Divorce Calculator: Which Assets Are Taken Into Account When Divorcing?

Use our quick and easy divorce asset calculator below to find out what assets you will need to factor into your divorce settlement and what the total value of those assets might be.



Divorce assets explained

It is common for spouses to want to know what circumstances are taken into consideration when dividing matrimonial assets. The starting point for division of matrimonial assets is 50 : 50,  however, legal advisors and the court are under a duty to consider all the circumstances of a couple’s marriage, in particular section 25 of the Matrimonial Causes Act 1973 (explained below). And having considered the section 25 factors, the subsequent division may depart from a pure 50 : 50 split and instead an unequal, though still ‘fair’, division of the matrimonial property is decided upon. This may be a division that both spouses agree to, or it may be a division that the court dictates if the couple cannot reach an agreement.

It is important to add at this point, that matrimonial property covers almost every type of asset and includes property, and any interests in property such as tenancies or contingent interests (e.g. received inheritance), life policies, savings, trust interest, investments of any kind, pensions, shares, retirement annuity trusts, business interests, contents of the former matrimonial home, cars, livestock, and any other assets of value.

Circumstances that affect the division of assets

Guided by Section 25 of the Matrimonial Causes Act 1973, the following considerations may affect how assets are calculated and divided. They include:

a. Welfare of the children.

Children are always given first consideration when determining the division of matrimonial assets. In real terms, housing must be provided for any children, and consequently the parent who looks after them for the lion’s share of the time. In many cases, it means that one parent, whether that is the mother or the father, remains in the matrimonial home if they can afford to do so.

In the first instance, the court will try to house both parties, but it is not always possible because of the lack of available assets. For shared care arrangements, both party’s accommodation needs are going to be equal too, and it can be particularly difficult to ensure both party’s needs are met.

b. Financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future.

In essence, need exceeds all other factors, and most cases are determined purely based on need. This means providing any dependent children with suitable housing, which in some cases is likely to consume all of the matrimonial assets, leaving nothing immediately available to the parent who does not have the children living with them.

When considering need, the court looks at both party’s income, their resources available, and their outgoings. This requires a detailed analysis of each party’s household budget, and this is achieved by completing a Form E Financial Statement.

c. Income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future.

When considering income, bonuses, commission payments, fringe benefits, perks such as company cars, petrol, payment of phone or broadband bills and pension payments are all considered. The court will also consider potential income. This is because both parties are expected to maximise their income, although this can cause some difficulty for the parent caring for younger children.

Income and potential income are also important because it determines any mortgage capacity, which has a direct link to obtaining accommodation. The court can also consider any assets that are likely to be received in the very near future, such as an inheritance, for example.

d. The standard of living enjoyed by the family before the breakdown of the marriage.

The standard of living enjoyed by the family is usually only relevant in cases of substantial assets and when they exceed the reasonable needs of the family. The reality for most divorcing couples, no matter what their worth, is that their standard of living is likely to reduce.

e. The age of each party to the marriage and the duration of the marriage.

A party’s age can have a huge bearing in the decision a court may make. If the couple are both young and financially independent, then it is almost certain a clean break would be agreed to allow the parties to move on, having no ongoing link to one another. Younger couples also have greater mortgage capacity than those divorcing in their 50s or perhaps even later, which can be crucial to the issue of sale or retention of the family home.

The length of a marriage is also important. Generally speaking, the longer the marriage, the bigger the obligations between the parties, and the more complicated it may be to achieve a clean break and immediate independence.

Short childless marriages are far more likely to result in both parties returning to their previous financial position, or as close to it. Whereas a longer marriage, where one party has taken a career break to raise the children and has been disadvantaged in the labour market as a result, will have far less income and consequently reduced future earning capacity. Such factors will be taken into account when dividing the capital assets, and the financially weaker party may receive a larger share of the capital as part of the balancing exercise required by section 25.

For short marriages with young children, the duration of the marriage is likely to be of lesser significance. This is because the presence of children will almost certainly reduce or restrict the ability of the parent who does the bulk of caring duties, to return to immediate full-time work and achieve financial independence.

A further consideration is that of pre-martial cohabitation when considering the length of the marriage, because in some circumstances, pre-marital cohabitation can be taken into account. Case law suggests that when cohabitation moves “seamlessly” into marriage, it can be considered as one of the “circumstances of the case.”

f. Any physical or mental disability of either of the parties to the marriage.

If either party is mentally or physically disabled, it may have an adverse impact on their ability and capacity to earn income. It may also affect their accommodation requirements, expenses, and life expectancy. All of these factors can be taken into account.

g. The contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family.

Case law has clarified the position that the parent undertaking the lion’s share raising any children is absolutely equal to that of the main household earner. This is because there must be no discrimination, with domestic contributions not being undervalued merely because they are difficult to quantify in the same way as financial activity or contributions.

Contributions also cover those assets brought into the marriage at the start, including other assets or money received by either party, or both, during the marriage. This includes gifts or inheritance. In reality, this is a particularly thorny issue, most notably in cases where substantial assets have been received from one side of the family only.

In such cases, needs trump contribution.

h. The value to each of the parties to the marriage of any benefit which, by reason of the dissolving of the marriage, that party will lose any chance of acquiring.

Although this is one of the lesser weighted factors, it nonetheless can be extremely relevant, particularly in cases involving pensions. For example, after divorce, the surviving spouse would not be considered as a widow/widower, and unless specific provisions are made to contradict this, the survivor is unlikely to receive any entitlement from the deceased’s pension.

Any potential loss of pension rights following a divorce must be built into the overall settlement, to enable the party losing out to be adequately compensated by receiving other matrimonial assets, or by making provision for a pension sharing order.

i. The conduct of each of the parties if that conduct is such that in the opinion of the Court it would be inequitable to disregard it.

In this context, conduct means “exceptionally” bad behaviour. In practice, either party’s conduct is very rarely taken into consideration when dividing matrimonial assets. Whilst aggrieved parties may satisfy the test for “unreasonable behaviour” with ease, it is extremely unlikely such behaviour would then be taken into account when dividing the assets.

Examples of exceptionally bad behaviour include: extreme violence, attempted murder, or extreme child abuse. As you can see, it is not an easy test to satisfy. If your ex-partner has committed adultery, the court will not consider such conduct, and whilst some find this concept unfair, it carries very little weight.

Assets that are not divided 50:50 during divorce

If one party to the marriage has made what is known as a “stellar contribution”, where one party has amassed a vast fortune by using their own unique skills and endeavours, the courts are likely to make a departure from a 50 : 50 division.

Another example is where one party owned an asset prior to the marriage and that asset never became mingled together with the family finances. This could be another property perhaps, or an inheritance that has remained in their sole name. If the other party’s needs have otherwise been met, it is likely there would be an unequal division.

Additionally, if the couple entered into a pre-nuptial or post-nuptial agreement, this agreement may heavily influence the court’s decision as to how assets should be shared. These agreements are not legally binding, but if the court is satisfied that the agreement is still relevant at the point of divorce and that the spouses entered into the agreement fully aware of its consequences, they are more likely to be held to it.

Using an online divorce calculator, what information do I need to get?

Property

For any property you own, whether that is the former home you lived in as a couple, or includes a portfolio of properties, it is important you get a market valuation for each property. If you do not have an exact valuation, you should give your best estimate. You will also need to provide:

  • Outstanding mortgage. This can be found on your latest mortgage statement, which is generally sent out once a year. Alternatively, if you have online banking, you may be able to check the latest figure that way.
  • How the property is owned (e.g. solely, jointly, or as tenants in common). You can find this information from the Title Deed filed at The Land Registry, which can be obtained online.

Savings & Assets

You will need to provide the following:

  • Savings, ISAs: statements showing the sum held/value of all savings accounts
  • Personal possessions: high value items such as jewellery, etc and their value, estimated if necessary
  • Vehicles: value of each vehicle owned. This can be obtained via online car valuation sites, or estimated if necessary

Pensions & Investments

Pensions are valued on what is called the Cash Equivalent Value (CEV), which can be requested directly from the pension provider. The type of orders that can be made include:

  • Off-setting: Off-setting can often be achieved by letting the party with the smaller pension, or no pension provision at all, retain a share or greater share of the other matrimonial assets. It may be advisable to seek advice from a Pension on Divorce Expert (PODE), as this can be a particularly complex area to deal with.
  • Pension-sharing: This is where a pension is shared between the parties and an agreed (or court ordered) percentage is transferred into a new pension fund for the receiving spouse. Some pension providers will split the pension within the existing pension fund, although you should always speak with your provider to see whether they operate such a scheme and what fees may be involved. You will also need to agree how these fees will be paid between you and your ex-spouse.
  • Pension attachment order (earmarking): The pension company will pay a percentage of the monthly payments to the other party when the pension comes to be paid on the retirement of the pension holder. These days, pension attachment orders are rarely used, but if you are considering it as an option, you should get specialist legal and financial advice.

Information you will need to obtain:

  • private pension (CEV as described above for both you and your ex-spouse’s pension)
  • workplace pensions (CEV as described above for both you and your ex-spouse’s pension)
  • investments, stocks, shares (value of investments, stocks and shares held by both parties)
  • endowment policies (value, maturity date).

Debts

You will need to find the following information:

  • Loans: whether the loan is in joint names or in one party’s name, who the loan is with, and how much remains outstanding
  • Hire purchase agreements: whether this is in the sole name of one party or held jointly, and how much is outstanding
  • Credit/store cards: the name the credit or store card is held by, and the amounts outstanding
  • Any other debt: the amount(s) outstanding and who owes it.

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