Financial settlements in divorce can become complicated if one or both spouses are asset rich but income poor. This situation is becoming increasingly common, especially among individuals who have built wealth through property, family businesses, pensions, farms, or investments, but who do not receive a high regular income. While such assets may look substantial on paper, they can present practical difficulties when it comes to dividing matrimonial resources fairly.

What does asset rich but income poor mean?

A spouse may be described as asset rich but income poor where they hold significant capital assets but have limited cash flow or regular income. Common examples include:

  • Property owners whose wealth is tied up in residential or commercial property but who earn modest salaries
  • Business owners who reinvest profits into a company and take minimal drawings from it
  • Farmers or landowners with valuable land but low annual income
  • Individuals with substantial pension entitlements but little current income
  • Those holding valuable shares, investments, or trusts that cannot easily be accessed

This imbalance between capital wealth and income can cause tension in divorce, particularly where one spouse requires immediate funds to rehouse themselves or to meet their living expenses, while the other argues that they simply do not have the cash available.

Types of assets and how they are treated by the court

Property

Property is often the most significant asset in divorce proceedings and may include the family home, rental properties, holiday homes, or inherited property. In cases where there is little income but substantial property equity, the court may consider:

  • Selling the property and dividing the proceeds
  • Transferring the property to one spouse with an offsetting payment or adjustment elsewhere
  • Delaying a sale, for example, until children reach adulthood or complete full-time education

The court will be mindful of each party’s housing needs, especially where children are involved. Even if a property is technically owned by one spouse, it may still be treated as a matrimonial asset if it was used as the family home.

Businesses and company interests

A spouse may own shares in a company or run a business that appears valuable but produces little disposable income. The court will usually avoid forcing the sale of a viable business if doing so would destroy its value or undermine future earning capacity.

Instead, it may:

  • Determine a capital value to the business and offset it against other matrimonial assets
  • Allow the business-owning spouse to retain the business while compensating the other spouse in a different way
  • Consider structured or deferred payments

In some cases, however, if the business is the main source of wealth and there are no alternative assets, a sale or partial sale may be unavoidable.

Pensions

A pension may be extremely valuable but inaccessible until retirement age. The courts treat pensions as matrimonial assets and can deal with them through:

  • Pension sharing orders
  • Pension attachment (less common)
  • Offsetting against other assets

Disputes often arise over valuation, particularly with defined benefit pensions, which require a proper actuarial assessment.

Investments and shares

Investments such as shares, bonds, or investment portfolios may fluctuate in value and often have tax consequences if sold. The court will consider their net value, liquidity, and any tax implications. Sometimes, assets may be transferred rather than sold to avoid unnecessary losses.

Inherited or pre-marital assets

Assets acquired before the marriage or by inheritance are not automatically excluded from the matrimonial settlement. While they may be treated differently from matrimonial assets, they can still be taken into account, especially where needs cannot be met otherwise.

When assets may need to be sold

Where there is insufficient income or liquid capital to meet a fair settlement, the sale of assets may be necessary. This often causes anxiety, particularly if the asset has personal or emotional significance. The court does not take the decision to force a sale lightly, but fairness and need will generally outweigh a desire to retain assets intact.

One of the most difficult aspects of asset division arises where assets have sentimental value. This might include:

  • Family heirlooms
  • Land held for generations
  • A family home filled with memories
  • A business founded by a spouse or their family

While the court will acknowledge emotional attachment, sentimental value rarely carries legal weight unless it can be translated into financial terms. That said, judges often encourage negotiated settlements that allow parties to retain items of personal importance where possible, even if strict equality is not achieved.

Who decides what happens to the assets?

Ideally, decisions about asset division are made by the parties themselves through negotiation, mediation, or collaborative law. These routes allow for flexibility and creativity, which are particularly important where assets are complex or illiquid.

If agreement cannot be reached, the court will decide. A judge has wide discretion and will make orders they consider fair in all the circumstances.

An accurate valuation is essential where assets are being divided. It should be noted that one size fits all is not possible here because different assets have different valuation methods:

  • Property is usually valued by independent chartered surveyors
  • Businesses may require forensic accountants or specialist valuers
  • Pensions often require actuarial reports
  • Art, jewellery, or collectibles may need expert appraisal

If the parties agree on a joint expert, the valuation is usually accepted; however, if there is disagreement, each party may instruct their own expert. That said, the court prefers single joint experts to reduce cost and conflict.

Ultimately, if valuations differ, the judge will decide which evidence to accept.

Disputes over value and liquidity

Disputes often arise where one spouse argues an asset is overvalued or cannot realistically be converted into cash. For example, a business owner may argue that selling shares would damage the company, or a landowner may say that land cannot be sold quickly or without incurring significant tax consequences.

The court will scrutinise such claims carefully, and while genuine liquidity problems are taken into account, they will not be allowed to defeat a fair outcome.

Ultimately, while being asset rich but income poor may complicate matters, it does not prevent the court from achieving a fair and workable financial settlement.