How do I know what is fair when dividing assets with my former partner?

Why do I have to share information about my personal financial matters?

The factors considered when dividing assets are taken from Section 25 of the Matrimonial Causes Act 1973.    A piece of legislation that is now 50 years old but is still applied by the Courts today and MUST be considered when approving Financial Orders to give legal effect to financial settlements.   https://www.legislation.gov.uk/ukpga/1973/18/section/25A

It does not matter whether the settlement is achieved as a result of contested court proceedings or whether it has been reached through negotiation and/or mediation, the same Section 25 factors MUST always be applied.

To enable the Court to consider the Section 25 factors in all cases, the Court has to be provided with an understanding of the overall financial position and relevant factors and the Court has to be satisfied that there has been sufficient financial disclosure and sharing of knowledge between the parties for them to be able to make informed decisions.

Section 25 – a list of the factors to be considered:

  1. The duration of the marriage and the age of the parties
    • Comment: The longer parties have been married the more their assets will have been intertwined throughout the years, and the more likely they will be approaching an age when pension needs will carry greater weight or securing mortgages might become problematic.
  2. The resources available to the parties, including property, capital, pension and income (including at the present and reasonably foreseeable).
    • Comment: this is why financial disclosure HAS to be made. No one can make informed decisions if they do not have sufficient knowledge.
    • Reasonably foreseeable future can be anticipated inheritance or an anticipated monetary contribution such as an awaited compensation award
  3. The financial needs of the parties (considering the needs of minor children and any disabilities)
    • Comment: Needs means the financial needs, obligations, and responsibilities that each party has or is likely to have in the near future including income requirements and housing.
    • when there are minor children very often this will impact on the income earning capabilities of the parent with day-to-day care of the children. The welfare of minor children being a paramount or overriding consideration.
    • Any disabilities that impact on earning capabilities would impact on meeting needs
  4. The standard of living enjoyed by the family before the breakdown on the marriage
    • Comment: this is very often difficult to achieve but whenever possible the presumption is that each party will maintain their standard of living as closely as possible but offset against the reality that going from running one home to providing two homes is likely to require some compromise and changes to be considered.
  5. The contributions that each of the parties has made to or is likely in the foreseeable future to make to the welfare of the family
    • Comment: this includes direct financial contributions such as earnings, non-financial contributions such as being the homemaker raising the children and indirect financial contributions such as inheritance.
    • The consideration being that caring for the children should not carry any less financial contribution than earnings
    • That monies introduced from inheritance should not be presumed to automatically be ring fenced away from the matrimonial assets, but considered alongside other factors such as making sure needs can be met first, before ringfencing is considered.
  6. Any benefit either party may lose as a result of the divorce
    • Comment: particularly relevant in respect of pensions, as divorce cuts off the right to benefit as a widow under the other’s pension scheme
    • This is why pensions sometimes have to be shared at the time of the divorce, or offset against another asset to compensate
  7. The conduct of the parties (but only in exceptional circumstances and very rarely applies)
    • Comment: lying about a new relationship or committing adultery would NOT be conduct that the Court would take into account.

Final comment: the factors will carry different weight in each individual case and circumstances, but all factors have to be considered when negotiations are taking place and considering these factors  through the mediation process, with the help of an experienced mediator sharing all of their knowledge and experience can make the whole process much more straightforward and ultimately help the parties achieve the outcome that they feel is fair to themselves, each other and is still within the parameters the Court will be expecting.

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