In the event of a divorce or other relationship breakdowns, splitting your assets becomes a necessary part of the separation process, which can have significant implications for the future of your family and living arrangements. Should you need to sell your home quickly due to circumstances out of your control, Spring can be on hand to help you through the process.
Divorce and Property - How Can We Help?
When we talk about ‘assets’, we are not just talking about physical possessions. Although this does apply to some more significant purchases that a couple may have made, assets are often seen as the much larger financial items such as pensions, investments and, of course, property.
During a divorce, splitting your assets can be a difficult process for everyone involved but knowing what to expect and where to find assistance will go a long way to help.
Agreeing to split assets
If you and your ex-partner can both agree on how to split your property, you should be able to avoid having to go to court. Splitting a property, however, is by no means easy and often requires the help of a third party mediator.
There are other alternatives to mediation, though. Other legal advisers as well as Citizens Advice can all help you reach an amicable decision for your assets, however, should none of these work for you, you can move toward a court decision.
Going through a divorce can be an expensive process but if you need to ensure a quick sale of your home, Spring are able to help. As one of the UKs most experienced home-buying services, we have over 15 years of experience of helping others in equally sensitive situations by providing options and are on hand to provide a solution that suits your needs.
Court Ordered Asset Splitting
The first thing to be aware of is that getting a ruling through a court will almost certainly be the longest and most expensive method; it is, however, sometimes the only one that would work.
When the Court makes the decision on the ruling of your assets, there are a number of considerations that are taken into account.
Asset Splitting - Court Considerations
Before anything else, the first concern for a court is always the welfare, home and maintenance of any children involved. Once this has been established, the following aspects are brought forward:
- Age and Duration of Marriage
The younger the parties are, the higher chance they will have at being able to acquire a mortgage again for the future. While this does not mean that courts will always find in favour of the eldest party (as there are other things to consider), mortgage capacity can have a tremendous impact on the ruling.
The duration of the marriage will also play a significant role in the Court’s decision. Splitting assets after a short marriage will be easier as the financial obligations would be lower and overall contributions would be equal. In longer marriages however, further details will be looked at.
- Income, property and money
Much like with age, the ability to earn greatly impacts mortgage capacity. As well as income from a job, courts will also consider external sources of money such as bonuses or commission. Being able to demonstrate earning ability and mortgage capacity is something that courts will want to see, as each party is expected to maximise their income.
- Financial needs and responsibilities
The primary belief of all courts is that needs outweigh everything else. Bills that need paying, debts etc. are all considered to be financial obligations. However if the assets are considered to exceed the needs of the parties, this becomes less of a consideration.
- Contributions to the family (caring, homemaking etc.)
There is a documented history of courts outlining that contributions to the family such as raising children are equal to that of potential monetary contributions made by the breadwinner.
Equally, contributions to the home are valued; homemaking and economic contributions cannot be measured in the way but both provide a necessary contribution.
- Disabilities or health conditions
Disability will always impact income and earning capacity as well as accommodation needs.. Much in the same way that age has an effect on mortgage capacity, so too does a physical or mental disability.
Splitting Your Assets - Property & Money
On top of solicitor and court fees, there are also a number of additional costs that can come up in the form of various taxes and orders that you may have to pay when splitting your assets.
Capital Gains Tax
Depending on when assets get transferred, there is a chance that you will not have to pay Capital Gains Tax. For example, a married couple can transfer assets to each other without having to pay Capital Gains Tax providing they can demonstrate proof they lived together during the tax year. After a divorce, however, this is no longer possible. Any asset transfers made after a divorce will result in having to pay a tax levy.
Decided by the Court, a Maintenance Order is a payment made by the party with the higher income in order to help with the other party’s living costs. These orders can either apply for a set period of time or dropped entirely if employment situations change (for better or worse) or until one party passes away.
Making adjustments to your mortgage when going through a divorce process involves changing the conditions of your loan agreement, e.g. a change to the interest rate, extending the term from 25 to 30 years in order to lower the payments. If liquidation of a property is required to settle court fees or an outstanding mortgage about then Spring may be able to help settle the outstanding debt.
- Does the reason for divorce impact the settlement?
It is unlikely that the grounds for divorce will impact the settlement. Invariably, the priority is given to the welfare of the children. In some extreme cases (domestic abuse, for example), the grounds for divorce are considered, however citing irreconcilable differences would not.
- When do you need to agree on the settlement?
Ideally, doing so before the divorce is final allows for courts to make any financial orders, however you can agree to the terms any time before or after the divorce. It is best to do so before either partner remarries, however.
- Would a court approve an agreement you have reached with your former partner?
For the most part, a court will approve an agreement if it is fair and agreed upon from both parties. If there is anything to suggest that the potential children are not put first or one party is being exploited, the Court will not approve the agreement.
- If you file for the divorce, do you have an advantage in negotiating?
No. Asset splitting always starts equally without any advantages for either party.
Spring has a proven track record of providing an excellent service that offers care and attention to our customer’s individual needs. For more information on how we can help you, get in touch
with us today.