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What is included in a financial settlement during a divorce?

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 Finances are often the top of peoples’ worries throughout a divorce. So, in this article, we’re going to make you aware of the financial settlement you could be looking at during divorce, and what the courts consider when deciding.

Going through a divorce can be very expensive in many ways. A Birmingham, Bristol, or Bath divorce solicitor – or wherever you live – may wear out your purse strings. You may also find that your daily expenditure and housing requirements, amongst other things, will burn a hole in your pocket too.

That said, investing in a family or divorce solicitor may be a smart move. They will be able to help you with reaching a financial settlement with your ex-spouse. This should assist in taking away the stress and helping you to focus on other important matters, such as yours and your children’s wellbeing.

To help settle your mind about knowing the type of financial settlement you could be entitled to, keep reading to find out what is included in one during a divorce, and what the courts will consider when deciding. 

What is a financial settlement? 

During your marriage, you may have acquired a series of assets together as a married couple. So, for there to be an equal split during divorce and to start your individual lives, that’s where the importance of a financial settlement comes in. It will determine what each of you can keep after your divorce, and this could be money, property, and/or other assets. 

To ensure that no future claims can be made by your ex-spouse, it is essential to have your agreement legally binding. For this to happen, the court will need to approve the agreement, which will enforce it to be legally binding. 

What do financial settlements include?

Matrimonial Assets 

The term matrimonial assets are something you might frequently hear during your financial settlement. So, to make you aware of what they are, in simple terms, matrimonial assets are assets that were obtained during the marriage. They can also be assets prior to marriage when you lived together as a cohabiting couple.

These assets will automatically be included in the financial settlement. Some common examples of matrimonial assets include:

  • Family home

  • Pension plan 

  • Savings 

  • Investments 

  • Belongings 

  • Any other financial assets 

Non-Matrimonial Assets 

Another term you might hear is non-matrimonial assets. These are assets that were obtained before or after the marriage breakdown. They aren’t always necessarily included in a financial settlement but, on the odd occasion, they will be considered. 

Some common examples of non-matrimonial assets include:

  • Pension plans 

  • Property 

  • Savings 

  • Investments 

  • Businesses

  • Inheritance 

How will a financial settlement be decided?

Most people presume that the courts decide who receives what in a divorce financial settlement, but this isn’t necessarily the case. You do not have to attend a court hearing to decide:

  • It can be done individually between you and your spouse;

  • Or, if you are unable to come to an agreement together, you can choose to do it through an alternative resolution, such as mediation with a mediator and the assistance of a solicitor.

Even if you are doing it individually or through an alternative resolution, you can make the agreement legally binding through a consent order. The division must be a ‘fair division’ that is approved by a judge. 

Section 25 of the Matrimonial Causes Act 1973

A fair division doesn’t mean that each party will receive equal halves. The court will consider each party’s individual circumstances and contribution to the marriage under section 25 of the Matrimonial Causes Act 1973. This means that each divorce financial settlement will be different; you and your friends are unlikely to receive the same result, so don’t rely on ‘their word’.

The factors that the court will take into consideration under section 25 of the Matrimonial Causes Act 1973 include:

  • The income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future;

  • The financial needs, obligations and responsibilities each of the parties has or is likely to have in the foreseeable future;

  • The standard of living enjoyed by the family before the breakdown of the marriage;

  • The age of each party and the length of the marriage;

  • Any physical or mental incapacity of either of the parties;

  • The contribution each party has made or is likely to make in the foreseeable future for the wellbeing of the family, including caring for children or looking after the family home;

  • Conduct either party has made during the marriage.

Another important factor that is taken into consideration if children are involved in the marriage breakdown is their needs. They will be determined by the following: 

  • The financial needs of the child/children;

  • The income, earning capacity (if any), property and other financial resources of the child/children;

  • Any physical or mental disability of the child/children;

  • The current education/training the child/children receive and are expected to continue to receive.

These considerations made in court ensure that the needs of any children are met, and that it is a fair division that does not negatively impact either party involved. 

The financial settlement will also be fair 

From this, we can determine that, as long as you and your ex-spouse make your financial agreement legally binding, the settlement will always be fair. This will ensure that both parties are taken care of after divorce, with any children being of the utmost importance. 


Please be advised that this article is for general informational purposes only, and should not be used as a substitute for advice from a trained divorce professional. Be sure to consult a divorce professional or solicitor if you’re seeking advice regarding your divorce. We are not liable for risks or issues associated with using or acting upon the information on this site.