Essential guide: splitting your money and property and making financial arrangements

If you have decided to divorce or dissolve your civil partnership, you and your ex need to decide how to separate and share your money and property.

The first step is to provide each other with full details of your income, property, pensions, savings, and all debts and loans, called a disclosure . All of your assets should be disclosed whether you intend to share them or not, as they factor into how the final decision is made.

Let’s look at how you can come to an agreement for your finances.

Ways to reach an agreement

Kitchen table agreement £

A kitchen table agreement is one you reach yourselves (usually while sitting at a kitchen table). It’s by far the cheapest option, and you’re both fully in control, but it’s also the least secure option. You’ll need to get everything written up into a consent order for it to be legal, but this can be turned down by a judge if they don’t think it’s a fair agreement.

Mediation ££

You can work with a mediator to reach an agreement over your finances, but you’ll then need a trained professional to write it up into a legal document.

Negotiation ££

Negotiation services like amicable help you come to an agreement you’re both happy with, and can prepare all the documents needed to be reviewed by a judge and made legally binding.

Solicitors £££

You can each hire a solicitor and reach an agreement with them acting for you. This can be an expensive option, and puts the two of you against each other, instead of working together to reach an agreement.

Arbitration £££

Arbitration is for when you can’t agree. If you don’t think mediation or negotiation will work, you can hire a private arbitrator , who will review all the facts, and make the decisions about any unresolved issues, without you needing to go to court. However be aware: the arbitrator will make the final decision, and it is legally binding.

Court ££££

Court is the most expensive and time-consuming option. You should only go to court if you truly can’t come to an agreement and have enough finances and property to make it worth the expense. It’s also worth noting that the final decision will be entirely made by the judge, so you have far less control over what happens.

General finances

It can feel overwhelming to try to split up all your finances. It can be helpful to start with the big picture and then work down.

Start with these steps:

• Make a list of all your current finances, major valuables, properties and debts. A simple spreadsheet should be enough for this
• Collect evidence like bank statements to back this up
• Find out the value of your pensions by requesting a Cash Equivalent Transfer Value (CETV) from your pension providers. This can take weeks or even months to get, so request it early
• Work out what each of you earn, including additional income like savings interest
• Work out how much money each of you will need to live in the future by looking at your outgoings
• Think about how you will support yourself. Will you need to return to work? What kind of salary do you think you’ll earn?
• Use the government’s child maintenance calculator to work out what you may need to pay

If you have children, they should be at the centre of any decisions you make. We have an [essential guide to child arrangements in divorce here.](LINK TO ESSENTIAL GUIDE TO CHILD ARRANGEMENTS)

**Important to know** Finances are not always split 50/50. Rather than having a single decision that you want, it can be good to have a few options you’re happy with, as a judge will have to look at and approve the final split.

Things to think about when splitting up finances:

• The needs of any children
• Your financial needs
• Your earning potential
• The contribution you have made during the marriage, such as raising the children
• The length of the marriage
• Your health and age

Here are more tips on reaching a fair financial agreement:

Pensions

When it comes to dividing up your money, don’t forget about your pension . Because we pay into them across our entire working lives, they can end up being worth a lot and should be included in discussions about finances.

You don’t have to share your pension, but it does need to be included in your financial disclosure to ensure a fair outcome for you, your ex and any children you might have.

What options do I have for my pension on divorce?

There are two main options for pensions in divorce:

• Offsetting: this is when one of you keeps their more valuable pension plan(s) in exchange for taking less of the other finances. For example, they take less of the equity in the family home or your combined savings.
• A pension sharing order: this is when one of your pension plans is divided between you both when your divorce is finalised. A pension sharing order transfers out a percentage of a pension and pays it to the ex-spouse.

More on pension sharing orders

A pension sharing order is a legal document that gives one person part of their ex’s pension. A pension sharing order can be made before or after it starts paying out.

The money that comes out of the pension plan (called a **pension debit** ) is paid into the recipient’s separate pension plan. This may be their existing pension plan or a newly set up pension ready to receive the pension credit.

You can also share multiple different pensions, and the amounts that come out of each can be different if needed. You and your ex can agree between yourselves on how much will be transferred from the pension fund, but this must be expressed as a percentage of the pension **cash equivalent transfer value (CETV)** that will be paid to the recipient, not a fixed amount.

Note: state pensions cannot be shared.

Pros and cons of pension sharing:

Pros

• It gives both of you a clean break financially
• It makes sure both of you have a pension for retirement
• Remarriage or other changes in circumstances won’t change the order

Cons

• One of you will have a smaller pension afterwards
• There might be a fee for your pension sharing order

How are pensions shared?

The starting point is usually a 50/50 split. However, if one of you has a lower income or earning capacity, or is the primary carer of the children:

• It may be appropriate to make only a small adjustment to pensions
• There may be no divorce claim on your pension
• There may not be any need for sharing pensions in your divorce

How to get a pension sharing order

To get a pension sharing order, you first need to apply for divorce and then reach the stage where you get a conditional order.

From there, you can submit a consent order , and as part of that consent order you can include a pension sharing order. This will make all your arrangements legally binding once approved.

Your pension sharing order must be carefully drafted. As part of it, you will need a pension sharing annex , which is a document outlining how the pension will be split.

It’s important to send a copy of the draft consent order and the pension sharing annex to your pension provider first, so they can check the contents and make any changes before the papers go to court. Trying to get any errors changed later on can be time-consuming and potentially costly.

Some pension providers will do this for free, others will charge for it. Check your pension providers’ fees in advance, as some can be surprisingly expensive. Some providers will agree to deduct the fees from the pension plan, but you must ask them to confirm this.

They can also take a while to get this information to you, so begin this process as early as you can. You and your ex will also need to agree on how any fees will be paid before you send the paperwork to court.

You’ll need support from someone legally trained for this, which we can help with.

When does a pension sharing order come into effect?

Once the court has approved your consent order and made your pension sharing order, the pensions sharing order becomes legally binding on whichever is the later of these two dates:

• The date of the final order

• 28 days from the date of the pension sharing order (seven days after the time given to appeal the order) As soon as you have your final order from the court, you can send all the necessary documents to the pension provider and ask them to implement the pension sharing order. You’ll need to send:

• The original consent order stamped by the court

• The original pension sharing annex stamped by the court

• A copy of the final order

• A copy of the conditional order

• Payment of their charges (if there are any) The pension provider then has 4 months from the date of receiving the documents to implement the order for you.

This article will teach you [everything you need to know about the legal process of getting divorced](LINK TO ESSENTIAL GUIDE: THE LEGAL PROCESS).

Property

Your house may be the largest element of your finances to be considered during divorce. There are three main options for dealing with ownership:

Sell the house and divide the proceeds Selling the house has two major benefits: it gives both of you a clean break and immediate access to funds, which can then be used to cover other costs such as renting.

One of you buys the other out If staying in the house is important for one of you, and they have the means to do so, they can purchase the entire property. This may require adjusting the mortgage arrangements.

Continue living together and co-own the house This option is the cheapest and might make the best financial sense depending on the housing market, but it can also be difficult emotionally. You might need to change the existing mortgage through changes to the ownership percentages or how much each person contributes towards the mortgage payments.

If you have children If there are children involved, the judge in charge of your divorce case will always prioritise them and their wellbeing, making sure that they have a place to live while hopefully causing as little disruption as possible.

Because of this, whoever is the primary caregiver is more likely to get the family home in the divorce, but this isn’t always the case.

There is also a special type of order known as a mesher order , that triggers the sale of the family home when a certain event happens, usually your child’s 18th birthday.

Handling property abroad

If you own property abroad it can be very complicated to split up, as different countries have different rules. Consider getting a specialist to review your case before making any decisions.

We have a video of FAQs around property here:

Businesses

For your financial disclosure, you must include all businesses which you own or have a stake in, so that their value is added into the full sum of all your shared finances.

In the UK, **limited companies are not exempt from divorce** .

The judge will try to find solutions that keep these businesses intact, so it isn’t always possible to split the value between you. However, the business owner will likely have to compensate the other by offsetting this with other finances.

The financial side to getting divorced can be worrying, but keep in mind that the entire process is designed to ensure that both of you get a fair amount. Making a full disclosure and getting your agreement made legally binding allows both you to get some peace of mind and move on knowing that your ex can’t make any claims on you in the future.

If you’re worried about your financial security, this video has some tips for long-term stability:

Ask the community

Sometimes it can really help to talk to someone who is going through the same thing. That’s why we created a forum where you can ask questions and talk with other members of the [amicable community](LINK: SUBSCRIPTION FORUM PAGE).

If you need help with anything mentioned above, or just want to talk to a Divorce Specialist who understands what you’re going through, get in touch with us for a [free 15-minute consultation](https://amicable.io/book-divorce-advice-call).

Useful links

Check out the rest of our articles on finances and the legal process.