One of the most challenging aspects when going through a divorce is the division of assets and whether specific items, including more than just property or the family home, can be sold to achieve a fair settlement. This article will explore different types of assets in a divorce are handled, who decides their value, and what happens when disagreements arise over sales, valuation, or ownership.
One of the most challenging aspects when going through a divorce is the division of assets and whether specific items, including more than just property or the family home, can be sold to achieve a fair settlement. This article will explore different types of assets in a divorce are handled, who decides their value, and what happens when disagreements arise over sales, valuation, or ownership.
If you have a family law issue and you require legal advice to understand your options, contact specialist family law solicitor Joanne Major. Joanne is the founder of her specialist family law firm and has spent her 25-year legal career specialising in family and matrimonial cases.
Types of assets in divorce proceedings
When a marriage ends, assets are generally divided into two main categories: matrimonial and non-matrimonial assets.
Matrimonial assets, typically acquired during the marriage, are often split between spouses, while non-matrimonial assets, such as gifts or inheritance received by one spouse, are more likely to remain with the recipient unless they have been “mingled” into the marital finances.
Beyond the family home, a wide array of assets may be capable of being divided in a divorce, including:
- Cash in bank accounts, ISAs, and other savings accounts
- Pensions can be significant, especially in long-term marriages, and may be shared under pension sharing or earmarking orders
- Any stocks, bonds, or investment portfolios
- Cars, motorcycles, and other valuable vehicles owned by either spouse
- Items such as artwork, jewellery, antiques, or even collectibles like vintage cars
- If one or both spouses own businesses, the value of these can be split
- Other assets may include things such as furniture, electronics, or other items that hold substantial resale value
Can these assets be sold during divorce?
While the family home often receives the most attention in divorce proceedings, other assets may also be sold to facilitate a fair distribution of wealth. Whether an asset is sold, however, is not always clear-cut and depends on several factors:
- Assets such as vehicles, valuable artwork, or high-value jewellery may be sold more easily than a business interest or collectibles with sentimental value. The practicality and fairness of selling an item are weighed before making any decisions.
- The court may decide that certain assets need to be sold if they are needed to settle debts, split proceeds, or help one spouse buy out the other’s share.
- If an asset was jointly acquired, both spouses generally have a claim to it. If it was acquired by one spouse individually, the courts will consider whether it should remain with that spouse or be sold depending on whether or not it is considered a matrimonial asset.
Can the sale of assets be forced?
The court can order the sale of assets in specific cases to achieve a fair settlement, though this is typically a last resort. Factors influencing this decision include:
- If the sale of a particular asset is essential to ensure each spouse has adequate resources post-divorce, the court may force its sale.
- The court considers if one spouse can reasonably compensate the other without needing to sell an asset.
- The contribution towards and need for particular assets (e.g., a business or pension) can influence whether the asset should be retained or sold.
The court encourages attempts to reach a mutual agreement but can impose a Property Adjustment Order or other orders that may require the sale of assets if negotiations fail.
Who determines the value of assets?
Proper valuation of assets in a divorce is crucial, as it determines the fairness of the split. In many cases, both spouses need to agree on the valuation, but if they disagree, the court can appoint an expert valuer. This is an independent party who is brought in to assess the worth of high-value items such as properties, businesses, or artwork.
Items are typically valued based on current market conditions, but factors such as condition and potential depreciation may play a role. If a spouse disputes an asset’s value, they can provide evidence (e.g., from a private valuation) to support their argument. However, the court will typically rely on an unbiased expert’s assessment.
Once the value is set, it is difficult to contest unless new, compelling evidence arises.
What happens if an asset sells for less than expected?
If an asset sells for less than its appraised value, the court usually takes a pragmatic view. As long as the sale was conducted in good faith, any shortfall is usually accepted. However, if a spouse intentionally sells an asset at a loss (for example, to a friend or family member), this can be seen as an attempt to undermine the divorce process. The court has the authority to revisit and adjust the settlement in such cases to ensure fairness.
Does ownership of a specific asset play a role?
Ownership structure often plays a significant role in determining whether an asset can be sold:
Generally, both spouses have an equal interest in jointly purchased assets. Even if one spouse paid more initially, the asset is often considered part of the marital pot, making it subject to division or sale if necessary.
If an asset was purchased by one spouse before marriage, it might be treated as a non-matrimonial asset and excluded from the divorce settlement unless it merged with marital finances or was used by the family, for example using another property as a holiday home. The court examines factors like who used or benefited from the asset when deciding if it should be included.
What happens to gifts and inherited assets?
Gifts and inheritances can sometimes be excluded from the division of assets, but the distinction isn’t always clear-cut. If a gift was intended for both spouses (e.g., a family member gifting a car to the couple), it may be considered a matrimonial asset.
However, gifts or inheritances received by one spouse are often viewed as personal and may remain with the recipient unless they are integrated into marital assets or are required to reach a fair settlement.
Disputes over lost, hidden, or under-valued assets
Divorce can become contentious when assets are hidden, claimed to be lost, or undervalued. If a spouse claims an asset is lost, they may need to provide proof, such as a police report or other documentation. The court may be sceptical if it seems the item was deliberately hidden.
The law has mechanisms to uncover hidden assets, such as forensic accounting, to ensure a fair settlement. Hiding assets is generally seen as dishonest and can lead to penalties, including adjustments to the division.
If one spouse sells an asset to a friend or family member for a reduced price, this can be contested. The court can order an adjustment or consider the actual market value when determining the settlement.
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