In This Post
This is the most complete online guide you'll find to divorce settlements.
So, If you want to:
- Discover how to get the BEST possible settlement in your divorce.
- Find out what happens to assets like your pensions and your home.
- Understand how the divorce settlement process works.
Then you’ll love the detailed strategies in this guide.
Let’s dive right in.
<chaptertitleh2>What Is A Divorce Settlement?<chaptertitleh2>
In this chapter I’m going to walk you through the basics of a divorce settlement.
- What a divorce settlement is.
- How it differs from your formal divorce process.
- Why it’s often the most important part of your divorce.
The Divorce Process vs The Divorce Settlement
The first thing to understand is that there are two distinct elements to every divorce:
1. The formal <bloglink>divorce process<bloglink>
2. The divorce settlement
The Formal Divorce Process
This is where you take the official steps needed to become legally divorced.
If your divorce is uncontested (the <bloglink>vast majority<bloglink> are), then getting your formal divorce is a largely administrative process.
It's a matter of:
- Submitting the right paperwork to the courts, and;
- Paying the court fee
In fact, it’s so straightforward you can now <bloglink>do-it-yourself online<bloglink> without needing a lawyer.
The 5 key steps of divorce:
Once all the steps are complete the court will declare you legally divorced.
However, bear in mind that the process will take at least <bloglink> 6 months.<bloglink>
The Divorce Settlement
The divorce settlement is the bigger, more complicated part of most divorces.
It’s where couples often start to fight over money.
You see, the formal divorce process only separates you legally from your partner.
It does NOTHING to sort out the finances between the two of you.
And people’s finances can become devilishly intertwined during marriage.
This is why you need a divorce settlement, which allows you to:
- Figure out who should get what from the family finances, and;
- Make that agreement legally binding.
If your relationship remains good, or your finances are straightforward, you may be able to agree relatively easily.
But if your finances are more complex, or you can’t see eye to eye, or there are acrimonious <bloglink>reasons for your divorce<bloglink>, you may need help from a lawyer, a mediator, or the courts.
This is often the case where:
Whether you’re using a lawyer, or doing it yourself, the divorce settlement can usually be completed at the same time as the formal divorce process.
<chaptertitleh4>What Assets Do You Own?<chaptertitleh4>
The first step to getting a fair divorce settlement is figuring out what the marital assets are.
In this chapter I’m going to show you:
- The difference between marital and non-marital assets (and why it matters).
- How to easily record all your assets.
- How to calculate your net worth.
Let’s go through the process, step by step.
What Are Marital Assets?
Your assets are everything you and your partner owned or accumulated during the marriage.
It’s things like:
- The family home,
After you’ve added up all your assets, you then deduct any debts, such as mortgages, <bloglink>car loans<bloglink> and credit cards.
What’s left in the ‘pot’ makes up the marital assets, and is split between you and your partner.
There are two ways in which you can decide on the split:
1. You can agree between yourselves (either on your own or via a mediator)
2. You can ask a judge to decide for you.
We’ll talk about the pros and cons of each of these approaches in chapter 4.
But before we get to that, we first need to figure out what your marital assets are. Frankly, it can be a real pain digging through your entire family finances.
But don’t worry,
I’m going to guide you through the whole process.
What Are Non-Marital Assets?
This is super important, because in a divorce only marital assets are shared, while non-marital assets are ring-fenced.
A marital asset is anything acquired during the marriage (ie. before your <bloglink>decree nisi and decree absolute<bloglink> are granted), regardless of which partner paid for it, or who’s name it’s in.
Think of your marriage as a window in time: Everything acquired inside that window is classed as a marital asset.
Non-marital assets are assets which are acquired outside the marriage window, and are kept by the partner that owns them.
However, sometimes the court can declare that a non-marital asset has BECOME a marital asset if they think it has been ‘intermingled’ with the family finances during the marriage.
For example, say one of you <bloglink>gained an inheritance<bloglink> before you married.
This would normally be considered a non-marital asset.
But, if part of that inheritance was used to pay for the family home, or to fund your married lifestyles, the court may consider it has now been ‘intermingled’ with the family finances, and should be shared.
This is why it’s so important to record everything you AND your partner own, so that the judge can decide which are marital assets, and which are not.
And I’m going to show you how to do just that in the next section
Recording Your Assets - Step by Step
Before the judge will agree to your divorce settlement, they’ll ask you and your partner to both fill out an official court document called the <bloglink>'Form E'<bloglink>
It can be a pretty long and painful document to complete.
But it’s essential, and I’m going to help you.
The <bloglink>Form E records<bloglink> all your:
- And living expenses.
The court will use it as the cornerstone for approving your divorce settlement.
The Form E:
The Form E isn’t actually submitted until after the formal divorce process has begun.
BUT, it's a good idea to start recording your financial details on a spreadsheet as soon as possible.
It’s easier to keep track of things that way.
And when the time comes to complete the Form E, it’s a simple case of copying the information across.
Your spreadsheet doesn’t have to be completed all in one go- people often remember to add things later down the line.
But the earlier you start, the better.
You can grab my <bloglink>spreadsheet here.<bloglink>
My spreadsheet walks you through the process of recording all your assets and debts, and then calculating the marital assets ‘pot’.
Once you have all this information you’ll be in a MUCH better position to start negotiations with your partner.
And, when the time comes, it will make completing your Form E super easy.
Remember to keep a record of:
- All your joint assets,
- Any assets solely in your name,
- AND any assets solely in your partner’s name.
This way, if your partner fails to disclose any assets on their Form E, you’ll be able to raise it with the judge.
(sadly, hiding of assets is all too common, as you'll discover in Chapter 6).
Types Of Marital Asset
In the table below I’ve listed out some of the most common types of asset you should include on your spreadsheet / Form E. Most people won’t own all these different types of assets, so once you’ve covered the ones that you do own, you can simply skip on to the next section.
Once you’ve figured out all your assets, you then need to consider what debts you and your partner have, such as:
- Outstanding mortgages (on your main home, or any other properties)
- Any bank loans or overdrafts
- Any outstanding credit card or store card balances
- Vehicle loans
- Any taxes you owe
This is important because the court will deduct any marital debts before they calculate the overall value of the settlement ‘pot’ .
Now, there’s a couple of things to remember here:
Marital debts are treated in a similar way to marital assets. Ie, if the debt was used to support the marriage (for example for home improvements or a family holiday), then the court will treat it as a joint debt, regardless of who actually took out the loan.
Only if the debt was clearly used for the benefit of just one partner will the court then exclude it from the divorce settlement (for example if it was used to pay for a bad habit like gambling).
And just like marital assets, any debts accrued before or after the marriage will tend to be ignored by the courts.
Just because the court decides that the debt should be taken into account when deciding the divorce settlement - This does not change who is legally responsible for repaying the loan.
It just means the court might award a bit more in the settlement, to compensate a partner who took on debt for the benefit of the whole family.
Don’t suddenly stop paying your loan instalments just because the court considers it a joint debt!
<chaptertitleh4>Should You Go To Court?<chaptertitleh4>
In this chapter we’re going to discuss what your options are for reaching a settlement.
- Should you go to court?
- What are the alternatives to going to court?
- What are the pros and cons of going to court?
Let’s dive in.
Should You Go To Divorce Court Or Not?
There are two ways you can sort out your divorce settlement:
- By negotiating and agreeing between yourselves
- By going to court and asking a judge to decide
There are advantages and disadvantages of each approach.
Let’s check them out:
Often people think going to court is the only way to get a fair divorce settlement; but these days any of the following negotiation options can help you save the emotional and financial <bloglink>cost of going to court<bloglink>.
If you and your partner are on good terms and see eye to eye, you can simply agree who gets what between yourselves. This is likely the quickest and cheapest way to decide your divorce settlement. However, you’ll still need a lawyer to draw up the final agreement if you want it to be legally binding, and, without having any legal advice during the negotiations, there’s a risk you don’t fully understand what you are entitled to and end up getting an unfair deal.
Mediation is where you <bloglink>ask a qualified mediator<bloglink> to help you and your partner decide on the settlement. They do not decide for you. Ultimately, you and your partner have to agree. But having a qualified and independent mediator can really help couples come to agreement, and ensure both sides get a fair deal. There is another method called ‘collaborative law’ where, instead of a mediator, you both have your own lawyer who help you negotiate the settlement.
Arbitration is like an informal court. Here, you hire a qualified third party who acts like a judge, and decides the case for you. The main difference to mediation is that arbitration guarantees a final decision by the arbitrator.
So those are the main options to avoid court. Now let’s see what happens if you do go to court.
Going To Court
The court divorce process generally consists of three hearings, with the aim of;
1. Deciding what assets, income, liabilities and needs each of you has,
2. Dividing those assets and liabilities between you fairly.
The first step in going to court is submitting the <bloglink>Form A.<bloglink> This formally kickstarts the court process, and after it's submitted the timetable for the first hearing will be set.
But before you even get near to a courtroom, the court will first expect you to consider attending something called a "MIAM".
<ulheading>The Mediation Information and Assessment Meeting (“MIAM”)<ulheading>
Before hearing your case, the Court will want to know that you’ve at least considered mediation. If you have already tried mediation and it has failed, that will suffice. But if you haven’t, you will be expected to <bloglink>attend a MIAM session<bloglink> to see if mediation could work for you. There are a few circumstances where this step is not required (mainly involving domestic abuse), but otherwise it’s mandatory. If, after the MIAM, you decide mediation won’t work for you, the next step is to start formal court proceedings.
As we discussed in Chapter 2 you’ll both also need to complete and submit the Form E, giving your financial disclosure.
<ulheading>The First Directions Appointment (FDA)<ulheading>
The first hearing is the “First Directions Appointment” (FDA), and is usually held at least 4 weeks after the Form A has been submitted. It’s basically an administrative hearing to review all the information and documents, to make sure everything is in order, and to set a timetable for the remainder of the case. Usually no major decisions are made at this stage.
<ulheading>The Financial Dispute Resolution Hearing (FDR)<ulheading>
The second hearing is the “Financial Dispute Resolution” Hearing (FDR), and is often 3 or 4 months after the First Direction Appointment.
The FDR is kind of like a mediation appointment, but at court. A judge will look at all the documentary evidence, will hear arguments from either partner’s lawyer, and will consider any settlement offers either of you have made.
The judge will then try to help you reach agreement by dispelling any unrealistic expectations either of you may have, and by indicating what the most likely outcome would be at a full trial. In essence, the judge will say something like “I think Mrs A would get £X, and Mr A would pay £X in maintenance payments for £X years”
At this stage, many couples are able to reach an agreement, and the court approves it, thereby concluding the case.
But if you don’t agree, the court can’t force a settlement on you at this stage. Instead, the case will be listed for a full trial, often 6 to 12 months later.
The third and final hearing is the trial itself. This will be a full formal hearing before a single judge. You and your partner will both give live evidence, including being cross-examined by the other side’s lawyer. At the end of the trial judgement will be given determining the final financial settlement.
The court can make a number of different orders, including awarding a lump-sum or ordering regular maintenance payments.
So, now you've had a brief overview of the out-of-court settlement options, and of the court process itself.
Let’s recap by looking at the advantages and disadvantages of each approach:
<chaptertitleh4>How Is The Settlement Determined?<chaptertitleh4>
In Chapter 2 you discovered what the marital assets are, the next step is to understand how they will be shared.
In this chapter you’ll discover:
- How does the court decide on a fair settlement?
- Does the conduct of the parties (such as cheating) matter?
- How do any children affect the settlement?
Let’s get started.
When it comes to dividing your assets, the courts have a VERY wide discretion.
There are guidelines and principles they follow, but no real hard and fast rules. The upside of this approach is that it allows them to remain flexible and to be sensitive to the unique circumstances of your case.
But the downside is that it makes it hard for your lawyer to predict what the court will do! The key point to understand is that the court’s overriding objective is to achieve fairness.
Now, fairness does not necessarily mean equal.
Think about it - If you worked 20 hours and your colleague worked 10, but your boss paid you equally, you wouldn’t say that was fair.
To achieve fairness, sometimes an unequal outcome is required. What the court tends to do is take a 50/50 split as the starting point. They’ll then consider all the unique factors of your marriage, and will make adjustments from that 50/50 starting point to achieve what they think is a fair outcome.
To do this, they use the Matrimonial Causes Act 1973.
The Matrimonial Causes Act 1973
This is the main piece of divorce law in the UK.
It lays out the relevant grounds for getting divorced, and the various orders the court can make.
And, at <bloglink>section 25 of the Matrimonial Causes Act<bloglink>, it lists the main factors the court will take into account when deciding on your divorce settlement. Section 25 is basically a checklist (think broad guidelines, not strict rules). However these are not the only factors the court can consider- the judge will always try to look at your case in the round.
That being said, let's take a look at the section 25 factors.
1. The welfare of any children
The first of the factors is the welfare of any children. This means any dependent child under the age of 18, including any step-children. The welfare of the children is known as “the first consideration”. This means it is the most important factor, and it pretty much trumps everything else. The court will want to make sure any children have proper accommodation and sufficient funding to support their lifestyle until adulthood, and if this means using most of the marital assets, so be it.
This is why there is sometimes a misplaced belief that the divorce courts favour the wife in settlements....
The simple reality is that in the majority of cases the mother takes custody of the children. And this means she’ll often be awarded a disproportionate share of the divorce settlement, and will often get <bloglink>rights to the family home<bloglink> so that the children can be housed. Not all cases are the same (plenty of fathers fight for custody rights these days)- but overall, this is a very common scenario.
2. The needs of the parties
After any children are provided for, the needs of each partner is the next most important factor. ‘Needs’ includes common expenses like housing, and an adequate income both now and in the future. The court will calculate how much you both need to live on, and will then divide the assets accordingly. However, the simple truth is that it’s just more expensive to run two households instead of one, and a common issue is that there just isn’t enough money to go around.
These types of case are often referred to as ‘needs based cases’ and, sadly, the majority of divorces fall into this category. This is the only situation where the court can dip into any non-matrimonial assets (remember, that means any assets acquired before or after the marriage). If the court looks at each party’s basic living costs, and realises one of you will be left short, they can order the other party to share any non-matrimonial assets they may have, so that the basic needs of each side are met.
So you can see why it’s important to take an accurate record, not only of all your assets, but also all of your costs. You want to give the court the most accurate picture of what your living expenses are, so that they can make sure you’re adequately provided for. My <bloglink>spreadsheet<bloglink> also has a budget tab where you can make a record of all your costs. If there are more than enough assets to meet each of your needs, then the court will turn to the other section 25 factors to decide how the excess should be split.
3. The income of the parties
The court will look at how much each of you earns now, and how it might change in the future (such as increases, like a promotion or bonus, or a reduction in income, like retirement). If either of you isn’t currently working, the court will expect you to go back to work if you can. They are likely to allocate you a hypothetical income, equivalent to what they think you would earn if you were working.
This is also where the court will also take into account any other assets that could produce an income, like share dividends, rental income, or business profits.
Be aware, if either of you is living with a new partner, the court can take that new partner’s income into account. So if one of you doesn’t work, but has recently moved in with a millionaire, it’s unlikely the court will treat you as having no income. Assessing your incomes is an example where the court will start to adjust from the 50/50 starting point. Ie. If one of you earns three times what the other does, the court will likely award the poorer party a bigger share of the divorce settlement to offset this imbalance.
4. The standard of living
The courts will look at the standard of living enjoyed by the family prior to the divorce. Your ‘standard of living’ is things like:
- How much you had to spend each month
- The type of cars you drove, and holidays you took
- How often you went to restaurants, and what type
- Whether your kids went to an expensive school
The reality is that, after a divorce, both of your standards of living are likely to take a hit. What the courts will try to avoid is one side suffering a much bigger decline in their lifestyle than the other.
5. The age of the parties and duration of the marriage
In simple terms, the younger the parties and the shorter the marriage, the more likely the court is to try to make a ‘clean break’ by returning each of you to the financial position you had before entering the marriage.
If you are both older or have been together for a long time, things will be less straight-forward. The older you are, the less time you have to build up your finances, and the harder it is to get a mortgage. So the court may order the lower earning party to receive a bigger share of the divorce settlement to compensate for this.
If you lived together before the marriage, this period of time can be included as part of the marriage period. On the other hand, if you are living apart and are estranged for a long time before actually getting divorced, the court may exclude this period when calculating the marriage length.
6. Any physical or mental disability
If either of you has a physical or mental disability that impacts your earning capacity, the court may award them a larger part of the settlement or maintenance payments. The court will need to see medical evidence of any disability.
7. The contributions to the marriage
The courts consider your contributions to the marriage to be equal. This means that staying home to raise children is considered to be just as important as being the main breadwinner. They also won’t make any distinction if one of you happens to earn more than the other.
Regardless of what you earn, the starting point is still a 50/50 split.
Very rarely, the court can award a larger part of the settlement in recognition of a “special contribution” made by one party.
However, this is exceptionally rare.
Just consider the case of Work v Gray, where the husband claimed he earned more than £7 billion for his hedge fund, and so should get a larger share of the £180 million in marital assets.
The court still decided that this wasn’t enough to justify departing from an even split because, while the numbers were very large, he had done nothing exceptional that other members of his firm weren’t capable of.
8. The value of any benefit lost through divorce
This factor usually comes into play when <bloglink>pensions<bloglink> are involved. For example, if one of you would have had an entitlement to part of your partner’s <bloglink>pension<bloglink>, and that right has now been lost due to the divorce, then the court can take that into account when dividing the assets.
9. The conduct of the parties
Ok- so this question comes up a lot.
People tend to expect that if one side cheated or behaved badly during the marriage, then the court will take this into account.
However, rightly or wrongly, this is generally not the case.
The courts take the view that bad behaviour like adultery is part of the reason people get divorced in the first place, and is not significant enough in itself to deny one party their fair share of the financial assets.
Only if the behaviour is really bad (like child abuse or domestic violence), will the court consider changing the divorce settlement.
Sometimes the court will also consider financial misconduct, such as one party hiding or stealing money from the other.
Be aware though that arguing about misconduct in the marriage can add quite a lot to your <bloglink>legal costs<bloglink>, as it complicates the case. You should discuss with your lawyer the likelihood of a misconduct argument succeeding, and whether the additional legal costs will be made up for by any higher settlement award.
<chaptertitleh4>What Happens To The Marital Home?<chaptertitleh4>
9 times out of 10 the marital home is the biggest shared asset in a divorce.
That’s why it deserves its own chapter, to consider some of the key issues.
In this chapter we’ll discuss:
- Does it matter who legally owns the home?
- What are the different ways you can split the property?
- How can you use your home to help secure divorce funding?
Who Owns The Marital Home?
If you own the house jointly (ie. both names are on the title deeds) then things are pretty straight forward- You are both legal owners and have rights to the property.
But what if only ONE of you is named as the legal owner?
Well, as you’ve probably figured out by now, the courts don’t draw such fine distinctions when it comes to the marital assets.
“the matrimonial home, even if brought into the marriage by one party at the outset of the marriage, plays a central part in the marriage and so should normally be treated as matrimonial property”
<quotesub>Lord Nicholls in Miller v Miller, McFarlane v McFarlane 2006<quotesub>
If the property IS OR WAS lived in by you as the family home, then you have home rights and will get a share of it on divorce (even if you’re not you’re registered on the title deeds).
How Can The House Be Divided?
Let's have a look at the 4 main ways that the marital home can be divided:
Mesher And Martin Orders
Mescher and Martin Orders (both named after real-world cases) are two ways the court can protect the interests of children or a less well off spouse when it comes to the marital home.
They come into play when the court decides that, if the house were sold, there wouldn’t be enough money left over for one of the parties to re-home themselves adequately.
So, what’s the difference between the two?
Property Adjustment Orders
In addition to Mescher and Martin Orders, the court can make a general property adjustment order. The court has a LOT of powers to vary property rights, and can basically do what it sees fit in order to reach a fair divorce settlement. This can include transferring legal ownership from one partner to the other, changing the equity split, and postponing or <bloglink>ordering the property’s sale.<bloglink>
What Happens To The Mortgage?
Ok, first things first.
Just like any other joint debt, your responsibility for the mortgage doesn’t stop just because you’re divorcing.
So, even if you move out, DON’T just walk away and suddenly stop paying your share!
It can seriously damage your credit score, and if the house is repossessed by the lender you’ll end up with a lot less to share when it comes to the divorce settlement.
First step: Contact your bank.
As soon as you know that one of you will be moving out, call your bank. They are often sympathetic and should try to help accommodate your circumstances by offering you a payment holiday if you need it.
You’ll then need to decide what your long term plans are. If you know you are going to sell the property relatively soon, then you should be able to pay off the mortgage after the sale and go your separate ways.
But if one of you is staying in the property longer term the other partner may want to consider being released from the mortgage (usually by buying the other partner out).
The advantages of this are:
- Removing your name from the mortgage frees up more of your credit score, allowing you to take out your own mortgage.
- Removing your name from the mortgage will be necessary if you want to <bloglink>break the link<bloglink> between you and your partner’s credit scores.
You should also ensure you don't breach any previous court orders that affect the property, such as an <bloglink>occupation order.<bloglink>
Your House Could Be Your Best Funding Asset
The <bloglink>marital home<bloglink> is usually the biggest asset to be shared in a divorce settlement. But many people don’t realise it can also be used as an asset to help secure funding for their divorce lawyer. If you have reasonable equity in your home, it’s possible you might be eligible for a legal funding loan.
Specialist funding is rapidly becoming one of the most convenient and cost-effective ways to fund your divorce.
This specialist funding can help you pay for:
- Mediations session
- Solicitor led negotiations
- Going to divorce court
- And more...
Check out my guide divorce funding page to learn more…
<chaptertitleh4>Bad Behaviour And Hiding Assets<chaptertitleh4>
Going through a divorce is often one of the most high stakes financial events in a person's life.
This means, sometimes, the temptation to cheat is just too strong.
There are two key ways people try to avoid paying their fair share during a divorce:
- Not declaring or hiding their assets.
- Dissipating (getting rid of) assets prior to the divorce.
Let's take a look at how you can identify and combat these tactics...
The Duty Of Disclosure
Remember the Form E we discussed earlier?
That long and complex document you both need to fill out detailing all your finances?
Well, here’s what it says right on the first page:
Pretty serious stuff.
Both you and your partner have a legal duty to make “FULL and FRANK and CLEAR disclosure of your finances”
This is not a request.
It’s a legal duty.
And there are consequences if a person is found to have breached that duty.
What Are The Penalties For Non-Disclosure?
The court can impose some pretty severe penalties if they discover a party has been hiding any of their assets.
This can include ordering that the at-fault party pays some or all of the other side’s legal costs, and/or gets a smaller share of the divorce settlement.
If the non-disclosure is very serious, the at-fault party could ultimately face criminal charges for misleading the court, leading to large fines or even imprisonment.
Despite these risks, it’s still quite common for hiding of assets to occur (usually by the wealthier partner).
So how do they do it?
What Are The Common Ways People Hide Their Assets?
Some of the most common ways people try to minimise the divorce settlement include:
There is a second way a dishonest partner can try to avoid sharing money in the divorce settlement: Dissipating assets.
This simply means spending money for the sole purpose of getting rid of it.
This can include activity such as gambling, making unusually large purchases, selling assets, or spending money on lavish items or events.
However, merely spending money is not enough. The court needs to find that it was ‘wanton’ spending. In short, this means:
- The spending had no serious purpose and was made purely to reduce funds;
- It started once it became obvious that the parties would separate, and was done in order to frustrate the divorce settlement;
- The amount spent is enough to have made a substantial difference to the divorce settlement.
What Steps Can You Take?
So, what are the actions you can take if you think your partner is hiding or dissipating assets?
The first thing is to act quickly.
As soon as you suspect any bad activity is occurring, you should inform your solicitor who will advise you on what steps to take.
A word of warning- be wary of conducting your own investigations. Activities such as hacking into your partner’s emails or filing cabinet could land you in trouble, and won’t leave the court with a good impression of you.
So, once you’ve told your solicitor of your suspicions, there are a number of actions they can consider, including:
- Once Form Es have been exchanged, your solicitor can raise a formal questionnaire asking about any suspicions you have. This is a fairly low level way of bringing the issue to the court’s attention. If your partner can’t answer basic questions convincingly, the court will likely allow or order further investigations.
- A next step is to apply to the court for a forensic accountant to investigate the discrepancies. Often the court merely making this order can be enough to convince the at-fault party to declare their hidden assets.
- Another tool the court can order is non-party disclosure. This means side-stepping the at-fault partner, and going directly to their bank or HMRC etc. The court can then order these third party organisations to disclose the necessary financial information.
- The final steps that can be taken are obtaining a court search order, which allows the non-disclosing partner’s property to be searched; and/or a freezing order which prevents assets being disposed of (eg. by ordering a bank not to allow funds to be spent).
Can The Divorce Settlement Be Reopened?
If bad behaviour is exposed before the settlement is finalised, then the court can order that any hidden assets are included in the final divorce pot.
They can also ‘add back’ any funds that were unreasonably spent.. For example, if the court found that one partner had purposely spent £20,000 to avoid the settlement, then they could offset this by making a larger award to the innocent party.
But what if the bad behaviour is only discovered after the divorce settlement has been agreed?
Well, if you can show there was fraud or dishonesty you will very likely be allowed to apply to court to have the settlement reopened.
<chaptertitleh4>High Net Worth Divorce & Prenuptial Agreements<chaptertitleh4>
On the face of it, a high net worth divorce is no different to a normal divorce.
The value of the marital assets is just higher.
However, they can bring some additional complications, such as:
- A higher likelihood of hiding or dissipating assets
- The use of pre-nuptial agreements
- More complex finances, such as business interests, trusts, or overseas assets
- More common use of <bloglink>Litigating Funding<bloglink>, <bloglink>Sears Tooth Agreements<bloglink>, <bloglink>Interim Maintenance<bloglink> or <bloglink>Legal Services Orders.<bloglink>
This can often mean high net worth divorces can cost more and take longer.
What Is Classed As A High Net Worth Divorce?
There is no official definition of a high net worth divorce. However, many specialist solicitors would consider a couple with a combined income of £150k+, or £1million in liquid assets (ie. excluding the family home), to be a high net worth client.
Beyond that, high net worth divorces can stretch into millions or even billions.
What Are The Common Features Of A High Net Worth Divorce?
Some common features of a high net worth divorce include:
What Is A Prenuptial Agreement?
A <bloglink>prenup<bloglink> is simply a written contract stating who gets what in the event of a divorce. They are generally more common in high net worth cases, simply because there are more valuable assets to be divided or protected.
You can also have a ‘post-nuptial’ agreement, which is the same thing, only signed after the marriage.
Can Prenuptial Agreements Be Enforced?
Unlike the US, strictly speaking pre-nuptial agreements are not enforceable in UK courts. Simply put, the courts will not allow a written contract to override what they view to be a fair outcome in the divorce.
However, the UK courts' approach has softened in recent years, and while they remain technically unenforceable, the court will generally give the agreement a lot of weight and seek to uphold it, if they view it to be reasonable and fair.
What does reasonable and fair mean?
Well, the court will likely look favourably on the agreement provided:
- Each party had full disclosure and knowledge of the other partner’s financial assets and liabilities.
- Both parties entered into the agreement voluntarily.
- Both sides had independent legal advice.
- The agreement is judged to be a fair by the court.
If the agreement falls foul of these criteria, then it’s likely it could be successfully challenged in court.