Splitting Shared Assets when Divorcing

Divorce proceedings can be extremely stressful and traumatic for everyone involved, even more so when shared assets need to be split. When tying the knot, the last thing couples anticipate is divorce and as a result, few actually plan what would happen to their shared assets should they get divorced.

Over the years, you and your partner will have invested together, saved together and perhaps opened joint bank accounts, and in order to make financial settlements fair, there are a number of factors that have to be taken into consideration before splitting your assets.

Before we continue, it is important to note that how assets are split between a couple will be determined by the relationship. Simply put, the rights of a cohabiting couple will differ from those of a married couple, so bare this in mind.

Step 1:

The first thing you must establish is who legally owns what assets. If you’re in a cohabiting relationship then any investments or savings in your name will belong to you and your partner will not have access to these assets. Likewise, savings or investments made in your ex-partners name will be theirs and you will not be granted access.

However, there are exceptions to the rule. You may be entitled to beneficial interest if you have made contributions towards something in your ex-partners name, such as investing your own money into one of their projects. If this is the case, then you should seek legal advice.

On the flip side, investments or savings made throughout the duration of the marriage will be taken into consideration and divided as part of a financial settlement. Whilst assets amassed prior to the marriage aren’t typically subject to financial settlements throughout divorce proceedings, there is still a chance that your assets are at risk and you should seek legal advice to make sure your savings and investments are protected.

Step 2:

Next, it is time to find out what your savings are really worth in the eyes of the law. If you save money into a savings account such as a cash ISA or cash deposit, it should be pretty easy to get a rough idea of how much your savings are worth as you should be receiving regular financial statements.

However if you have invested in the stock market, or own shares and investment bonds, then it may not be as straightforward when it comes to determining the worth of your assets. This is solely because the value of your investments will differ from week to week, even day to day especially in a volatile and quick-changing market. You should talk to a financial adviser about finding out the value of invested assets tied up in the stock market.

Step 3:

It can be difficult to make sense of the whole process when splitting assets and couples often aren’t aware of how to split their savings and investments. Generally, it depends on where your savings are kept. Cash ISA, shares, investment property or savings accounts – there are a number of ways in which your money can be invested and each will differ when it comes to paying out financial settlements.

Cash ISAs

Cash ISAs can only be held in one individual name and therefore money cannot be transferred from one party to another. If the court has demanded you pay a financial settlement to your ex-partner you must withdraw the money from the account.

Shares

You have a bit more flexibility when it comes to shares as there are a number of different options in which you can pay off a financial settlement. Simply hand over control of the shares, sell the shares or give the value of the shares once sold to another party – it is your choice.

It’s easy to transfer shares, just fill in a J30 form which you can get from the company you initially brought the shares from. Alternativley, if you decide to sell your shares you will need to use the same service you used when buying those shares.

Investment property

If either you or your partner owns a property, then that asset is legally yours/theirs and the other party will have no claim to it – unless contributions have been made. In that case, you will both need to come to an agreement as to how the appropriate party will be paid back.

If you jointly own the property, then you may choose to sell your share to your ex-partner, or buy them out.

Savings accounts

If you plan to transfer money to your ex-partner as part of a financial settlement from a fixed-rate account, then you must first notify your bank so that you do not lose interest. If you are transferring from a normal savings account then you don’t have to give notice.

You should now be fully are of all your legal responsibilities and the claims you can make when it comes to splitting both shared and individual assets when divorcing. We understand how distressing divorce proceedings can be and that is why we have put together this comprehensive guide so that the process can be as amicable, straightforward and stress-free as possible for both you and your ex-partner.

Kerry Smith is the Head of Family Law at K J Smith Solicitors, specialist family law solicitors in Reading that deal with a wide range of issues, including divorce, domestic violence, civil partnerships, and prenuptial agreements. Kerry has over 15 years experience in family law and is recommended by the Legal 500 guide to law firms in the UK.