Divorce 70 30 Financial Assets Split – With Scenario (2023)
What is a 70 30 Split and would it apply to me?
When it comes to dividing assets during a divorce or separation, it can be a complex and stressful process, especially if both parties don’t agree. It can also be quite expensive! You might have heard from friends or read on the internet that a 70/30 split is a common outcome when one party was not working or worked less during the marriage. Others might suggest a fair 60/40 split or even an equal 50/50 split.
But here’s the thing: there’s no one-size-fits-all answer. The outcome depends on your unique situation and future needs. Allow us to explain why.
Divorce 50 50 Split Vs 70 30 Split
In long marriages or relationships that lead directly to marriage, a 50/50 split is often assumed to be the starting point. However, it might not be the fairest option for your circumstances. We understand that can be hard to grasp, especially with all the stress and emotional challenges that come with getting a divorce.
Depending on your situation, a fair division might actually be a 70/30 split or a 60/40 split. It could even be something completely different. We’ve seen cases where a couple agreed on a 95/5 split because that’s what worked best for their specific situation, as they had a disabled child who required round-the-clock care from their mother.
Scenario where 70 30 split is proposed
Let’s consider an example scenario to better explain this:
Rebecca and Simon are going through a divorce. Rebecca sought advice from her lawyer, who suggested she ask for a 70/30 asset split during mediation. Simon, on the other hand, received legal advice stating that a 50/50 split would be more likely if it went to court. Both have invested significantly in their legal counsel and neither is willing to compromise. They have decided to turn to family mediation to resolve their financial dispute.
Here are the key details:
- Rebecca earns £30,000 per year at the age of 39, with a mortgage capacity of £120,000.
- Simon earns £58,000 per year at the age of 42, with a mortgage capacity of £232,000.
- They have two teenage children who will spend equal time with both parents.
- They’ve been married for 12 years and have been together for a total of 15 years. It’s considered a long marriage.
Here are the key needs:
As teenagers, it’s understandable that children would prefer not to share a bedroom. Since the children spend equal time with each parent, it’s important for both Rebecca and Simon to have a 3-bedroom property. In their area, a reasonable 3-bedroom property, including stamp duty and other costs, is priced at £375,000.
In terms of assets, they each own a car valued at approximately £8,000. Additionally, they have pensions valued at £60,000 and £80,000 for Rebecca and Simon, respectively. They both don’t have savings or other assets.
Currently, they reside in a 5-bedroom house valued at £600,000. After considering the mortgage and costs, the equity they’ll have is around £400,000. Selling the house is a decision they both agree on.
For a fair outcome, Rebecca needs £375,000 to purchase a house that meets her requirements. If she takes a mortgage of £120,000 (the maximum she can borrow) and splits the equity equally from the house sale, she would have £320,000. However, there’s a shortfall of £55,000 in meeting her needs with a 50/50 split.
Simon also requires £375,000 for his new house. By splitting the equity equally from the house sale and maximizing his mortgage capacity, he would have a total of £432,000. This amount surpasses his needs.
Instead, they come to an agreement that Rebecca should receive a larger sum from the house sale – £255,000. With her full mortgage capacity, she can purchase a 3-bedroom property that fulfills her future needs.
Simon receives £145,000 from the proceeds of the house sale. Even without maximizing his mortgage capacity, he can satisfactorily meet his future living needs.
Both parties decide to retain their respective pensions.
In this relatively straightforward example, the overall split between Rebecca and Simon is 70% and 30% respectively. This division has been carefully determined to ensure both parties can meet their reasonable needs going forward, fostering a fair and amicable separation between them.
Divorce 70 30 Conclusion
Instead of fixating on the percentage split as a standalone measure, it is advisable to initiate a conversation and consider each other’s future requirements. This involves exploring the available assets, including mortgage capacity, and finding a solution that addresses both parties’ needs. By adopting this approach, it becomes evident that an equal division of assets may not be necessary due to specific circumstances. For instance, in the illustration above, mortgage capacity played a significant role in accommodating both Rebecca and Simon’s needs.
Every couple’s situation calls for a reasonable need-based percentage split. It’s important to understand the reasons behind the split rather than simply agreeing on a percentage. Many couples opt for a 50/50 split if it meets their reasonable needs. However, in the case of a long marriage, diverging from such a split requires clear reasons or the court may decline the consent order. It’s essential to debunk the myth of a standard 70/30 or 60/40 asset split on divorce. The split entirely depends on what both parties can agree upon while ensuring their needs are met.
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