4 ways to split a home after divorce and how solicitors and financial planners can help

Divorce is one of the most stressful experiences your clients can go through, and the financial and legal complexities of dividing their shared assets can often make it worse.

The family or shared home is likely one of their most valuable possessions, both financially and emotionally. Its significance is often heightened if children are involved, making it a particularly challenging asset to divide in the divorce process.

Regardless of whether the divorce was amicable or acrimonious, your clients will likely need legal assistance to split the family home and manage property deed transfers. If they are unable to reach an agreement, they may also need support from a solicitor in mediating their asset division, and they may even decide to take their case to a family court.

Financial advice is also crucial for splitting the family home, as your clients can benefit from guidance on the most suitable property division strategy for their respective circumstances. Moreover, a financial planner can use cashflow modelling to assist in reorganising their financial plans to ensure their personal goals remain on track in light of their new status.

While helping with the difficulties of splitting a shared home is unlikely to ease the emotional impact on your clients, it can provide them relief by removing some of the major sources of stress during a challenging time.

So, read on to learn about four common ways of dividing a home in a divorce, and how solicitors and financial planners can help.

1. Both parties decide to sell the property

A simple option for your divorcing clients is for both parties to sell the property and split the proceeds based on their respective stakes. They can then use the money they receive to buy new, separate properties.

This provides them with a clean break, ensuring that once the sale is complete, they are no longer tied together by the property. However, leaving the family home may be emotionally challenging and can be particularly complicated if the couple have children.

If the divorcing couple obtained a joint mortgage, they may want to seek independent financial advice to evaluate their options for future mortgages, either on their own or with a new partner with a different income. They may also benefit from using cashflow modelling to assess the budgeting changes needed to accommodate their new mortgage repayment amounts.

If the two parties mutually agree to sell their property, they will need a solicitor to draft the necessary paperwork and obtain a financial consent order.

A financial consent order is essential in the process of splitting a property, as it formalises and legally binds the financial arrangements agreed upon by both parties, protecting their interests and preventing future financial claims.

Again, solicitors and financial planners play a key role in obtaining this order, ensuring the agreement is fair, legal, and aligned with each party’s long-term goals.

2. One party buys the other party out

If one party wishes to retain the property, they may choose to buy out the other’s share. This can be done through a cash payment, by assuming the existing mortgage, or by using other assets in the divorce settlement to offset the cost.

This option may be appealing for couples with children as it can help ensure that they are able to remain in the family home.

The purchasing partner may need to increase their mortgage to facilitate the buyout and must demonstrate to their lender that they can afford the full mortgage independently.

A financial planner can assist by evaluating the partner’s financial situation, helping them understand the affordability of the increased mortgage, and exploring potential lending options.

Moreover, since both parties remain liable for mortgage repayments until the individual keeping the house secures a new mortgage and ownership is fully transferred, it may also be advantageous for the other party to seek financial advice.

A solicitor can also play a crucial role in this process. They can guide both parties through the legal intricacies of the property transfer and help ensure that the buyout agreement is fair and legally binding. They could also help draft the necessary documentation to protect each party’s interests and facilitate a smooth transfer of ownership.

3. Both parties keep the home

Both parties may choose to retain joint ownership of the family home, allowing one party to continue living in the property while the other moves out. This arrangement may be made to provide stability for the children until they leave home.

In such cases, obtaining a Mesher Order can be beneficial. A Mesher Order is a court order that defers the sale of the family home until a specified event occurs, such as the children reaching 18 or leaving home.

One party may apply for a Mesher Order if they wish to remain in the family home (perhaps with the children) but lack the financial stability or resources to take over the mortgage independently.

Divorcing couples may also want to obtain a Mesher Order if they want to avoid the stress of selling the property during the divorce process, as managing both can be overwhelming.

To obtain a Mesher Order, your clients will need to seek legal assistance from you, while care needs to be taken with the Capital Gains Tax (CGT) position, which is where we can provide assistance.

How the mortgage repayments are made until the trigger events occur depends on the particular terms of the Mesher Order. So, both parties would likely benefit from financial advice to fully understand the implications of the order on their financial situations.

4. One party transfers part of the value of the property to the other

One party may decide to give up a share of their ownership rights while retaining a partial stake in the home. This arrangement allows them to receive a percentage of the property’s value upon its sale. Again, care needs to be taken in this instance with the CGT position.

In such cases, solicitors can provide crucial legal support by drafting agreements that clearly outline the terms of the shared ownership, ensuring that both parties’ rights are protected. They may also be called upon if a Mesher Order is included as part of the deal.

Additionally, we can assist by using cashflow modelling to evaluate the potential financial outcomes of this arrangement, helping the parties understand how this decision will impact their overall financial situation.

Get in touch

Solicitors and financial planners are key players in the process of dividing the family home after a divorce, ensuring a smooth and fair division of assets, and providing clients with both legal protection and financial security as they transition into separate lives.

To find out more about how we can collaborate to support each other’s clients during their divorce proceedings, get in touch.

Email info@fbwealth.co.uk or call us on 0333 1122211.

Please note

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.

The Financial Conduct Authority does not regulate cashflow planning.