Financial Settlement on Divorce: Money, Property, Pensions

GOV.UK says that when you divorce or end a civil partnership, you need to decide how you are going to divide:

• ✓Yes: pensions
• ✓Yes: property
• ✓Yes: savings
• ✓Yes: investments

GOV.UK says you might get a share of your partner's pension, including State Pension or private pension plans, and regular maintenance payments to help with children or living expenses.

The government says both parties to the marriage are ordinarily entitled to an equal share of assets acquired during the marriage, called matrimonial property, unless there are good reasons to depart from equality, and that non-matrimonial property, generally from outside the marriage, will not be shared unless needs require it. It also says there is no statutory definition of matrimonial property or non-matrimonial property, and that case law dictates that the sharing principle applies to matrimonial property only.

The government says the law that governs financial remedy applications on divorce is the Matrimonial Causes Act 1973, with equivalent provisions in the Civil Partnership Act 2004 for civil partners. When the court considers an application, it has a range of financial orders at its disposal: one-off lump sum payments, regular maintenance or periodical payments, and property-related orders such as transferring ownership or ordering a sale.

Section 25 of the Matrimonial Causes Act 1973 requires the court to have regard to all the circumstances of the case, first consideration being given to the welfare while a minor of any child of the family who has not attained the age of eighteen. The court must in particular have regard to these matters:

• the income, earning capacity, property and other financial resources which each party has or is likely to have in the foreseeable future
• the financial needs, obligations and responsibilities which each party has or is likely to have in the foreseeable future
• the standard of living enjoyed by the family before the breakdown of the marriage
• the age of each party and the duration of the marriage
• any physical or mental disability of either party
• the contributions which each party has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family
• the conduct of each party, if that conduct is such that it would in the opinion of the court be inequitable to disregard it
• the value to each party of any benefit which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring

The government says that, in practice, the court will usually only apply equal sharing of assets where there is a surplus of assets to cover the needs of each of the divorcing couple and their children, that most cases do not have such a surplus, and so equal sharing is generally less common than division of assets based on need. Where the equal division of assets does not meet the needs of the parties, the judge may depart from equality to ensure needs are met.

GOV.UK says that to make your agreement legally binding you need to draft a consent order and ask a court to approve it. A consent order is a legal document that confirms your agreement, and you can get legal advice or ask a solicitor or divorce specialist to draft one for you. The court fee is £62. The court cannot approve a consent order before you have your conditional order or decree nisi, and the consent order will only take effect after you get your final order or decree absolute. There is usually no court hearing: a judge will approve your consent order to make it legally binding if they think it is fair, and if they do not think it is fair, they can ask you to change it.

Our divorce guide sets out how much a divorce costs in court fees at each stage.

A clean break is the ending of financial obligations and dismissal of all future financial claims between divorcing parties. Under section 25A of the Matrimonial Causes Act 1973, where the court decides to exercise its powers in favour of a party to the marriage, it must consider whether it would be appropriate to exercise them so that the financial obligations of each party towards the other will be terminated as soon after the making of the order as the court considers just and reasonable. GOV.UK says a consent order can also include arrangements for maintenance payments, including child maintenance. Our child maintenance guide explains how it is worked out.

The government says pensions built up during a marriage can represent a significant matrimonial asset and may be divided through a pension-sharing order. However, it says research suggests that pensions are commonly overlooked during financial remedy proceedings. The court can redistribute pensions through pension sharing orders or, more rarely, pension attachment orders.

• A pension sharing order is a Family Court order that shares a pension by giving a percentage of a pension fund to the person benefitting from the pension order, which they can put into a new pension of their own
• A pension attachment order is an order that allows a percentage of a divorced spouse's pension to be paid when they retire to their ex-spouse

GOV.UK lists pensions among the assets a consent order explains how you are going to divide.

GOV.UK says it is usually more straightforward and less expensive if you agree how to divide your money and property. A mediator can help you agree, mediation can be quicker and cheaper than asking a court to decide for you, and you need to attend a mediation information assessment meeting before you start mediation. If you cannot agree, you can ask a court to make a financial order, and GOV.UK says getting the court to decide usually takes longer and is more expensive. Our family mediation guide explains the process.

Scotland has different rules in the Family Law (Scotland) Act 1985. One principle the court applies is that the net value of the matrimonial property should be shared fairly between the parties, and the net value is taken to be shared fairly when it is shared equally or in such other proportions as are justified by special circumstances. The relevant date is whichever is the earlier of, subject to section 10(7), the date on which the persons ceased to cohabit and the date of service of the summons in the action for divorce or for dissolution of the civil partnership.

In Scotland, subject to sections 10(5) and (5A), matrimonial property means all the property belonging to the parties or either of them at the relevant date which was acquired by them or him, otherwise than by way of gift or succession from a third party, before the marriage for use by them as a family home or as furniture or plenishings for such a home, or during the marriage but before the relevant date.

Northern Ireland: GOV.UK says there are different options in Northern Ireland. nidirect says the court can make orders about finance, maintenance and property.