Financial Settlements After Divorce – How Does It Work in the UK?

When a marriage ends, sorting out finances is often the most sensitive and complex issue. In the UK, divorce itself does not resolve financial matters automatically—you need to apply for a Financial Order to legally finalise any agreement and prevent future claims.

What is Included in a Financial Settlement?

A financial settlement aims to fairly divide:

• Property: including the family home, rental properties, or overseas assets.
• Savings and investments: bank accounts, stocks, shares, crypto, etc.
• Pensions: often overlooked, pensions can be a significant asset.
• Debts: joint and personal debts may also need to be divided.
• Spousal Maintenance: regular payments to support a spouse after divorce (not automatic, based on need).

How Do Courts Decide?

Key Legal Principles:

1. Needs, sharing, and compensation: The court aims to ensure both parties’ needs are met fairly, including housing and income.
2. Needs of any children: Children's welfare is always the top priority.
3. Length of the marriage: Short marriages might not result in the same division as long-term marriages.
4. Contributions: Both financial and non-financial contributions, such as childcare, are considered.
5. Earning capacity and future prospects: Including health, age, and ability to work.

Is It Always 50/50?

Not always. While the starting point may be an equal division of assets, the court can adjust the split to ensure fairness based on the above factors.

Clean Break – Why Is It Important?

A Clean Break Order is essential if you want to cut financial ties and avoid future claims—even if you have no assets to divide now. Without it, either spouse can make claims in the future.

Can You Agree Out of Court?

Yes, and it's encouraged. Couples can reach agreements through:

• Direct negotiations
• Mediation
• Solicitor-led negotiations

Even if you agree amicably, it's critical to make the agreement legally binding through a Consent Order.

Do You Need a Family Lawyer?

Given the financial and legal implications, yes. A lawyer will help you:

• Understand what you’re entitled to
• Negotiate on your behalf
• Draft legally binding agreements

Many people underestimate the value of early legal advice, which can save you time, money, and stress in the long run.