Family Assets and the Court’s Powers to Distribute them on Divorce

Divorce and Family Assets

When a couple decides to get a divorce, there are usually financial issues to be sorted out.  Most of those issues relate to maintenance (support) and family assets.  Often the matrimonial home is the most significant family asset.  What follows is a brief discussion of the division of family assets. 

What are family assets?

Note the following regarding family assets:

  • Family assets are normally assets owned/earned by the spouses during their marriage.   Examples are a family home (often called the “matrimonial home”), a car, savings, a holiday cottage, a boat, and a pension.

  • Normally assets owned by either spouse before the marriage do not constitute family assets.  However, depending on the circumstances, if one spouse owns an asset before marrying, but buys it so that the spouses can live together or use it together, then that asset will be considered as a family asset.  Thus, a matrimonial home can be a family asset in that situation.

The Court has Wide Powers to Distribute Family Assets

The court has a very wide discretion to redistribute family assets.  Although the legislation regarding the distribution is quite short, each case is decided on its merits.  This is good in that every case is decided individually, but this also has the effect of lack of certainty – it is difficult to predict what a court will do in any given case.  However, the following are the basic principles.

Principle 1

The children come first .in any financial arrangements on divorce.

Principle 2

A judge can order periodic child and spouse maintenance (support) payments, and can order that those payments be secured against property.  For example, if you must pay spousal support and those payments are secured against your holiday cottage, then if you do not make the payments, your holiday cottage can be sold so that the payments are made from the sale proceeds of the cottage. 

Principle 3

A court can also order lump sum payments.  For example, if you have £20,000 in your bank account, a judge can order a transfer of, say, £10,000 to your spouse either by way of support or property adjustment.   These payments can also be secured against property. 

Principle 4

A court can make property adjustment orders, that is, order a transfer of property from one spouse to another if the judge feels this is necessary to come to a fair arrangement.   

Principle 5

Many judges follow the “clean break” principle if the marriage has certain characteristics:

  • The marriage has been short-lived

  • There are no children

  • The parties are young

  • There are sufficient assets to satisfy each party’s current maintenance needs

In these circumstances, a judge may come to the conclusion that there should be a one-time distribution of property without ongoing support payments.   Note that such an order is not final, so if circumstances change dramatically in the future, the court may “reopen” the order. 

Factors the court considers when making its orders

  • The extent of the family’s resources.  Thus it is important when you are thinking of separation or divorce to have a good idea of your family’s assets and debts, together with income and expenses. 

  • The family’s current and future financial needs, obligations and responsibilities

  • The family’s standard of living before the breakdown of the marriage

  • The age of each party, and how long the marriage lasted

  • Physical and mental disability

  • Contributions to the family, including the contribution of looking after the home and taking care of the family

  • The conduct of each of the parties if, in the opinion of the court, it would be unfair to disregard it

  • The value of any benefit which that party will lose the chance of acquiring.

Orders regarding the matrimonial home

Often the matrimonial home is the most significant asset of the family.  There are usually three types of order made regarding the matrimonial home:

  1. An order for immediate sale and division of proceeds

  2. A transfer of the home into the sole name of one spouse

  3. Postponement of the sale of the home (most commonly until the children grow up or until the wife’s circumstances change).

If title to the matrimonial home is in your spouse’s name, and you are worried about that the spouse may sell it or take some other step, then you can register a document registering your matrimonial home rights.  A solicitor can do this for you.