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When a marriage ends, reaching a financial settlement involves much more than the family home. A fair outcome depends on the complete disclosure of each person’s assets, liabilities, income, pensions and future needs.

Under section 25 of the Matrimonial Causes Act 1973, the court in England and Wales considers all circumstances including when and how assets were acquired, how they were used during the marriage, the parties’ needs and the evidence available.

Full Financial Disclosure – where to start

Before meaningful advice can be given, both parties need to provide full and frank financial disclosure. This is done using Form E, which discloses assets held in a person’s sole and joint name, property, overseas assets, trusts, investments, valuable belongings, debts and all other relevant finances. Missing or inaccurate information can delay negotiations and increase costs.

A Form E is supported by documents such as bank statements, property valuations, mortgage statements, pension valuations, payslips, tax returns and business accounts.

Commonly overlooked assets

Whilst all aspects of financial disclosure are important these are commonly overlooked:

1. Properties

The family home is often the biggest asset in a marriage. You will need to know its current market value, mortgage balance, how it is owned and the likely costs of selling or transferring it.

However, all other property must also be considered, including investment properties, holiday homes, and properties owned abroad. Possible outcomes may include an ordered sale of the property to divide equity between the parties, transfer to one party, deferred sale or an adjustment of other assets. The court will consider reasonable housing needs, particularly where children are involved, as well as mortgage raising capacity.

2. Pensions

Pensions often rank as the second most valuable asset, after the family home. As a non-tangible asset these can be easy to overlook but considering the pensions of parties is important in securing your financial future.

A pension sharing order can divide pension rights between the parties. Other approaches, such as offsetting, may also be considered, which involves trading pension provisions for a larger share of the equity in the former family home.

3. Debts and liabilities

Mortgages, loans, credit cards and liabilities should also be included in financial disclosure. The fact that a debt is in one person’s sole name is relevant but may depend on whether the debt was incurred to benefit the family as a whole.

4. Inheritance, gifts and pre-marital assets

Assets owned before the marriage, held solely in one party’s name, or inherited from family members are known as ‘non-matrimonial property’. Assets acquired during the marriage are usually treated as ‘matrimonial’ property.

Whilst an asset may be considered to be non-matrimonial, the court must still consider the needs and circumstances of the parties. Even non-matrimonial assets can be dipped into if necessary to meet the reasonable housing and living needs of each party.

This article provides further insight into how premarital wealth can be treated on divorce (link to https://laceyssolicitors.co.uk/premarital-wealth-divorce/)

How we can help

Divorce settlements are important for your financial future, and missed assets can cost you long after the paperwork is signed.

Our family team can advise you in both your financial disclosure, assessing your former partners disclosure and drawing up a financial order which can provide a clean break between parties.

If you would like some additional advice we offer an initial fixed fee appointment, giving you the chance to meet with us and discuss your goals. To book, please contact either Sara or Charlotte at s.gilak@laceyssolicitors.co.uk and c.grant@laceyssolicitors.co.uk or call 01202 377983.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.

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