Is 50/50 fair when dividing money and property?

In short, it depends. There's no defined formula for splitting money and property when you separate, and there are many factors that impact whether or not your agreement is 'fair' and in what context.

For marriages & civil partnerships:

When you marry, you may not realise that you are forming a legal contract, where you are tying yourself together financially.

A divorce will end your legal marriage, but not your financial relationship.

If you want to ‘untie’ yourselves financially, this is done through a separate legal process.

If you agree, a consent order will outline your financial arrangements after separation and end future claims through a clean break. If you aren’t in agreement, you can ask a judge to decide any unresolved disputes. This can be an expensive and lengthy process, so better to avoid it if possible and you don’t need the protection of the court.

If you choose to separate your money and property informally, you can make claims against each other indefinitely into the future. .This includes things such as future earnings, pensions, and inheritance. The only thing that ends these claims totally is re-marriage by you both.

Summary: As a divorced couple you remain tied together financially unless you get a ‘clean break’, in a financial order, as part of your divorce.

What is a fair way to divide money and property?

When looking at dividing money, property and other assets/debts during a divorce, there isn’t one legal document that outlines what’s a ‘fair’ split under all circumstances.

There is something called the 'sharing principle', however, which is used to define the starting point of how a separating your money and property should be divided. In simple terms, it means that the law generally aims for a fair and equal distribution of your assets acquired whilst you were married.

A judge will review your consent order, to make sure it meets the basic legal requirements, given multiple factors and the ‘sharing principle’. They aren’t there to interfere, so won’t tell you what you should do, just assess whether the agreement is fair or unfair on the basic legal requirements.

Summary: There’s no defined formula when dividing money and property, it starts at 50/50 and there are many factors that impact why you may want or need to depart from that.

What basic factors is a judge looking at?

• Needs: children, housing, bills and income
• During the marriage: length of the marriage, contributions made and
• Before the marriage: Inheritance, pensions and earning capacity
• After the marriage: Inheritance, pensions, age

What a judge doesn't consider:

• Why the relationship has broken down (who’s at fault)

Example case study: Person A & B married for 15 years and share care of three children

• Marital pot (one property with equity, money in savings, investments (pensions, stocks, crypto etc.) = £100,000
• Monthly outgoings = £3500 (mortgage, bills & expenses)
• Earning capacity (per month) - person A: £5000 (from full-time job)
• Earning capacity - person B: £1000 (from a part-time job)

If you divide the marital assets by two, leaving £50,000 each, person A is in a much better financial situation than person B. There are lots of ways to make this fairer, and needs are the primary concern. If outgoings as one household are £3500, how will this look when separated? What will happen with the former marital home? Who will live where? Can both partners raise a mortgage?

Person A might be expected to pay maintenance or divide the marital pot 60/40. Person B might be expected to find a different job or full-time employment. If person B is the primary carer of the children, then childcare costs will need to be considered to see whether a full-time job is economically worth it. Person B will have a different earning capacity from Person A, as they’ve stayed at home with the children. Person A has built up a bigger pension than person B, as they’ve been working full-time.

Other factors that influence ‘fairness’ in this situation are things such as risk profile and personality. Person A is financially savvy and has a high-risk profile, if Person B has a low-risk profile, dividing their cryptocurrency investment portfolio might not be as useful, or fair, as taking more equity from the property.

Clearly, there are lots of factors that impact fairness, and there isn't one definitive answer. This is where getting advice or choosing a process that will help you divide your money and property, fairly and consider different options and solutions is invaluable. Our Divorce Specialists, work with you together, to help you understand the different options that won’t only be fair, legally speaking, but also fair given other external factors such as future goals, your family's needs, and your personalities.

If you cannot agree and end up using separate solicitors or going to court, it's likely you will end up with a 'winner' and a 'loser' and have spent a fortune in the process. The result will be fair in the context of the basic legal requirements but may not consider the specific family context that makes your family unique.

Listen to my latest episode of The Divorce Podcast where I'm joined by legal commentator Joshua Rozenberg and family court judge David Hodson to talk about if 50/50 is the fairest outcome.

You can listen to the full episode below, or on your favourite listening platform such as Spotify, Apple Podcasts or Google Podcasts.

Explore different episodes here.