If your marriage has come to an end and you are thinking about divorce, one of your main concerns may be what will happen to your finances, your home, and any other assets you and your spouse own.
In Ireland, there is no automatic rule that assets are divided equally on divorce. Instead, the court looks at the full financial circumstances of both spouses and asks whether proper provision has been made for each spouse and any dependent children. This can include property, savings, pensions, business interests, debts, and other financial resources.
Here we answer the most frequently asked questions posed to our family law team on this topic.
What counts as an asset in a divorce?
When deciding what financial orders to make, the court can consider all relevant property and financial resources belonging to either spouse, not only assets acquired during the marriage. This may include the family home, other properties, bank accounts, pensions, investments, vehicles, business interests, savings, life insurance policies, and valuable personal belongings. The court can also look at assets one spouse owned before the marriage, as well as resources either spouse is likely to have in the foreseeable future.
How are assets documented in the divorce process?
When seeking a divorce in Ireland, you will need to provide detailed financial disclosure. In paper applications, this is usually done through an Affidavit of Means. This is a legal document used to detail your financial situation, including income, assets, debts, and expenses. If there are dependent children, an Affidavit of Welfare is also used to give the court information about the children’s circumstances and needs. In online applications through the Courts Portal, Statements of Truth may be used in place of certain affidavits.
Whether your case is straightforward or complex, full and accurate disclosure is essential. If one spouse does not fully disclose their financial position, it can affect how the case progresses and the orders the court is willing to make.
Will I get 50% of everything we own?
Not necessarily. There is no automatic entitlement to 50% of all assets on divorce. The court does not apply a rigid formula. Instead, it must be satisfied that proper provision has been made for both spouses and any dependent children in light of all the circumstances.
That means the outcome may be equal in some cases, but not in others. The final division will depend on the facts, including the parties’ needs, resources, responsibilities, and future financial position.
Why does fair not always mean equal?
Equitable means a fair and just distribution based on various factors like each spouse’s financial needs, contributions to the marriage, and future earning capacity. The goal is to reach a division that is fair in the context of the marriage’s specific circumstances, which might result in an unequal but equitable distribution of assets.
What are the key factors considered when determining how to divide assets?
A key factor in divorce proceedings is whether there are dependent children. A dependent child is a child under 18, a child over 18 and under 23 who is in full-time education, or a child with a disability that prevents them from fully maintaining themselves. The court will consider their housing, welfare, education, and day-to-day needs when deciding what arrangements amount to proper provision.
Additionally, if one partner is dependent due to health issues or inability to work, this can affect asset division and may lead to orders for financial support. The court may also consider the contributions each spouse has made to the welfare of the family, including financial contributions, and contributions made as a parent or homemaker. In some cases, the contents of a pre-nuptial agreement may influence court decisions.
Are pre-nuptial agreements binding in Ireland?
Pre-nuptial agreements are not strictly binding in Ireland in the same way they may be in some other countries. However, a court may take a pre-nuptial agreement into account as part of the overall circumstances, particularly where it reflects the parties’ intentions and appears fair.
What happens to the family home?
The family home is often the most valuable and emotionally significant asset in a divorce. What happens to it will depend on the family’s circumstances. In some cases, the home may be transferred to one spouse. In others, it may be sold and the proceeds divided, or one spouse may buy out the other’s share. In some situations, the court may order a deferred sale so that dependent children can continue living there for a period of time.
Where children are involved, their housing and welfare needs are important, but there is no automatic rule that the family home will go to the parent with primary care. The court will look at the overall question of proper provision, including each spouse’s housing needs, financial means, and responsibilities.
What about pensions?
Pensions can be one of the most valuable assets in a marriage, especially after a long relationship. The court can make a Pension Adjustment Order, which directs that part of one spouse’s pension benefits be paid for the benefit of the other spouse or a dependent child.
In some cases, a pension may be shared directly through such an order. In other cases, its value may be taken into account when dividing other assets. Pension issues can be legally and financially complex, so specialist advice is often needed, particularly where defined benefit schemes, self-employed pensions, or multiple pension arrangements are involved.
What happens to debts?
Many people focus on assets, but debts are just as important. Mortgages, personal loans, business liabilities, overdrafts, and credit card debt can all affect the overall outcome. The court looks at each spouse’s obligations and liabilities as part of the wider financial picture.
This means that even where there are significant assets, the net position may be very different once debts are taken into account. It is important to provide a full and accurate picture of both assets and liabilities at the outset.
Do assets I owned before the marriage count?
They can. The court is not limited to assets built up during the marriage. Property owned before the marriage, inherited assets, and other personal resources may still be relevant when the court is deciding whether proper provision has been made.
That does not mean every such asset will automatically be divided in the same way as jointly built-up assets. The source of the asset, the needs of the parties, the length of the marriage, and the overall fairness of the outcome are key considerations.
What happens to a business?
If one or both spouses own a business, the court may need to take its value and income-producing capacity into account. This can be particularly important where the business is a major source of family income, where both spouses contributed to its development, or where one spouse’s role in the business was informal but still significant.
Depending on the circumstances, the business may be valued as part of the financial settlement. In some cases, one spouse may retain the business while other assets are adjusted to achieve a fair overall result. In more difficult cases, the future of the business itself may become an issue. If you cannot reach agreement about how a business should be treated, the court may need to decide how its value and income should be reflected in the overall settlement. In some cases that may involve a sale, but in others one spouse may retain the business while other assets are adjusted.
Can we agree on the division of assets ourselves?
Yes. Many couples resolve financial matters by agreement rather than asking a judge to decide every issue. Reaching agreement can save time, reduce legal costs, and make the process less stressful. However, any agreement should be properly documented and should be based on full financial disclosure by both sides.
Even where parties reach agreement, the court must still be satisfied that proper provision has been made before granting a divorce.
Should we consider mediation?
Yes, in many cases mediation is worth considering. It can help separating spouses discuss finances, property, and arrangements for children in a more constructive and less adversarial way. Under the Mediation Act 2017, solicitors have duties to advise clients about mediation before certain court proceedings are issued.
Mediation is not suitable in every case, particularly where there is coercive control, abuse, or a serious imbalance of power, but it can be a useful option for many couples.
Are transfers of assets on divorce taxed?
They can be, but important reliefs may apply. Transfers of assets between former spouses that are made under a court order can be exempt from Capital Gains Tax. Court ordered transfers of property between former spouses may also be exempt from stamp duty, subject to the relevant conditions.
Tax treatment depends on the facts and the way the transfer is structured, so it is sensible to take legal and tax advice before finalising any settlement.
Do I need to update my will after divorce?
Yes, this is something many people overlook. Divorce can have important consequences for succession and estate planning. Financial orders made on divorce may affect what happens on death, and your existing will may no longer reflect your wishes or your legal position. It is wise to review your will, your pension nominations, and any wider estate planning arrangements as part of the divorce process.
Require assistance with dividing assets following a divorce?
If you are considering taking divorce proceedings but you are worried about what will happen to your assets following the process, the family law team at McCarthy + Co Solicitors LLP will be happy to assist you with any further questions you may have. Arrange a consultation with us using our confidential online form and a member of our team will be in touch to schedule a time for your appointment.
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