Divorce and money – everything you need to know if you are splitting up

Divorce is an unpleasant process, but sometimes a necessary one if a marriage has broken down.

Establishing how money and assets will be divided following a divorce can cause a great deal of anxiety, both before, during and after the legal proceedings.

Almost three-fifths (59%) of unhappily married couples in the UK feel as though they can’t get divorced because of their finances, a survey of 1,000 people from Co-Op Legal Services found.

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Meanwhile, 49% of divorcees said they delayed the process due to financial reasons, according to a separate poll of 1,000 people.

The survey found that the only reason for staying married that eclipsed personal finances was concern about the impact a separation might have on their children, as 60% of respondents said this was the primary reason for staying in an unhappy marriage.

Ben Evans, lead family law solicitor at Co-op Legal Services, said: “Getting divorced can be complicated further when the couple has children to consider or if they feel their finances do not allow for them to go their separate ways.

“I would advise anyone considering a divorce to seek support, whether that be with trusted family and friends, or through an independent service.

“There is a wealth of resources available to help those who are considering a separation. People can seek legal advice early to provide peace of mind, or to discuss the implications of divorce and the available options.”

What does divorce mean for your mortgage, pension, savings and investments though? We explain all the need-to-knows.

Divorce and your mortgage

There are a few options available to you when it comes to dividing a home – what is likely to be one of the most valuable assets shared between a couple.

Nick Mendes, mortgage technical manager at broker John Charcol, said one of the most common routes is for one person to keep the property and take over the mortgage in their name.

An affordability assessment will be carried out by the lender, with income, outgoings, credit history and age all considered. If that person can afford the new repayments, the mortgage is transferred to them and any equity owed to the other party is paid out.

Another option is selling the property and repaying the mortgage.

“This is often the cleanest solution. Any remaining equity can then be split in line with the divorce settlement. While this can be emotionally difficult, it removes ongoing financial ties and avoids future disputes if circumstances change,” Mendes added.

Another alternative is for both people to remain on the mortgage, even if only one is living in the property. This carries risk though.

“The non-resident party remains fully liable for payments and the mortgage will still count against their borrowing capacity if they want to buy elsewhere,” Mendes said.

Divorce and your savings and investments

Savings and investments are other big assets that will come up during divorce negotiations.

Savings are, in theory, easy to divide as you can simply move the money from an account owned by one partner into one owned by the other.

Things can be a little more complicated with investments. In some cases you can transfer ownership between partners, but in others you may need to sell the asset and divide the proceeds. It’s important to remember that doing so could incur fees and taxes, such as capital gains tax.

If you have a joint account, it is worth letting the bank know that you are separating as soon as possible to avoid any misuse of the money in the account.

Divorce and your pension

Dividing pensions between two parties is often overlooked during divorce proceedings.

Craig Rickman, personal finance expert at interactive investor, said: “Pensions in the event of divorce can be a complex area, and their value is sometimes overlooked, despite often being a couple’s largest asset alongside the family home.”

There are three main options for dividing pensions in the event of a divorce.

• Pension offsetting: This is where the value of a pension pot is offset against the value of another asset, for example with one partner keeping the pension and the other getting a larger stake in the family home.
• Pension sharing. The name is somewhat self-explanatory here, with some ‒ or even all ‒ of one partner’s pension savings moved into an account belonging to the other.
• Attachment orders - where one partner commits to paying a portion of their pension income to the other once they reach retirement. This works slightly differently in Scotland, where it is known as pension earmarking. Recipients north of the border can only receive some of the lump sum available to those taking money from their pension for the first time, but cannot take a portion of the pension income that follows.

Some 15% of over 50s have been forced to delay their retirement due to divorce proceedings, according to new research by life cover provider Legal and General (L&G).

The poll of 471 over 50s also revealed a third (32%) of divorcees who had been through a divorce were considering downsizing their homes as a result.

Lorna Shah, managing director of retail retirement at L&G, said: “Retirement incomes are being stretched further than ever as people live longer and often enter retirement without sufficient savings. A divorce can make this challenge more complex.”

It comes as separate research from now:pensions and the Pension Policy Institute (PPI) reveals divorced women typically have £400,000 less in pension savings than divorced men in the UK.

What happens to pre-marriage assets in a divorce?

Lawyers are increasingly seeing couples fight over how assets obtained prior to their marriage should be split on divorce. The issue is known as “matrimonialisation” – the process by which non-marital assets become matrimonial assets as a result of married couples typically sharing finances, which are then subject to division on divorce.

The issue is a legal grey area and disputes over whether pre-marital assets should be divided on divorce have more than tripled over the past two years, according to Nockolds, a law firm. By its analysis, there were around 3,200 matrimonialisation-related court claims in 2024/25 – up from 1,200 the previous year and just 800 in 2022/23.

The figures are extrapolated from published judgments in the Family Court and the Family Division of the High Court, based on the assumption that 5% of all claims reach final hearing and that 5% of those hearings are published by The National Archives’ Find Case Law service.

According to Nockolds, the recent surge in court disputes over what assets are subject to division on divorce is partly down to more complex wealth structures being used, such as offshore trusts and family investment companies. These are increasingly blurring the line between what is personal ownership and what are jointly owned marital assets.

Kaja Viknes, senior associate at Nockolds, said: “As asset structures become more sophisticated, so do the arguments. It’s no longer just about ownership, it’s about how, why, and when assets entered the marital sphere.”

Tighter non-dom rules and increased scrutiny of inheritance tax planning have also prompted a wave of inter-spousal asset transfers and relocations, some of which have triggered divorce proceedings, Nockolds has found.

“Transfers made for tax efficiency can backfire in divorce. Without proper structures, they risk being reclassified as marital contributions,” said Viknes.

More couples are choosing pre- and post-nuptial agreements. But this can also lead to disputes over their scope, enforceability, and whether excluded assets were later matrimonialised, she added.

“Outcomes often hinge on how judges interpret intention, conduct, and fairness,” said Viknes. “Where the law stops short of bright-line rules, parties are more willing to test the limits, particularly when millions are at stake and asset histories are complex.”

A ruling in July in the Supreme Court in the case of Standish v Standish – where Mrs Standish sought an equal split in the divorce – involving assets moved from husband to wife to avoid inheritance tax, confirmed not all assets transferred during marriage become matrimonial.

Nockolds expected the ruling to prompt more disputes over whether specific assets, especially properties, business interests, and large gifts, were matrimonialised. Spouses seeking a share will need to show clear evidence of joint use, improvements, or integration into family life.

Viknes said: “The Standish ruling gives greater confidence to those seeking to ring-fence wealth, especially in cases involving inherited assets, business interests, or offshore structures. It reinforces the principle that origin and intention matter more than title alone.”

For pre- and post-nuptial agreements, it’s a “drafting wake-up call”, she added.

The cost of a divorce

The eventual cost of your divorce will come down to how you go about doing it, and how much involvement there is with lawyers.

There is a £612 fee to apply for a divorce, as well as a £263 fee if a child arrangement needs to be put in place.

The cost of your divorce can be substantial if you have to go through the courts, due to the lawyer fees.

The Ministry of Justice says that hourly fees can hit as much as £566 an hour depending on your location and the lawyer’s experience.

Going through mediation may be cheaper and faster, while you may also be able to get help from the government worth up to £500 which can go towards mediation costs. You can find a mediator through the Family Mediation Council.

Another alternative is arbitration, where an independent arbiter is appointed to make a decision on the division of assets. This decision is binding on both parties.

Your finances after a divorce

Two people divorcing need to separate their finances not for the immediate term, but for the future as well.

Joint accounts left open can dent your credit score if the other person starts missing credit payments. This could prove an issue when you come to trying to get a mortgage.

Similarly, don’t forget to look at your will and amend it, if needs be. It may be that changes need to be made as a result of the divorce, for example if you no longer want your former partner to receive any of your assets.

The no-fault divorce process

A big change to the divorce process was introduced in 2022 as no-fault divorces became legally implemented, meaning no reason has to be given for divorce.

Before this, one partner would have to register a particular reason for the split, such as adultery or unreasonable behaviour, or else have to go through a period of two to five years of separation first.

With no-fault divorces, splits are quicker and easier – and most of all, cheaper. This is because proceeding with a no-fault divorce will likely mean you need less time with a lawyer.

Under a no-fault divorce, the same advice will apply as they, legally and functionally, have the same implications for your finances as a divorce that cites a reason.

No-fault divorces are not available in Northern Ireland.

When do the most divorces happen?

The first working Monday of the new year is when lawyers typically get the highest number of divorce queries, so much so, the day has been rebranded ‘Divorce Day’.

“There’s usually a surge of enquiries with divorce lawyers on the first Monday back after Christmas,” says Sarah Coles, head of personal finance at Hargreaves Lansdown.

“It’s one of two annual peaks, with the second on the first working day after the school summer holidays.”