HM Revenue and Customs (HMRC) have been unsuccessful in their appeal against a decision that a dividend received by a man in the 2016/17 tax year was paid for Income Tax (IT) purposes in that year, even though another shareholder had received the dividend in...
In a divorce, who gets the car is a common concern, especially where you are reliant on your car, would struggle to replace it or you are keen to make sure the value of your spouse’s car is taken into account as part of their assets.
There is no straightforward answer to who gets the car in divorce that always applies as it will entirely depend on the situation. In this article, we cover the following key questions and concerns that people often have in relation to cars and divorce:
- Is a car an asset in divorce?
- What are your options for dealing with a car during divorce?
- How do you decide who gets the car in divorce?
- How to value a car in divorce
- What happens if the car is on finance?
- Can you trade in a car during divorce?
- What happens during divorce if the car is in your name?
- What happens in divorce if your car loan is in your husband’s name?
- What happens if you have a car loan in both names in divorce?
- Can I sell my car before divorce?
- Can I sell my car while going through a divorce?
- What can you do if your husband sold the car during your divorce?
- What happens if you buy a car during a divorce?
The advice in this article is intended for general information purposes only and should not be taken as legal advice. To arrange a fixed fee initial consultation with a member of our team, please fill in our simple enquiry form or call 020 8301 7777.
Is a car an asset in divorce?
People often ask if a car is considered marital property in divorce and, therefore, whether it will need to be considered in any negotiated divorce settlement or court-ordered division of assets.
The answer is that a car likely will be considered a marital asset if it was bought during the marriage. If you bought your car before your marriage, it is possible that it would not be considered a marital asset, but it is important to check with your solicitor to make sure your exact position is clear.
What are your options for dealing with a car during divorce?
Assuming that the car is considered a marital asset, then there are various options you can take to deal with it, including:
- One spouse keeping the car and the other taking different assets of an equivalent value
- Selling the car and splitting the proceeds
This assumes a broadly even split of assets, but this is not necessarily always required. While many people assume that assets in a divorce will be split 50:50 between the separating spouses, the reality is that various factors will be taken into account to decide what is a fair division of assets. You should, therefore, always speak to a solicitor specialising in divorce financial settlements early on so you can be clear about what you and your spouse may be entitled to in your divorce.
How do you decide who gets the car in divorce?
There are various ways to decide on the division of assets during divorce, including with respect to a car. Broadly, you will either:
- Negotiate a divorce settlement voluntarily
- Apply to a court to decide how your assets will be divided
Most divorces are resolved with an amicable settlement, which is usually reached through private negotiation between the spouses or with the aid of a trained mediator. Other options exist including collaborative law and private financial dispute resolution (FDR), which may be appropriate depending on your circumstances.
How to value a car in divorce
You will need to either agree a value with your spouse based on the price that equivalent vehicles are currently selling for or have an independent valuation. If there is an outstanding loan on the car, this will need to be deducted from the car’s value.
What happens if the car is on finance?
As stated above, if a car is on finance, then the outstanding amount of the loan would need to be deducted from the car’s value. If you would be unable to afford the car payments on your own, then this is something you would need to carefully consider as part of the divorce settlement. Car loans and divorce can be tricky to navigate, so this is an issue we recommend flagging with your solicitor early.
Can you trade in a car during divorce?
Trading in a car during divorce can be complicated, but it may be possible. The issue is that you cannot do anything to reduce the value of your assets before a settlement has been agreed or ordered by a court. If you wish to trade in your case, you will therefore need to make sure that you can clearly evidence that doing so has not resulted in a reduction in the value of your overall assets.
What happens during divorce if the car is in your name?
While it might seem like a car that is in your name should automatically stay with you during divorce, if it is considered to be a marital asset, then its value will still need to be factored into the division of assets.
What happens in divorce if your car loan is in your husband’s name?
Debts will need to be considered in relation to your assets as part of your divorce settlement. This can make things complicated if the car you normally drive has a loan that is in your spouse’s name. Exactly what would happen in this situation is not necessarily straightforward, so this is something you would need to discuss with your solicitor.
What happens if you have a car loan in both names in divorce?
As covered above, debts need to be considered as part of your divorce settlement. If you had a car loan in both spouses’ names and you both contributed to the repayments, then these facts will need to be looked at when deciding what is a fair settlement.
Can I sell my car before divorce?
Yes, you can potentially sell your car before getting divorced, but the proceeds would then be considered part of your assets for the purposes of reaching a settlement. It is also important to realise that, if the sale happens shortly before your divorce, it is likely to be looked at closely to check that you did not sell it for less than its true value.
If it is determined that the car was sold for below market value, then the true value could be used when determining the division of assets, rather than the price you actually received.
Can I sell my car while going through a divorce?
As above, yes, you can potentially sell your car during divorce, but it is important to show that you achieved its true market value and the proceeds of the sale will be considered part of your assets for the division of finances.
What can you do if your husband sold the car during your divorce?
If your spouse sold the car during your divorce, then the price they received would be considered part of their assets and would need to be factored into any divorce settlement.
You would be entitled to know what price they received for the car and can check this against the sale prices of equivalent cars. If you believe your spouse sold their car for less than its true value, then you may be able to have its real market value used as the basis for the division of assets, rather than the price your spouse actually received.
What happens if you buy a car during a divorce?
If you buy a car during your divorce, it would normally be considered part of your assets, especially if you used existing funds to make the purchase. These situations can be complicated, however, so it is a good idea to speak to your solicitor before making any large purchases during your divorce.
Contact our divorce solicitors in Bexleyheath, Dartford and Orpington
To speak to one of our divorce solicitors or to arrange a fixed fee initial consultation, please fill in our simple enquiry form or call 020 8301 7777.