Divorce Financial Settlement: What can my wife claim?

When you decide to divorce or dissolve your civil partnership in the UK, there are a few different ways you can settle your divorce. You may settle your divorce by one of you agreeing to pay the other a lump sum of money, divide matrimonial assets or pay ongoing spousal maintenance payments if the other is struggling financially. 

All final financial arrangements must be fair. It is generally beneficial for the courts and couple if a ‘clean break’ can be agreed upon, but sometimes that is not possible.

What are the matrimonial assets?

Matrimonial assets or matrimonial property is the property that has been acquired throughout the marriage and is the financial product of both parties collective endeavour. Generally, the most significant assets are the marital home and pension.

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What is a clean break?

When you are both deciding how to divide your property and assets, it might make sense for both parties to sort a ‘clean break’ from your finances. A clean break means cutting any financial ties to your ex-spouse. 

When you arrange a clean break, neither of you should be expected to pay spousal maintenance. The only way that you can prevent your ex-partner from making financial claims against you will be to get a court order. 

If you do decide to get a court order to prevent this from happening, it must set out the financial arrangements made between you both and state that there is a clean break in place.

Buying out for a clean break

In some cases, there may be enough money to “buy out” the financially weaker party’s financial maintenance claim. A “buy out” is done by calculating a sum of money that the other person can then use to invest in and can receive a steady income from instead of receiving spousal maintenance payments. 

If you are thinking about buying out for a clean break, it is essential that you first seek advice from a divorce lawyer, as buyouts can be quite a complicated process. Although you will have to pay a lump-sum of money, it does not have to be paid all at once. You can pay in more than one instalment—any lump sums which require payment in the future run the risk being changed. 

Seek specialist legal advice if you think this could happen to you. In Northern Ireland, take note that to “buy out” a spousal maintenance claim requires both you and your ex-partner to agree to this. In England and Wales, the court can order a “buy out” for you.

What are the spousal maintenance payments?

Spousal maintenance payments are regular payments made by a former spouse. Spousal maintenance payments are only necessary when one partner cannot support themselves financially without the financial support of the former spouse.

The amount of money you will receive from the spousal maintenance payments depends on the following:

• How much financial support they would need to live on.
• How much of an income they already have.
• What their future earning potential is.
• When are spousal maintenance payments paid?

If the length of the marriage or civil partnership was short, spousal maintenance payments might not be necessary at all. If they are required, they will only be for a short period, which is called a ‘term order’. 

If the marriage was long-lasting or if one of the parties can no longer work, the spousal maintenance payments may persist for life. This means the arrangement is based on joint lives – the agreement will continue until the person paying, or the person receiving the maintenance payments dies. Spousal maintenance based on joint lives is rarely considered as an option now.

When do spousal maintenance payments stop?

Spousal maintenance payments typically stop once:

• The payment period has ended.
• Either party die.
• The person who is receiving the maintenance payments re-marries or enters a new civil partnership.

If the person receiving the payments is living with a new partner, this does not mean that payments should stop if they are not married. 

However, the person making the payments can use this as a reason to have the payment amount reduced by attending court and using this as a reason.

How can you insure spousal maintenance payments?

If you are the recipient of the payments, you should consider insuring the payments, should your ex-partner die you will continue to receive an income after their death. Either you or your ex-partner must take out a life insurance policy in their or your name.

The life insurance does not have to be expensive, but the policy may provide a lump-sum or monthly payments if your ex-partner was to die while you received the payments.

What do courts take into consideration when dividing assets?

If you decide to go to court to agree on the division of your assets, the court must consider the Matrimonial Causes Act 1973 (and Civil Partnership Act 2004), these outline the factors that the courts must consider when deciding on your divorce.

• How much income you and your ex-partner receive, both of your potential earning capacities, property owned by either of you.
• The financial circumstances and responsibilities that each part may have or is likely to have in the future.
• What the standard of living was like before the marriage broke down.
• The age of both of you at the start of the marriage and during.
• Any physical or mental disabilities that affect either party in the divorce.
• Whether the couple has a child and how the divorce will impact the child, the primary caregiver of the child is likely to receive a larger share of the total sale price from the house or may be able to continue to occupy the home if the mortgage cost is within their means.
• The contributions that either party has made to the welfare of their family.

Property Adjustment Order

Property Adjustment Orders are court orders that determine what happens to the family home when you divorce or separate if you haven’t been able to agree between you what to do. 

If one partner agrees to “sell” their share of the house (or obtain the equivalent value of other shared assets), the ownership of the house can be completely transferred to another partner. There may also be an order to transfer property at some future date, for example, when any child turns 18 or completes school.

Simply put, if you go to court to arrange an agreement for diving assets, it is entirely possible that if as a couple you jointly own a house, the court can transfer the ownership of the house from both of you to just one of you.

Key Takeaway

What you get from the divorce settlement will be what you and your spouse or the court consider fair. It doesn’t necessarily have to be your ideal settlement; however, expectations must be managed. 

An excellent way to do this is to seek the advice of a divorce lawyer who can review your matrimonial assets and provide a realistic estimate as to what you can expect.

We strongly recommend that you negotiate and agree on a settlement, if possible, before your divorce proceedings. This will avoid complications, delays or further legal costs. 

If you suspect that your spouse may be taking unethical steps to conceal assets before commencing divorce proceedings, contact a divorce solicitor for expert legal advice.