Divorce asset splitting has been a contentious issue for many years. Although the Matrimonial Causes Act 1973 sets out the core guidelines for managing financial assets following a divorce, judges can also consider previous cases when making their decision.
This makes it very difficult to determine what the courts will decide, leading to lengthy and expensive legal battles for divorcing couples. The government is now set to review these divorce laws for a potential overhaul – with widespread support from divorce solicitors and other experts. So, how is divorce asset splitting currently decided – and what changes have been proposed?
How is divorce asset splitting currently decided?
In England and Wales, the courts will refer to Section 25 of the Matrimonial Causes Act 1973. These guidelines detail how financial assets will be split in a divorce. As well as savings, this also covers any property you own, your pensions and child maintenance.
Section 25 sets out several factors that the court will take into account when making a decision regarding divorce asset splitting….
- The total income and assets, including property and other financial resources, that the two parties have access to now, and are likely to in the future.
- The financial needs and responsibilities of the two parties, currently and in the future
- The standard of living experienced by the family unit before the marriage breakdown
- The age of the two spouses and the duration of their marriage
- Any physical or mental disabilities of either party
- The contributions made to the family unit, including both financial support and time spent caring for the children and home
- Any benefits (such as a pension) that either party will be deprived of due to the divorce
They will also consider the rulings in previous legal cases, which is known as case law. This creates more uncertainty surrounding the potential ruling, as the guidelines are not strict. It’s also important to note that the welfare of both parties’ children will be the priority throughout the proceedings.
Why are changes being proposed?
The uncertainty surrounding asset splitting can make divorce costly for most couples. Courts typically start by splitting savings and other assets 50/50. Then they’ll look at other factors relating to the two parties to determine if the ruling should be adjusted in favour of one of the parties. However, what is classed as a “fair ruling” in these cases is murky at best. This makes it more challenging for divorce lawyers to advise their clients about the potential outcome of their claim.
Aside from this lack of clear guidance, critics also claim that the Matrimonial Causes Act 1973 is outdated. Marriage and society has changed dramatically since the 1970s. In particular, women are far more likely to work, and continue with their jobs after marriage and having children. This means that incomes are not split so dramatically between spouses – i.e., with one spouse as the breadwinner and the other having no independent source of income. With this in mind, critics argue that divorce law needs to be brought into the 21st century, for clearer and fairer rulings.
What are the proposed changes?
At the request of the government, the Law Commission of England and Wales is currently reviewing the Matrimonial Causes Act. This is to ensure it provides effective, balanced and consistent outcomes.
For the review, the Law Commission will analyse the current legislation to identify issues and determine potential solutions for reform. They’ll take into account past rulings in England and Wales, along with legislation from other countries. At the end of the review, the Law Commission will publish a comprehensive report in September 2024, which could lead to legislation reform.
Specific areas that will be considered for reform include…
- The extent to which judges should have discretionary powers to determine the division of assets between a divorcing couple, and whether a clear set of principles is required.
- To what extent judges should consider the parties’ behaviour when setting out financial remedy orders
- How maintenance payments should work
For a full list of the areas for consideration, consult the Law Commission website.
Affordable legal advice to secure your finances
Divorce can be a painful time for your and your loved ones. That’s made even more worrying when you’re concerned about the financial outcome. It’s important to note that this blog post is for informational purposes only. Seeking professional legal advice is the first step to restoring your peace of mind.
From pre- and post-nuptial agreements to no-fault divorces, our experienced divorce and family law solicitors will support you at every stage. If you’d like to discuss your circumstances further, then you can arrange a free initial consultation with our expert lawyers today.