISAs, shares and investment portfolios.
  • Pensions: which can represent a substantial part of the family’s wealth.
  • Business interests: including shares in private companies and interests in family businesses.
  • Debts and liabilities: mortgages, loans and other financial commitments.

An asset being held in one person’s name does not, by itself, put it outside the financial settlement. The source of the asset, how it has been used and the family’s needs may all matter.

Are assets owned before marriage included?

Assets brought into the marriage, inheritances and gifts received from third parties may be classed as non-matrimonial property.

Non-matrimonial property is not subject to the sharing principle. However, it can still be taken into account to meet financial needs or, where applicable, compensation claims arising from financial disadvantage caused by the way the marriage was organised.

Assets that started as non-matrimonial may also become matrimonial, depending on how the couple treated them during the marriage. For example, inherited money used towards the family home may be treated differently from an inheritance kept separate.

The outcome depends on the circumstances, so it is important to obtain advice before assuming that an asset will be protected or divided.

What happens to the family home?

For many couples, the family home is both their largest asset and their biggest concern.

Depending on the circumstances, possible outcomes include:

  • Selling the property and dividing the net proceeds.
  • Transferring it to one spouse, with the other receiving money or other assets.
  • Allowing one spouse to remain for an agreed period, with a sale taking place later.

The appropriate arrangement will depend on the available equity, mortgage affordability, each person’s income and the family’s housing needs.

Where there are children, their need for suitable accommodation will be particularly relevant. This does not automatically mean that one parent will receive the home or a fixed percentage of the assets.

A property transfer or court order does not automatically release either person from a joint mortgage. The lender’s agreement may be needed before mortgage responsibilities can change.

How are pensions divided on divorce?

Pensions can be easy to overlook because they may not be immediately accessible. However, they can be among the most valuable assets in a marriage and may be essential to your future financial security.

Depending on your circumstances, options may include:

  • Pension sharing: transferring a percentage of one person’s pension rights to the other.
  • Pension offsetting: balancing pension rights against other assets, such as equity in the home.
  • Pension attachment: directing certain pension payments to a former spouse when they become payable.

These options have different implications. A pension’s stated value is not necessarily directly comparable with the same amount in cash or property, and specialist pension advice may be needed.

Reaching an agreement is an important step, but it does not automatically make the arrangement legally binding.

If you agree how to divide your finances, a solicitor can help record the terms in a financial consent order for the court’s approval.

Depending on its terms, the order can deal with property, lump sums, pensions and maintenance. Where appropriate, it can also provide for a clean break, ending future financial claims between you.

The court must be satisfied that the proposed arrangements are fair before approving the order.

The final order ending your marriage does not, by itself, end all financial claims between you and your former spouse. Take advice about resolving your finances and the timing of your divorce before applying for the final order.

What if we cannot agree on a settlement?

Disagreement does not necessarily mean that a judge will need to decide the outcome.

Solicitor-led negotiations, mediation and other forms of dispute resolution can help couples explore an agreement. The right approach will depend on your circumstances, including any concerns about domestic abuse or safety.

If an agreement cannot be reached, either person may apply to the court for a financial order. The process involves financial disclosure and opportunities to negotiate before a final hearing, where a judge can decide the settlement.

At Gepp Solicitors, we can explain your options, help you assess proposed terms and represent you in negotiations or court proceedings where needed.

How can I protect my financial position during divorce?

Taking advice early can help you understand what is realistic and avoid decisions that could affect your financial security.

Useful steps include:

  • Gathering information about assets, debts, income and pensions.
  • Keeping copies of financial documents you are lawfully entitled to access.
  • Considering your current and future housing and living costs.
  • Providing full and honest financial disclosure.
  • Seeking advice before transferring assets or agreeing to a settlement.
  • Checking the tax, pension and mortgage implications of proposed arrangements.

Even if you and your spouse are on good terms, independent advice can help you understand whether an agreement meets your needs and how to make it legally binding.

Speak to our family law team about your financial settlement

Before you agree to divide your home, savings or pension, make sure you understand what the settlement could mean for your future.

Whether you are considering separation, already negotiating or ready to formalise an agreement, Gepp Solicitors’ Family Law team in Chelmsford can help you understand your position and take the next step.

Call 01245 228 106 or email familyenq@gepp.co.uk to discuss your circumstances. Alternatively, request a call back from our family law team.