As tax increases and steep asset value declines make divorce more costly, attorneys anticipate more court battles
The courts are contesting divorce-related financial settlements at the highest level in 16 years, according to new data, as rising living expenses and economic uncertainty exacerbate disagreements.
According to statistics that law firm Nockolds obtained from the Ministry of Justice, up to 10,300 financial remedy orders were challenged in the family courts in 2024.
This represents a 66 percent increase from 6,191 the year before. After a separation, the court determines how best to divide money, property, and other assets like pensions through a financial remedy order.
The number of financial settlements that were contested in court in 2024 was the most since 10,905 in 2008.
Kaja Viknes, a senior associate at Nockolds, stated: "We are seeing more and more people contesting current final orders and attempting to change them because divorces now frequently take two years or longer to complete.
This typically occurs as a result of their financial situation worsening over time or as a result of previously unknown assets becoming apparent.
Issues with the financial settlements of divorces.
Section 25 of the Matrimonial Causes Act of 1973 governs the division of assets in financial remedy orders, which frequently produce results that favor the party with less money.
As outlined in the Matrimonial Causes Act 1973, a court will typically consider a 50:50 split as the beginning point for a long marriage lasting more than five years when reaching a financial agreement. Property, pension distribution, savings, and any child support will all be covered.
However, as divorcing couples grow less confident about their financial futures, Nockolds suggests that growing living expenses and economic uncertainty may be escalating disagreements over monetary settlements.
Conflicts over asset division in divorce settlements are believed to be sparked by factors such as the drop in the value of residential real estate and other assets in 2024, as well as worries about the state of the world economy due to Donald Trump's tariffs in 2025.
"We are also witnessing a rise in the number of individuals attempting to enforce final orders due to noncompliance," Viknes stated. This is probably brought on by growing living expenses and unstable finances.
Because they cannot afford to buy a new home or take out a mortgage in their sole name after a divorce, for instance, people are increasingly not complying with orders for the sale or transfer of property, she said.
"Tax increases and steep declines in asset values are likely to continue to be a burden on people's minds," Viknes continued. We anticipate that the large number of contentious financial settlements will persist for some time to come.
What occurs when a divorce occurs across borders?
The law firm claims that cases involving complex asset portfolios, like businesses or foreign properties, and divorces involving high-net-worth individuals from various nations are also contributing to an increase in financial disputes.
High-net-worth individuals leaving the UK is frequently the cause of divorces and settlement disputes.
"Divorces involving complex asset portfolios that frequently span multiple countries are on the rise due to the exodus of high-net-worth individuals from the UK," Viknes stated. The divorce process may begin if one spouse wants to move while the other does not.
Judges will examine financial disclosures and may ask for expert appraisals of contested assets during the dispute process.
Viknes stated that "UK divorce law, which tends to favor the financially weaker party, isn't the cultural norm elsewhere, so we are seeing cultural issues come to the fore more and more."
"If a different asset division is preferred by the divorce law in their home country, someone is probably less likely to accept a settlement.
How assets are divided in a divorce.
It is recommended that divorcing couples learn to manage their finances early on because, although dividing assets can be difficult, ignoring it can lead to protracted arguments that cost more money and effort.
"It's a part 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," stated Ben Glassman, financial planning partner and head of family and divorce at wealth management firm Evelyn Partners.
No-Fault laws passed in April 2022 allow couples to file for divorce on the grounds that their marriage has irretrievably failed without assigning blame.
Making important decisions about asset division with a little more clarity and harmony can be facilitated by this less combative system.
Though Glassman cautioned against the temptation to "go DIY" throughout the entire process, including the financial settlement, the No Fault law may help more couples avoid expensive legal exchanges over the actual separation.
"As a separate matter from the divorce itself, the financial settlement dispute is often the source of the largest legal bills and can take a lot longer to resolve," he said.
"If both parties wish to reduce stress and expense, an amicable agreement regarding the division of assetsideally reached early onis crucial. Financial planners with divorce experience can be a great resource for many couples.
The family house.
A partner who wishes to remain in the family home will typically have to give up most of the other assets, including savings and pensions, because property is typically the largest asset.
However, if you live there, it may not always be financially advantageous to keep the house because it does not generate income and some of its components cannot be sold to cover expenses.
However, for many divorcees who must borrow money to purchase a new home, the options have become more limited due to rising mortgage rates.
"If there is no other choice but to sell the house, this may also entail paying an early repayment fee if the mortgage was fixed," Glassman stated. Nonetheless, it is frequently possible for one party to transfer an existing fixed mortgage, and certain lenders even permit couples to transfer a fixed rate loan after splitting up.
With current mortgage rates, a single buyer may find that, without relocating to a less expensive area, they can't afford as much as they had hoped.
According to Glassman, "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'."
Pensions.
According to the Office for National Statistics, pensions account for 42% of household wealth, making them frequently the largest marital asset after property and occasionally the largest.
Prior to the financial settlement, which frequently calls for financial advice, it is crucial to ensure that pensions are valued appropriately and that an informed agreement is reached.
The settlement is very hard to change once the court order is issued.
A split pension gives the non-pension holder a portion of the asset, which they can use however they see fit and releases them from the original pension holder's control.
Offsetting a pension against other assets is another way to deal with it, but this can require frequently difficult calculations to determine the pension's "real" market value. Since they won't have had time to accumulate sizable pots, younger couples may choose it more frequently.
For matrimonial purposes, it is important to carefully consider how to value and divide valuable defined benefit pensions, which offer a guaranteed income for life.
Glassman added that state pensions are crucial, saying that women in particular frequently experience gaps in their careers that may impact their eligibility for state pensions.
It is crucial to acquire a projection, especially when attempting to equalize the two spouses' pension entitlements. It is important not to undervalue the importance of an inflation-linked guaranteed income from age 66 (as of right now) until death.
Additional resources.
Investments and savings.
Savings and investments are typically included in a divorce settlement, much like pensions are. While the courts in England, Wales, and Northern Ireland typically consider all of the assets and savings accumulated during a marriage, in Scotland, these factors are typically the only ones that matter.
Assurance of life.
Joint life policies are frequently in place between married couples; as part of the settlement, these may be canceled or transferred to one of the divorcees. This might be a problem, though, if one of the divorcees' health has deteriorated and they are unable to obtain replacement life insurance.
The requirement that the ex-spouse pay maintenance to children until they are financially independentusually at the end of full-time schooling or their 18th birthdayis one area that is frequently disregarded.
Since the ex-spouse must live to receive these maintenance payments, it is advisable to include a clause in a divorce settlement that would guarantee the payments would continue to be made even in the event of the ex-spouse's death.
Company resources.
Many times, business owners are unaware that their ex-partner, even if they have never worked for the company, may be entitled to a portion of the company upon divorce. Unless there is legal documentation to the contrary, the court considers all assets and is unlikely to distinguish between business and other assets.
Although they will probably make every effort to avoid interfering with a business, family courts occasionally determine that the only way to divide assets is to sell or break it up. One party buying out the other is another possible outcome of divorce.
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