If you and your spouse have been separated for a significant period of time before deciding to get divorced, it is likely that your assets may have changed since the date that you separated. For example, your house or business may have increased in value or you may have received a bonus from your employment.
Financial settlement negotiations
People will often ask how this might be taken into account in the context of any financial settlement negotiations.
In summary, the court always works with up to date values and so if an asset has increased significantly post separation this can cause real scope for dispute.
Matrimonial property
The court draws a distinction between matrimonial and non-matrimonial property. Matrimonial property will be the assets (capital and pensions) that were built up during the relationship and the starting point is that any such assets will be shared equally (provided both spouses’ needs are met on a 50/50 division).
Non-matrimonial property
By contrast, non-matrimonial property will include assets that were acquired outside of the relationship or assets that originated from external sources (such as inheritance or gifts which have been kept separate by the party to whom they were given). This concept of non-matrimonial property usually includes assets brought into a relationship by a spouse which have not been put into joint names. In rare cases it might include assets acquired after separation.
‘Ring-fenced’ assets
The starting point is that any assets of a non-matrimonial nature will not be shared with the other spouse and could therefore be ‘ring-fenced’. However, where the matrimonial property is insufficient to meet both parties’ needs, the non-matrimonial property might also need to be shared to the extent required to meet everyone’s needs. Therefore, the extent to which non-matrimonial property can be ring-fenced will often come down to the value of the matrimonial assets and whether these are sufficient to ensure both parties will have enough once the divorce is over and the finances have been separated.
‘Post separation accrual’
Where new assets are acquired or existing assets increase in value post separation this is generally termed ‘post-separation accrual’.
Depending on the circumstances, it might be possible for any ‘post-separation accrual’ to be classed as non-matrimonial property and therefore ‘ring-fenced’ from the assets shared with the other spouse.
However, the law in this area is complex and the court can be reluctant to ‘ring-fence’ post-separation accrual for a number of reasons. The court will generally share such wealth where the new asset acquired or the existing asset that has grown in value originated from matrimonial property unless there was an unreasonable delay in starting the divorce and financial settlement negotiations on the part of the person seeking to share the asset in question, and the period of separation is not that significant.
Seek specialist legal advice
Nonetheless, whatever your circumstances might be, it is always worth seeking specialist advice from a family solicitor at an early stage after separating to determine how the law might apply to the facts of your case.
If you require assistance regarding financial settlement negotiations or the value of your assets during divorce please contact our Family Law Team and we would be happy to help.