The Role of Mediation In Property Division Disputes

The Role of Mediation In Property Division Disputes
The Role of Mediation In Property Division Disputes

Property division is an essential aspect of diverse legal proceedings, predominantly divorce cases. It involves the amicable allocation of assets and liabilities between two parties. This guide aims to explore the complexities and intricacies surrounding property division under UK law, providing an exhaustive overview for individuals embarking on such a procedure.

Grasping the Concept of Property Division:

In the realm of family law, property division refers to the process where assets acquired during or before marriage and liabilities or debts are distributed between spouses or civil partners upon divorce or dissolution. These assets can range from tangible properties like real estate holdings (for instance, the marital home), vehicles, and personal possessions like jewellery or artwork to intangible assets such as cash savings, retirement accounts, pensions and businesses owned by either partner.

Distinguishing Between Marital & Non-Marital Properties:

According to UK law, properties acquired during a marriage can be classified into two primary categories: ‘marital” or ‘matrimonial’ and ‘non-marital’ or ‘non-matrimonial’.

Marital properties typically encompass all assets accrued during the marriage by either spouse, irrespective of who bought them or whose name is on them. These are ordinarily subject to equitable distribution upon divorce, implying they get divided fairly but not necessarily equally among both parties.

On the other hand, non-marital properties refer to any assets that one individual brought into the marriage personally, like inheritance received before or during the marriage. Gifts received exclusively by one individual are also regarded as non-marital property unless they were used for mutual benefits, such as the renovation of a shared home.

However, there could be exceptional circumstances where non-marital property may become ‘intermingled’ with marital property. For instance, if an inheritance was used towards purchasing a shared home or paying off joint debts, such assets can be targeted during a divorce.

Equitable Distribution:

Unlike certain jurisdictions that follow community property laws where marital assets are divided equally irrespective of the circumstances, England and Wales adhere to the principles of equitable distribution. This method of asset division does not necessarily imply a 50-50 split but rather what’s deemed fair considering different factors including earning capacities, age and health of both parties, contribution to the marriage (financial or otherwise), length and standard of living during the marriage, among others.

The Process of Property Division:

The process generally commences with identifying all assets and debts, followed by their valuation at current market prices, before proceeding towards negotiation and settlement discussions between both parties, either independently or through solicitors.

Ascertaining the Need for Legal Representation:

Navigating through divorce proceedings can be emotionally challenging and legally complex. You may wish to hire a solicitor who specialises in family law to guide you through this process, as property division can be intricate, particularly when it involves substantial assets or complex matters like business valuation, pensions, offshore accounts or international properties.

Understanding Mediation & Arbitration:

If spouses or civil partners find it hard to reach a consensus on asset division, they might need to consider mediation or arbitration as amicable alternatives to solve their differences.

A mediator is a neutral third party who doesn’t make decisions but helps parties find a solution acceptable to both parties while maintaining relationships as much as possible. An arbitrator, on the other hand, makes binding decisions that must be followed if mutual agreement isn’t possible.

Exploring the Route of Court Proceedings

If negotiation efforts fail, it may become necessary to commence court proceedings where a judge will determine how assets should be split based on various criteria highlighted under Section 25 of the Matrimonial Causes Act (1973). It’s prudent to note that this process can be time-consuming, emotionally draining and expensive, but it is sometimes necessary to ensure fair division.

Understanding Tax Implications:

Property transfers between spouses or civil partners during the tax year of separation do not attract capital gains tax (CGT), but transfers made after that year could potentially trigger CGT implications. Also, stamp duty land tax (SDLT) might be payable if one party takes over an existing mortgage from another during a property transfer.

Pension Rights:

Pension rights can constitute significant marital assets, and their division upon divorce can be complex. Options range from pension sharing orders (where pensions are divided at the point of divorce) to pension attachment orders (payouts made directly to the ex-spouse upon retirement).

Updating Your Will:

Post-divorce, you must update your will, as any reference to your ex-spouse in your existing will automatically becomes null and void unless stated otherwise in your will.

Considerations for International Couples:

International couples may face added complexities due to different laws applicable in different jurisdictions; legal advice becomes even more crucial here.

In conclusion, property division upon divorce in the UK follows principles of fairness rather than exact equality, with myriad factors considered by courts while making determinations. Given these complexities, it’s absolutely essential to seek professional legal advice to navigate this process successfully and achieve a fair outcome.

by DLS Solicitors
19th May 2024
DLS Solicitors

Our team of professionals are based in Alderley Edge, Cheshire. We offer clear, specialist legal advice in all matters relating to Family Law, Wills, Trusts, Probate, Lasting Power of Attorney and Court of Protection.

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