How financial settlements work
When you divorce, all your marital assets are considered as one “pot” to be divided fairly between you. This includes property, savings, investments, pensions, and debts.
The starting point
Courts in England and Wales generally start with the principle of equal sharing – a 50/50 split. However, this is just a starting point, and the final division often differs based on individual circumstances.
Factors the court considers
The court must consider several factors when deciding what’s fair:
- Needs – particularly housing needs, especially where children are involved
- Earning capacity – current and future ability to earn
- Standard of living – the lifestyle enjoyed during the marriage
- Age and length of marriage – shorter marriages may not result in equal division
- Contributions – both financial and non-financial (homemaking, childcare)
- Conduct – only in exceptional cases of serious misconduct
- Loss of benefits – such as pension rights lost through divorce
Needs usually come first
In most cases, especially where there are children, needs take priority over equal sharing. This often means:
- The parent with main care of children may receive more of the housing equity
- The higher earner may pay spousal maintenance
- Pensions may be offset against other assets rather than shared
What’s included in the pot?
Usually included:
- Family home equity
- Savings and investments (joint and individual)
- Pensions (using CETV – Cash Equivalent Transfer Value)
- Business interests
- Valuable possessions
- Debts (joint and individual)
Sometimes excluded:
- Inheritance received during marriage (depends on circumstances)
- Assets acquired before marriage
- Gifts from family
Getting a CETV for pensions
To include pensions accurately, you need the Cash Equivalent Transfer Value (CETV):
- Contact each pension provider
- Request a CETV statement
- This shows the “transfer out” value
- Most providers issue CETVs within 3 months
This is just an illustration
This calculator shows a simple 50/50 split. Real settlements are more complex and depend on many factors including needs, contributions, and earning capacity.
Always get professional legal and financial advice for your specific situation. Consider consulting a family solicitor and a financial adviser who specialises in divorce.
Next steps
- Gather information – get valuations, statements, and pension CETVs
- Try to agree – negotiation or mediation is usually cheaper than court
- Get legal advice – understand what you’re entitled to
- Make it legally binding – use a consent order to protect your settlement
Learn about financial settlements
Comprehensive guide to dividing money and property in divorce.
Financial settlement guide →