How Is A Divorce Settlement Calculated?

When going through a divorce, many people worry about the practicalities of reaching a financial settlement. Dividing your finances between yourself and an ex-partner can be daunting, particularly where there is some conflict regarding ownership of assets, financial rights, and obligations.

If you are concerned about reaching a financial settlement and wish to protect your interests, working with a specialist divorce solicitor is the best option.

In this blog, we will explore the topic of calculating a divorce settlement, including, what is a fair divorce settlement, and other key considerations to make when going through the divorce financial settlement process.

How are divorce settlements calculated?

When a couple get divorced, and must therefore make arrangements to divide their finances, it is a common misconception that their assets will be split equally. Though an equal split is a starting point theoretically, typical divorce settlements are based on several different factors. Ultimately, this means that one person may end up with a larger share than the other.

To determine a financial settlement, the Court follows guidelines outlined in the Matrimonial Causes Act 1973, Section 25. According to the law, financial divorce settlements should be divided fairly according to the circumstances.

To determine what is a fair divorce settlement, and split the couple’s finances accordingly, various factors are taken into consideration, including:

• The earning capability and income, property, and any other financial resources of each individual, considering the resources that each has now, as well as resources that they are likely to have in the future
• The standard of living that the couple experienced before the marriage later broke down
• How long the marriage lasted, and the age of each individual
• Any physical or mental disability that either person may have
• How each person has contributed, whether to the home or family, or financially

How do you reach a divorce financial settlement?

How you divide your finances depends on your unique situation, and how easily you and your ex-partner can agree to negotiate, to reach a divorce settlement calculation.

In many situations, divorcing couples will be able to separate their finances by reaching a voluntary financial settlement.

Reaching a voluntary settlement means discussing, negotiating, and ultimately deciding how finances will be split, using an out of Court process such as mediation or Collaborative Law. By using one of these alternative dispute resolution processes, couples can make decisions on how they will split assets, including:

• Property and pensions
• Businesses and trusts
• Investments
• Spousal maintenance

When a couple cannot reach a voluntary settlement, they will need to apply to Court to obtain a Financial Order. This refers to a Court Order that determines how the couple’s finances will be split and is legally binding.

How do I protect my finances in a divorce?

If you would like to protect your finances while going through a divorce, it’s recommended that you work with an expert divorce solicitor. After assessing your situation, your solicitor will be able to provide advice based on your circumstances, ensuring that you understand your legal position and options.

Couples that are preparing to marry, and would like to safeguard their finances, should consider drafting a prenuptial agreement. Such agreements are used to set a framework for how finances and assets will be split if a couple were to later get divorced.

Couples who are already married can enter into a post nuptial agreement, which affords the same type of protection.

How are pensions divided during divorce?

When going through a divorce, many couples wonder how their pension might be divided, and if they will have to share their pension with their spouse.

Pensions are deemed a marital asset, and therefore are included as part of a typical divorce settlement. There are two main options for dividing a pension, including:

Pension Sharing: This method means that a certain portion of one person’s pension can be transferred into a separate pension scheme, intended for the other spouse. In this way, there are then two pension funds, one for each person, each having full control over their own funds.

Pension Offsetting: This method means that the value of one spouse’s is offset against other assets, for instance savings or property. In this scenario, one spouse would keep their entire pension, without sharing it, yet agree for the other spouse to take a larger portion of another substantial asset.

What happens to a property during a divorce?

When it comes to dividing the family home as part of a divorce settlement, the solution is for the couple to negotiate. If they cannot agree, it may be left up to the Court to decide. Options for dividing a property when getting divorced may include:

• The couple agree that one spouse will buy the other spouse out
• The couple agree to keep the family property, without changing ownership, and one partner might continue to live there with the children
• The couple agree that part of the property value will be transferred from one spouse to another. The spouse retaining the smaller share of the property would receive a percentage of the home’s value when the property is later sold

Dividing property can be one of the more difficult aspects of calculating a settlement, rest assured, our expert divorce solicitors can help you to protect your interests while doing so.

What should I do if I think my spouse is hiding assets?

As part of a divorce financial settlement, both spouses are obligated to provide a full financial disclosure, giving details of all their financial assets and resources. Unfortunately, where spouses are concerned about protecting their finances, it is not uncommon for people to attempt to hide assets.

Hiding assets when going through a divorce settlement is illegal, and if caught, the individual could end up with legal action taken against them, or with a less desirable settlement than they may otherwise have received.

If you believe that your spouse is attempting to hide assets, you are advised to work with an expert solicitor. Our team at TG Baynes can support those who are in this situation, ensuring that your best interests are protected, and any attempt to hide assets is exposed.

Contact our divorce solicitors at TG Baynes

If you require support from our divorce financial settlement solicitors, please get in touch with us at TG Baynes today.

We have much experience helping clients to make fair divorce calculations, on a voluntary basis, with no need to attend Court.

You can get in touch by contacting one of our offices in Bexleyheath, Dartford or Orpington. If you prefer, you can fill in our enquiry form and one of our solicitors will get back to you.