Any agreement on financial settlements and the division of assets during a divorce will depend on the simplicity of the divorce. You may come to a mutual agreement with your spouse without any help through mediation if your assets are simple or if you remain on good terms after the divorce. If you have financial assets which are more complicated, or you and your spouse are in disagreement over who gets what, then you may require legal assistance from a solicitor specialising in family and divorce law. If negotiations through a solicitor fails to open the doors for an agreement then you can ultimately take the matter to court.
What are matrimonial assets?
Matrimonial assets, also known as marital assets, are the financial assets you and your spouse have accumulated during the duration of your marriage. Matrimonial assets can include:
- Family home
- Stock, bonds and mutual funds
What are non-matrimonial assets?
Non-matrimonial assets are assets that were acquired before or after your marriage. However, this does not mean to say that non-matrimonial assets are excluded from financial settlements during a divorce, but this will depend on the circumstances involved such as having pre-nuptial and post-nuptial agreements in place.
Do you have to declare all your assets?
It is compulsory to declare all your assets to the court before commencing divorce proceedings. If you or your spouse hide any assets the court will view this as fraud. The court has the power seek full financial disclosure if they are aware of any suspicious activity.
Failure to disclose all your assets can result in a hefty fine by the court, and you may be given a less favourable settlement and be ordered to pay the legal costs of the other party.
How is debt divided during a divorce?
As well as assets, you may have accumulated debts during your marriage such as a mortgage, loans, overdrafts, and credit cards. All debt incurred during your marriage will also be split fairly and equally, even if a debt is only in one party’s name. The court has discretion to treat personal debts as joint debts. Therefore, you should disclose all debts even if it is in your name only.
If you are in disagreement on who is liable for each debt, the court can decide who is responsible for the debt and can order the other party to assist with any maintenance payment.
Who is liable for any debt incurred after a divorce?
If you or your partner incur any debts in your own names after the divorce, you will not be liable for each other’s debt. However, there are exceptions to this, for example if a debt is taken out with the property held under joint names is held as security.
Are financial settlements legally binding?
Financial settlements are not legally binding. If the financial settlement is not legally binding, there would be no legal route to down and the court would not be able to enforce the financial settlement if any issues arises in the future.
You can make a financial settlement legally binding by filling in a consent order and get it approved by the court.
What if there is a prenuptial agreement in place?
A prenuptial agreement is a written agreement in place between two parties prior to marriage which outlines the assets owned by each party before marriage and protects their rights to their assets in the event that the marriage breaks down.
The downside of prenuptial agreement is that it is not legally binding so there is no guarantee that the assets you held prior to marriage will remain as your assets after a divorce. Although the courts will not entirely dismiss a prenuptial agreement if one was in place. They will consider the prenuptial agreement in place if there are any disputes relating to financial settlements.
The court will check whether the agreement is fair, that both parties voluntarily entered into the agreement, did both parties sign the agreement with no duress, whether all assets and liabilities were disclosed, and whether both parties obtained legal advice. If the agreement fulfils these criteria’s then the court will likely uphold the agreement.