How to split your finances in a divorce: 4 assets to consider

Divorce is a stressful time, and with the first Monday of January often seeing a spike in divorce enquiries, many couples are now turning their attention to the financial side of separation. 

While no-fault divorce, introduced in 2022, allows couples to divorce without attributing blame, you’ll still need to sort your financial affairs. These can include property, pensions, savings, and investments. 

However, experts have warned rising living costs and high mortgage rates could make dividing financial assets all the more complicated. 

Here, Which? explains how finances are typically split and highlights four key areas to address if you’re filing for divorce.

How financial assets are split

Couples who divorce have to sort financial settlements in a separate and parallel process to the divorce itself.

A financial consent order is a legal document that confirms your agreement, and explains how you’re going to divide up assets such as property, savings and pensions. It can also include arrangements for maintenance payments, including child maintenance.

If you have a fairly complex financial situation, you may benefit from getting independent legal advice. 

To make your agreement legally binding, a court will need to approve it. 

If a couple fails to obtain a financial consent order following divorce, either party will be able to make a financial claim against the other at any time in future (potentially many years after separation).

• Find out more: 6 financial mistakes to avoid when going through a divorce

4 financial assets to consider during divorce

When it comes to divorce, sorting out your finances early on is essential to avoid future complications. Here are four financial assets to focus on.

Pensions

Pensions are typically the largest asset in a divorce, making up 42% of household wealth, according to the Office for National Statistics. By comparison, the share of wealth held in property is 36%. 

Yet, just 16% of couples split pensions in divorce, which can often lead to women significantly missing out on income in retirement, according to Scottish Widows.

You should get a pension valuation as part of the financial disclosure, and it may be worth paying an adviser to check the numbers. They can also help you decide on the best way to share pensions.

There are three primary ways to divide pensions:

1. Pension sharing order: A percentage of one spouse’s pension is transferred to the other. This approach allows for a clean break, with assets divided at the point of divorce. In England, Wales, and Northern Ireland, this applies to the entire pension pot, while in Scotland, only the value accrued during the marriage is considered. However, financial advice is often needed to ensure a fair split, and pension scheme providers can only divide pensions by court order. 
2. Pension offsetting: One spouse keeps their pension in exchange for another asset, such as the family home. While this offers a clean break, the partner who forfeits the pension may lose out long-term, especially if the pension, such as a final salary scheme, exceeds the value of the assets they receive.
3. Pension attachment order: This involves one spouse receiving a lump sum or income from the other’s pension when they start taking it. In Scotland it's referred to as a pension earmarking. While it allows the pension holder to retain control over investments, it doesn’t provide a clean break and could leave the receiving spouse vulnerable if the pension holder dies before retirement.

• Find out more: fears pensions are being overlooked in DIY divorces

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Mortgage and property

If you're both named on the mortgage, you're jointly responsible for the full amount. It's important to continue making payments in the short term to protect your finances. 

You should try to reach an agreement with your ex, but if that’s not possible, contact your mortgage provider. They may allow interest-only payments or a payment holiday while you sort things out.

One of the biggest financial decisions in a divorce is whether to keep the family home, particularly when children are involved. However, experts warn that high mortgage rates mean limited options for those needing to borrow to buy a new property, which many divorcees face.

Ben Glassman, financial planning partner at management firm Evelyn Partners adds: ‘One spouse remaining in the family home has traditionally been the low-cost option as it will avoid some legal, mortgage and property transaction fees.  

‘But the spouse who stays will usually have to find the money to buy the other’s share of equity and, if they can’t draw on other assets to do so, the mortgage rate environment could make it difficult for them to obtain the extra borrowing.

'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.’

• Find out more: best mortgage rates and deals 2025

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Life insurance

During a divorce, life insurance might not be something you think about right away, but it’s important to review your policy. If it benefits your ex-partner and you no longer want it to, you’ll need to update the beneficiary details.

For joint life insurance, some insurers allow you to split the cover into two policies, though this isn’t always possible. If separation of policies isn’t an option, one partner can take over the policy while the other arranges a new one. 

Alternatively, you can cancel the joint policy and take out new individual ones, but this could be more expensive as you'll be older and may need to go through more health checks. Make sure the new policy is in place before cancelling to avoid gaps in coverage.

An often-overlooked aspect, according to Glassman, is ensuring life insurance is in place for child maintenance payments. He adds: 'These payments can only be made if the ex-spouse survives, so it’s crucial to discuss life cover to ensure payments continue after their death.'

• Find out more: best life insurance in the UK 2025

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Savings and investments

In a divorce, savings and investments are typically part of the settlement. 

In England, Wales, and Northern Ireland, the courts consider all savings and investments accumulated during the marriage, including joint and individual accounts. 

In Scotland, only those built up during the marriage are generally included, with any personal savings from before the marriage or after separation excluded.

If you have a joint account, make sure to arrange for your income to be paid elsewhere. 

You should notify the bank of your separation, and they can set up controls to ensure both parties must agree to withdrawals and prevent misuse of joint funds.

• Find out more: best bank accounts and providers

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