One of the major concerns that most people have when faced with a divorce is about their long-term financial security. You might have been the main ‘breadwinner’ from a successful career and be worried about how much of your savings or pensions will need to be shared with your ex-spouse, or you and your spouse might have operated your finances completely separately from each other but relied on each other to fund half of your shared lifestyle. Whatever your circumstances or hopes for your financial future, it is essential that you establish the value of the available assets and income before you start dividing them up.

Some assets, such as bank accounts, have a fairly obvious value, but others are more complicated. Below, we focus on a few common problem areas:

Land and Houses

In property division during divorce in the UK, the fluctuating nature of the property market makes accurate and up-to-date valuations essential. It is wise to ensure that an appropriate expert or agent is approached for a valuation. A local residential agent who knows the area and property type is usually the best option for a standard residential property. However, for unusual property types or land designated for specific use, such as agriculture, a specialist agent or surveyor will be better equipped to provide accurate property valuation divorce advice.

To get the most reliable estimate, it is always advisable to take the average of at least three different valuations in case one is a particular outlier. If one person is concerned that the other may try to influence a valuation, they may wish to suggest supplying a list of valuers from which the other person chooses the final three. Both parties might consider being absent from the property during the valuation visit and aim to agree on the terms upon which the valuer is to be approached beforehand. Key questions include whether the valuer is providing a starting point for marketing and negotiations or a realistically achievable sales price and how any planning permissions or problems are to be factored in.

Business Assets

Valuing business interests during divorce in the UK can be challenging because of the diverse types and structures of businesses. For instance, a sole trader without any premises or staff may work through a company structure or simply as a self-employed individual. The value of such a business may be limited to the income it generates or could be more substantial.

Alternatively, one spouse may have an interest in a company or business as a director, equity partner, shareholder, or owner. It will be important to establish their rights to receive equity (capital), a salary, dividends, or other benefits. The intrinsic value of a business depends on factors such as its size, gross turnover, assets (including customer goodwill), and staff.

Obtaining an accountant’s valuation is crucial for accurately assessing business assets during divorce cases in the UK. While the company accountant may be a suitable source of information, it is often appropriate to approach an independent expert for a neutral valuation. Different types of business require different valuation methods, making expert input critical.

Pensions

Pensions are a crucial consideration in financial settlements during divorce. While most people think of pensions in terms of the income they will generate at retirement, pensions also have a ‘cash equivalent transfer value’ (CETV). This figure indicates the pension’s worth at a particular date and is useful for comparing pension assets. However, because pensions are investments, their values can fluctuate based on market factors.

Ensuring that pension valuations are as up to date as possible (preferably within the last 12 months) is important when considering asset valuation in divorce cases. It’s also crucial to recognize that cash equivalent transfer values are not calculated uniformly and may overlook important benefits, especially for ongoing contributions. Additionally, CETVs do not necessarily provide comparable insights into the retirement income different schemes may generate.

Expert financial and pensions advice is strongly recommended before relying on any valuation or dividing a pension as part of a financial settlement in a divorce. By ensuring careful and informed evaluation, both parties can better navigate the complex financial landscape of divorce.

In conclusion, whether dealing with property division divorce UK matters, valuing business assets, or seeking property valuation divorce advice, obtaining accurate and expert valuations is essential for achieving a fair financial settlement. Navigating these complexities with the help of knowledgeable professionals ensures greater clarity and financial security for both parties involved.

Your solicitor at Phillips will give you detailed advice about how to approach each asset relevant in your situation and signpost you to relevant experts and sources of more information.  Contact Elizabeth Taylor, Daniel Weintroub or Kelly Geter in our family law team for more information on 01256 460830 or email [email protected].