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Divorce invariably comes with its own set of challenges, but financial disputes often bring a layer of complexity that can be especially overwhelming. Understanding the different types of assets involved in a divorce (for example matrimonial and non-matrimonial assets) is a crucial element for fair distribution. Both parties may still be living in the matrimonial home during the divorce, however it is important to plan how your situation could differ after divorce. It can be effective to gain the opinion of relevant experts at this stage to help value your assets.

Identifying and valuing assets

In the throes of divorce, it’s not just the emotional ties that are severed but also unpicking the financial entanglement that has often been built over many years. At the outset, it is essential to determine the value of financial assets and it is common to jointly instruct experts such as surveyors or estate agents to value properties and accountants to value businesses. Other experts may be called upon, including forensic accountants, financial advisors, actuaries, mortgage brokers, and sometimes medical experts such as psychiatrists, are necessary. Divorce solicitors often facilitate discussions with these experts to ensure that all financial aspects are thoroughly considered.

During financial proceedings, both parties have a duty of full and frank disclosure. Common assets to disclose can include property (the former matrimonial home, second homes, rental properties), bank accounts, investments, trusts, pensions, businesses and offshore assets. In addition to assets, liabilities or debts must be disclosed as well. Typical liabilities can include mortgages, bank accounts in overdraft, credit cards, cars on hire purchase schemes, capital gains tax (CGT) liabilities (on properties which are not the primary place of residence, shares in companies, foreign life insurance policies, offshore funds, personal possessions such as jewellery, antiques and works of art, currency, assets of a trade) and loans from third parties.

Approaches to equitable division

The court considers three main concepts when assessing how to divide the assets:

  1. Meeting needs
  2. Providing compensation to a party who has been economically disadvantaged by the marriage
  3. Sharing the financial fruits of the marriage

The vast majority of cases will only be able to consider how to meet both parties’ needs. The compensation and sharing concepts are in ‘big money’ cases, and even where these concepts are considered, the court will still have to check that the financial settlement meets both parties’ needs. The starting point is that an equitable outcome will be 50/50 division of assets. However, it is open to the parties to show why a 50/50 split should be departed from and why an equal division would be unfair.

Understanding the legal principles

The legal principles of family law in England and Wales are not formulaic. It is a discretionary system which means that a Judge will consider the facts of the individual case and determine what is fair on a case-by-case basis. However, to help the court come to a decision about what is fair, they must take into account a checklist of factors, listed at Section 25 of the Matrimonial Causes Act 1973.

The factors are listed in no particular order and depending on each case, some will be given greater weight than others. The courts are vested with the discretion to make a broad spectrum of financial orders, ensuring a fair division of assets and responsibilities. Once proceedings are concluded, it is important to consider your long-term financial future. For example, you may need to reconsider your will or closing any joint bank accounts if necessary, to protect your finances.

The financial aspect of divorce can be as complex as it is critical. With the right strategies and expert advice from divorce solicitors, parties can navigate this challenging terrain to ensure a fair and viable financial future. At Bross Benett, our expert solicitors aim to obtain the best financial settlement possible, demystify the process, provide clarity and support, and empower our clients to make informed decisions that will stand the test of time.

Our solicitors can provide invaluable guidance around asset valuation and division in complex financial disputes. Consider speaking to one of our family law experts to understand your financial situation after divorce and how your assets could be assessed, valued and divided.