Here at Prestige Tax and Trust Services we have been thinking about the ways in which divorce can affect assets that are jointly owned by the couple. Often the family home will be held in the names of both spouses but if a marriage breaks down questions will undoubtedly arise over who should keep the house or how the equity ought to be split.
During a divorce all assets will be considered and valued before being divided up. Divorce solicitors will usually try to be as fair as possible and aim for a 50/50 split, but often what one partner sees as fair, the other might not be happy with! In this consideration of assets, property will always be considered, regardless of whose name is on the deed.
The UK has no set formula for the division of assets. One spouse can buy the other out and retain ownership or they might decide it’s better to sell the property and split the proceeds equally. Usually if children are involved, the partner holding custody will stay in the property to maintain as much normalcy as possible. In these cases the moving partner would usually be given other assets to even up the distribution. Alternatively, that partner can defer the receipt of money or assets until the children move from the house, the house is sold, or their ex-partner remarries. This is known as a Mesher Order.
The downside to a Mesher Order is that both names will remain on the mortgage if there is one, which can make it difficult got the moving partner to obtain a new mortgage when they leave. Either way the house must be properly valued before any negotiations can take place. This value can go up or down according to significant changes in the market.
Deciding to sell the home can also pose problems, especially in the current economic climate. You may end up unable to sell a house you no longer want, or be forced to reduce your price for a quick sale. And even if you are able to sell, you’ll be dividing the sale price with your ex-partner and so will only have half the amount to search for a new property. Often it’s advisable for newly single divorcees to rent in the initial short term to reduce the stress of having to get back on the property ladder.