Where parties are unable to reach an agreement in respect of how the Family Home (or any property) should be dealt with on divorce, the Court may be asked to intervene. The Court can decide how best to divide an asset when sold, or if it should be transferred to one party in exchange for a monetary payment or some other financial benefit, such as a share of a pension.
It is important to note firstly that there is no ‘one size fits all’ approach to this; what is decided in one case will not necessarily be applied in another seemingly similar case. One of the benefits of this is that arguments can often be made on either side about how assets should be dealt with, and there is sufficient flexibility for the Court to decide each matter on its individual merits.
However, Court proceedings are costly and involve a degree of uncertainty. For these reasons, many parties prefer to attempt to reach an agreement with the benefit of legal advice. In their negotiations, they can take into account the way in which a Court might approach dealing with the assets to ensure that their agreement is fair. It is important the parties consider this, as they will want their agreement to receive the seal of approval from a judge for it to become legally binding in what is called a Consent Order.
What Assets Are Included in a Financial Settlement?
When determining a settlement, the Court considers all assets belonging to both parties, often referred to as the ‘matrimonial pot’. While the family home is frequently the most significant asset, it is crucial to identify and value all other assets, which can include:
- Financial Assets: This includes money held in bank accounts, savings, ISAs, stocks, shares, and other investments.
- Pensions: Private and company pensions are often one of the most valuable assets after the family home and are a critical part of the settlement. A pension sharing order may be made to divide pension funds between the parties.
- Business Interests: If either party has an interest in a business, a valuation will be required to determine its worth and how it should be treated.
- Property and Land: This includes the family home as well as any other properties or land owned in the UK or abroad.
- Other Valuables: The value of vehicles, art, antiques, jewellery, and even modern collectibles must be considered. The valuation of such items can be complex, particularly when some collectibles experience a significant surge in value on the open market.
Which approach the Court chooses to adopt will depend on the overall value of the assets, whether they are liquid or can be realised, and the specific circumstances of the family.
How Does Having Children Affect the Settlement?
The first matter for the Court to consider is whether there are any children of the family (under 18). The Court will always look to address their housing needs first, as this provides stability in what can be an unsettling time. For the Court, the children’s welfare is paramount.
Beyond this, the Court will look to meet the parties’ reasonable needs. To do this, the Court will consider a range of factors set out in Section 25 of the Matrimonial Causes Act 1973, including the parties’ ages, earning capacities, and the standard of living they enjoyed before separation.
While the Court will try to maintain the status quo where possible, it is regularly the case that both parties will suffer financially to some extent in the aftermath of divorce. It is the Court’s job to ensure that both parties are left in as equal a position as is possible. If, for example, one party has a greater income, the other party may be left with sufficient capital in the Family Home or otherwise to compensate for their lack of capacity to raise a mortgage in their sole name.
The Family Home – Will It Be Sold?
In many cases, there are insufficient assets to meet both parties’ needs without a sale of the home, particularly where there are debts to be dealt with, such as a mortgage, credit cards, and overdrafts. Where neither party has sufficient income or assets to meet their outgoings, there may be no option left other than to sell the family home and divide any equity that is left between them. This may also be the only option where one party cannot afford to buy the other out, or simply refuses to do so.
Can the sale be delayed?
In cases where there is a large disparity between the parties’ financial positions, or if one party has been out of work for a while, this is not necessarily a bar to them retaining the Family Home.
The Court can put in place a ‘Mesher Order’, which will allow one party (often the children’s primary carer) to remain in the Home until a trigger event occurs, such as the children turning 18 or finishing education, or until the main carer remarries. The Court may also consider the appropriateness of spousal maintenance to cover rent or mortgage payments. The disadvantage to this type of order is that it does not provide a total clean break, as you are likely to remain jointly tied to the property and any mortgage for the foreseeable future.
When Can a Court Order Be Made?
A final important point to note is that for the most part, financial orders—whether entered into by consent or as part of issued Court proceedings—will only be available where divorce proceedings have already started and will not usually take effect until the Final Order (previously known as the Decree Absolute) is granted. However, it is never too soon to seek legal advice or begin negotiations, as in most cases the earlier matters are discussed, the better.
If you’re considering a divorce and you want to find out more information about how we can help, give us a call on 0161 930 5151, e-mail familyteam@gorvins.com or fill in our online form at the top of this page.