If your relationship has ended and you are still married but separated from your spouse, you need to be aware of the financial implications. You will be in a unique...
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During a divorce, it is likely that a portion of your financial settlement will come from investments and savings. How these will be dealt with will depend on the circumstances, but it can be helpful to have an idea of the different options before discussing this with your spouse.
In some cases, the division of savings and investments may be straightforward but there can often be complications that need to be considered. It is sensible to seek the assistance of a divorce financial specialist at the outset to ensure you fully understand your financial rights and what you can expect from a settlement.
In England and Wales, investments and savings are considered part of the financial settlement. However, depending on when they were accumulated, these financial assets may be considered a matrimonial or non-matrimonial asset, which could impact whether they are included in the divorce settlement.
Savings and investments may include things like:
- Pensions
- Investment properties
- Personal savings
- Shares
How pensions may be divided in a divorce
During a divorce, you may be entitled to a share of your ex-partner’s pension and they may be able to claim a portion of yours.
How a pension is divided can depend on a number of things, for instance how much the pension is worth and if either party wants to offset it against other assets, such as the family home.
The main options are:
- Pension sharing – Where part of the value of the pension is transferred to a new, separate pension for the benefit of the other spouse.
- Pension offsetting – Where the other spouse receives a bigger share of other assets in exchange for giving up their rights to a share of a pension.
- Pension earmarking – Where a part of the pension benefits will be paid to the other spouse on an ongoing basis (this is rarely used as it means the two former spouses remain financially tied together)
You will need to consult an experienced divorce lawyer to determine what is best for your situation and to ensure your long-term needs will be met.
How is investment property divided in a divorce?
Investment properties, including residential rentals and commercial property, tend to be highly valuable. It is natural to be concerned about what may happen to such property during a divorce. In this instance, it is necessary to think about what you want to do with this investment.
Common options can include:
- Selling the property and splitting the money
- Continuing to rent out or lease the property and dividing the earnings between both parties
- One spouse buying the other out
- Offsetting the value of the property against other assets
You will need to carefully consider what is realistic and what will best meet your needs (and the needs of any children), so this is an area in which expert advice is essential.
Dividing a savings account in a divorce
The division of a savings account during a divorce will differ depending on the type of savings account you have.
A cash ISA, for instance, can only be under one name. In order to give your ex-partner any of the money you have saved there, you would have to take it out as it cannot be transferred.
On the other hand, a standard savings account allows you to transfer money from your account to an ex-partner easily. In some cases, it may be necessary to give the bank notice before you transfer money to your ex-partner or you may risk losing interest.
It’s important that you speak to your financial advisors so that you fully understand the type of savings account you have and how it may be divided within a divorce.
The division of shares during a divorce
When it comes to the division of shares in a divorce, you have three main options:
- Transferring some of the shares to your ex-partner
- Selling the shares and splitting the money earned
- Offsetting the value of the shares against other assets
If you want to transfer shares to your ex-partner, you will need to complete a stock transfer form or J30 form. This document can often be found through the company that the shares are in.
In the event that you want to sell your shares, you will need to contact a stockbroker or a share-dealing service owned by the company your shares are in. They will be able to arrange the sale of your shares, although this may require you to pay a charge, so do your research beforehand.
How to divide investments and savings in a divorce
A specialist divorce and finance solicitor can help you to work through all of these investments and savings in order to reach a financial settlement that works for you. This can help to avoid the need for contentious court proceedings in most cases.
There are various methods you can use to reach a settlement without court proceedings, including constructive negotiation, mediation, collaborative law and private financial dispute resolution. Having an experienced professional to guide you through these processes can help you to achieve a fair settlement that meets your needs and the needs of any children you have.
Each spouse can have their own solicitor or you can both be represented by the same solicitor which can save time and costs.
Speak to our divorce finance specialists in Bristol, Bath and Bradford-on-Avon
At Sharp Family Law, we understand how critical it is to get the right division of finances during divorce. Our team can provide sympathetic support and clear, practical guidance to help you get a settlement that fully meets your needs and those of any children.
We have offices in Bath, Bristol and Bradford-on-Avon. Our clients can expect constructive, clear and friendly assistance from our family law and divorce solicitors who will give you all the support you may need.
If you need legal assistance with the division of finances or any other matters related to divorce and separation, email us at info@sharpfamilylaw.com. Or you can call your local office: