Divorce financial settlement fights surge – why it pays to agree terms early

Financial settlements as part of a divorce are being contested in the courts at the highest level in 16 years, according to new data, as rising living costs and economic uncertainty fuel disputes.

As many as 10,300 financial remedy orders were contested in the family courts in 2024, figures obtained from the Ministry of Justice by law firm Nockolds showed.

This is up from 6,191 the previous year, an increase of 66%. A financial remedy order is where the court decides the best way to divide finances, property and other assets like pensions after a separation.

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The number of financial settlements contested in the courts in 2024 was the highest number since 2008, when 10,905 were contested.

Kaja Viknes, senior associate at Nockolds, said: “With divorces now often taking two years or more to finalise, we are increasingly seeing people challenging existing final orders and seeking to vary them.

“This is usually because their financial position has deteriorated over the intervening years or due to undisclosed assets coming to light later.”

Problems with divorce financial settlements

The division of assets in financial remedy orders are guided by Section 25 of the Matrimonial Causes Act 1973, which often result in outcomes that favour the financially weaker party.

In reaching a financial agreement, a court usually considers a 50:50 split as a starting point for a long marriage of more than five years as set out in the Matrimonial Causes Act 1973. This will cover property, how to split pensions, savings and any child maintenance.

But rising living costs and economic uncertainty may be fuelling disputes over financial settlements, as divorcing couples become less certain about their financial futures, according to Nockolds.

Factors like the decline in the value of residential property and other assets in 2024, as well as concerns about the global economy amid Donald Trump’s tariffs in 2025, are thought to be triggering couples to dispute the division of assets in divorce settlements.

Viknes said: “We are also seeing an increase in the number of people trying to enforce final orders because the other party is not complying. This is likely due to the rising cost of living and financial insecurity.”

For example, where there is an order for the sale or transfer of a property, people are increasingly not complying because they cannot afford to rehouse themselves or afford a mortgage in their sole name post-divorce, she said.

Viknes added: “Tax rises and sharp falls in asset values are likely to continue to weigh on peoples’ minds. We expect to see the high level of contested financial settlements continue for the foreseeable future.”

What happens with a cross-border divorce?

Divorces involving high-net-worth individuals from different countries and cases involving complex asset portfolios, such as businesses or international properties, are also leading to financial disputes more often, according to the law firm.

As high-net-worth-individuals leave the UK, in many cases this is triggering divorces and leading to fights over settlements.

Viknes said: “The exodus of high-net-worth individuals from the UK is leading to a surge in divorces which involve complex asset portfolios often spanning multiple countries. If one spouse wants to move while the other does not, that can be the trigger for the divorce.”

During the dispute process, judges will look at financial disclosures and may request professional valuations of disputed assets.

“We are increasingly seeing cultural issues come to the fore as UK divorce law, which tends to favour the financially weaker party, often isn’t the cultural norm elsewhere,” Viknes said.

“Someone is likely to be less willing to agree to a settlement if the divorce law in their home country would favour a different division of assets.”

How to split assets in a divorce

Separating couples are advised to grasp the financial nettle early on as splitting assets can be painful but not dealing with it can result in long-drawn-out disputes that cost more in time and money.

Ben Glassman, financial planning partner and head of family and divorce at wealth management firm Evelyn Partners, said: “It’s an aspect of the relationship that can cause some grief in this difficult process, so really it’s worth getting a handle on it right from the start.”

No-Fault legislation enacted in April 2022 means couples can now divorce on the grounds their marriage has irretrievably broken down, without the need to attribute blame.

This less confrontational system can help crucial decisions on the splitting of assets to be made with a bit more clarity and harmony.

But while the No Fault law might help more couples avoid costly legal exchanges over the separation itself, Glassman warned against the temptation to “go DIY” over the whole process, including the financial settlement.

“The biggest legal bills occur when there is a dispute over the financial settlement, which is a separate matter to the divorce itself, and can often drag on much longer,” he said.

“An agreement over the splitting of assets that is arrived at amicably, and preferably at an early stage, is important if both parties want to minimise stress and expense. For many couples, advice from a financial planner with experience of divorce will be invaluable.”

The family home

Property is usually the biggest asset, and if one partner wants to stay in the family home, they will often have to forgo the majority of the other assets such as savings and pensions.

But keeping the home doesn’t always make financial sense – if you live in it, it doesn’t produce an income and parts of it can’t be sold to meet spending.

However, higher mortgage rates have narrowed the options for those who need to borrow to buy a new home, as many divorcees do.

Glassman said: “If there is no option but to sell the home, this could also mean having to pay an early repayment charge if the mortgage was fixed. However, it is often feasible for one party to port an existing fixed mortgage and some lenders even allow couples to split and port a fixed rate loan.”

With mortgage rates where they are, a single buyer might find they can afford less than they’d hoped, without moving to a cheaper area.

“This will be especially the case for older borrowers who might find lenders less willing to allow monthly costs to be kept down by extending the loan term beyond 20 or 25 years, or into retirement when income is likely to be lower,” said Glassman.

Pensions

Pensions are often the biggest marital asset after property, and sometimes even the largest, making up 42% of household wealth, according to the Office for National Statistics.

The important thing is to make sure pensions are valued properly and an informed agreement is arrived at before the financial settlement – a process that can often require financial advice.

Once the court order is made, it is extremely difficult to alter the settlement.

When a pension is ‘split’, the non-pension holder is awarded a share of the asset, which then becomes their own, so they gain control of how they use it, and are no longer tied to the original pension holder.

A pension can also be dealt with by offsetting it against other assets, but this can involve often complicated calculations as to the “real” market value of the pension. As such it might be a more usual option among younger couples, who will not have had the time to build up significant pots.

Valuable defined benefit pensions provide a guaranteed income for life and need careful consideration on how they should be valued and split for matrimonial purposes.

State pensions are also important, said Glassman: “Women especially often have gaps in their career, which could affect their state pension entitlement.

“It’s important to obtain a projection, particularly when looking to equalise the pension entitlement of the two spouses. The value of a guaranteed income inflation-linked from age 66 (currently) until death is not to be underestimated.”

Other assets

Savings and investments

In the same way that pensions are usually included in a divorce settlement, so are savings and investments. In Scotland, it is usually only the savings and investments built up during a marriage that matter, whereas the courts in England, Wales and Northern Ireland generally take all of them into account.

Life assurance

Married couples will often have joint life policies in place and after divorce these could be cancelled or assigned to one of the divorcees as part of the settlement. However, this could be an issue if one of the divorcee’s health has suffered and they can’t get replacement life cover.

One area that is often overlooked is if the ex-spouse has to make maintenance payments for children, until they are financially independent (typically their 18th birthdays or the end of full-time education).

These maintenance payments can only be made if the ex-spouse survives so, as part of a divorce settlement, discuss putting in place life cover that would ensure that the payments would continue to be made, even on the ex-spouse’s death.

Business assets

Business owners often don’t realise that their ex – even one who has never been involved with the business – may be entitled to a share of the business on divorce. The court takes into account all assets and is unlikely to make a distinction between business and other assets unless there is legal paperwork to show otherwise.

A family court will likely try hard not to disrupt a business but at times they do decide that the only way to divide assets is to break it up or sell it. Divorce can also lead to one party buying out the other.