Splitting up what you own during divorce

When dividing things up during divorce or dissolution, you can reach agreement on your own or use the courts. This article offers an overview of things to consider when deciding which option is for you and provides links to further information.

The basics of splitting up what you own

In England, Wales and Northern Ireland, everything you own can be taken into account as part of the overall divorce or dissolution settlement. However, some assets, such as money or property you have inherited, may not be treated the same as those that you’ve bought or earned.

The basics in Scotland

In Scotland, generally, only assets you have built up during the time you have been married or in a civil partnership are taken into account. However, if you owned previously an asset which changed form during the marriage or civil partnership, then it may be taken into account. You may be able to argue for an unequal division of the matrimonial property to take account of the pre-marriage value of it. If a house was bought before the marriage with the intention that it would be the family home, then it will be taken into account.

Agreeing how to split your assets

If you’re married or in a civil partnership you may decide to agree between you how you divide money and assets you own (such as property and investments) or you can go to court. If you decide not to go to court, you can use a professional adviser, such as a collaborative lawyer, an arbitrator, a family lawyer or a mediator (a professional skilled in helping people to negotiate with each other) to help you reach an agreement.

If you want to decide between you how your assets and any debts you have will be divided, you should get a court order drawn up, which is a legally binding agreement, otherwise your spouse or civil partner could make another claim against you in the future. In Scotland, this is known as a separation agreement. To ensure that your ex-partner cannot make another claim against you in the future, you should seek professional help regarding your separation agreement.

• Read our guide Get professional help with your divorce or separation

Dividing up your assets

If you don’t want to go to court, you will need to decide how to divide assets you own jointly (such as bank accounts or joint investments) and those you own individually (such as savings or a pension in your own name).

Family home

There are different ways that you can divide the family home if you own it. One partner can buy the other out or you can sell up and split the proceeds – either equally or in unequal shares. How you split the family home will depend on factors such as the size of any existing mortgage, how big the mortgage is compared to the value of the property and how much each of you earns. If you rent, there are rules around who is liable to pay the rent during a divorce.

In Scotland, the overall value of the matrimonial property, any children and how the ownership of the remaining matrimonial property is constituted are all factors which would be considered in a decision regarding division of the matrimonial home.

Find out more about your options in:

• What to do about a mortgage during separation
• What to do about the home you rent during separation
• Your home and your divorce settlement

Bank accounts

You should decide how and when to close down any joint accounts you have. If you have money in a joint account, it’s normally assumed to belong to each of you 50:50, no matter who paid it in if you live in England, Wales or Northern Ireland. In Scotland, if the money is in a joint account, then it becomes joint property which may mean that it should be divided unequally to take into account the ‘source of funds’.

Investments

Some investments, such as shares, can be owned jointly. Take advice if you are thinking of cashing in your investment so you can divide them between you.

If you own buy-to-let property jointly, you will need to get it valued and to work out whether you want to continue renting it out. Contact your lender if you want to take your ex-partner’s name off the mortgage and consider talking to a mortgage broker if you think you will need to remortgage. If one of you owns it in their name alone, it may need to be sold or transferred as part of the divorce or dissolution settlement.

Pensions

There are several different ways that a pension can be divided on divorce or dissolution. It’s a complex area and you may benefit from the help of an expert. Find out more about the ways a pension can be split. 

• Read our guide Splitting pensions during divorce

Businesses

Valuing and dividing a business can be difficult, especially if it’s privately owned (which many small businesses are). It’s best if you and your ex-partner can work out how much the business is worth through straightforward disclosure. However, you can talk to an expert, such as an accountant, if you cannot agree.

In Scotland, if one party owned or had shares in a business before the marriage or civil partnership and this situation did not change in form throughout the union, then they would not be taken into account. However, if there was any change in the form of that business/ those shares, then they would be taken into account. If there is a business owned pre-marriage or civil partnership that may have changed form, then it would be advisable to consult a solicitor as this is not a straightforward area of the law.

• Read our guide Sorting out a business during divorce

Source:-  https://www.moneyadviceservice.org.uk/en/articles/splitting-up-what-you-own-during-divorce