As well as the family home and pensions, there are often various other assets a couple has to come to agreement about on separation. These can include savings, gifts and, for some, their business.
The following are some of our most frequently asked questions when it comes to savings and business division on divorce.
Savings built up over the course of a marriage and that the couple have at the date of separation are generally considered matrimonial property, which will usually be divided equally between the couple on divorce.
Any assets you had before you were married do not constitute matrimonial property and so are not subject to division. For example if you had £5,000 in a savings account before you were married and have not added to it or taken anything out of it at the date of separation, that £5,000 would be taken to be yours and not part of the matrimonial property.
However, if you used some of your pre-marriage savings to buy a jointly owned matrimonial home, then the position can become more complicated. If the marriage was very short-lived, then there may be a special circumstance to depart from the usual equal sharing of the assets. However, there is much less justification for this if the marriage was of longer duration.
Endowment policies you owned before marriage and that you have added to during the course of the marriage will have part of their value added to the ‘pot’ of matrimonial assets. The value allocated to the matrimonial assets is calculated by using the formula:
A (length of marriage)
B (length of the policy) x C (the value of the policy at the date of separation)
So for example, if you have been married for 12 months and the policy has been paid for 24 months and the value of the policy is £1,000 at the date of separation, the calculation is 12/24 x £1,000 = £500 treated as matrimonial property.
If your business was set up during the course of your marriage, then the whole net value of your business at the date you separated is matrimonial property. But, if you had an interest in the business before your marriage, then that interest is not determined to be matrimonial property at the date of separation.
However, the value of your business may be part of an overall calculation in deciding how assets should be divided. For example, if you have invested all of your income that you earned into a business which has increased substantially over the period of your marriage while your spouse spent their income on the family, then it would only be justified and reasonable that your spouse was entitled to a share of that increase in value of your business.
Your business will have to be valued at the date of separation. Generally an accountant will provide you with the net value, which will then form part of the matrimonial assets and be subject to division on divorce.
If you are unable to set-off the value of your business against other assets which have accumulated over the marriage, then the court is unlikely to order your business to be sold to fund a capital payment to your spouse. Instead the court might order that you pay your spouse capital by instalments over a reasonable period.
Although the court has the power to transfer assets or shares of assets from one spouse to another, it would be unlikely that it would order you to transfer part of your business over to your spouse, unless this was by agreement of you both.
If you owned a car before you were married and you still have it at the date of separation, it is not taken to form part of the assets that should be divided on separation. If it was bought during the marriage then it counts as matrimonial property.
When you are divorced there are a number of orders that you can claim:
Any gift from one of the couple to the other during the course of the marriage is treated as matrimonial property and so the value of the gift should be shared equally. You can of course ask for it back, but the value of it would be shared.
There is one exception to this general rule: if the gift was an heirloom of the donor’s family and was given on condition that it would be returned in the event of divorce then it would not form part of the matrimonial pot of assets.
If you are concerned about your entitlements on divorce or civil partnership dissolution, talk to a Solicitor. Our expert Family Law team can advise you on your rights and how best to proceed for your circumstances.
We are also able to help with alternative dispute resolution to assist separating couples come to an amicable agreement on matters arising from their separation and avoid costly court actions.
At Thorntons Family Law, we offer an initial free no-obligation chat over the phone to outline your options and the possible costs.
Depending on your case and circumstances, the next step is to come into one of our local offices to meet a Family Law Solicitor about your case and the way forward.
Call us on 03330 430 150 for a chat or contact us to book an appointment.
We are always clear to clients about the potential costs of any option and offer a range of payment options. In some cases we can offer clients a fixed price package. If we cannot offer a fixed price service, we charge based on the time we spend on your case, including meetings, emails, phone calls and court representations. Depending on your case and circumstances, you may also need to cover outlays, such as court costs or payments to independent experts. We will set out our fees and likely extra costs for you at the start and keep you informed of any possible changes as your case progresses.
Please note we do not offer Legal Aid for this service.
Frequently asked questions
We receive many questions about the division or savings and assets during separation and divorce. We have answered some commonly asked questions below
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