What happens to assets bought during the divorce process? What is the difference between matrimonial assets and non-matrimonial assets?
Starting point for dividing assets on divorce
When looking to divide assets on divorce, the general starting point is that all matrimonial assets are shared, and any non-matrimonial assets are kept separate. Matrimonial assets are assets that are either jointly owned or are acquired by one spouse during the marriage. Non-matrimonial assets are those that one spouse owned before the marriage and kept separate during the marriage as well as any inheritance either received before the marriage or during the marriage. However, as soon as non-matrimonial assets become mingled with matrimonial assets, then they are no longer non-matrimonial and may be shareable. For example, if inheritance is used to contribute towards the deposit of the family home then it becomes mingled and shareable. The spouse who inherited cannot ring-fence that part of the deposit.
What happens to assets that are acquired post separation but before the parties are legally divorced? Will these be part of the pot that is to be shared or will they be kept separate?
The courts will evaluate whether the parties’ needs are met by their share of the matrimonial assets and if they are not, then non-matrimonial assets may be taken into account and used to help a party meet their needs. The longer the marriage, the more matrimonial assets there are likely to be. To determine the share each party is given, the courts will examine the standard of living enjoyed by the parties during the marriage when considering what each parties’ needs will be in the future and how much they will need to provide for it.
Assets accrued post separation
Examples of common post separation assets include any gifts, inheritance, or purchases. These will be considered non-matrimonial assets, but this will not prevent the courts from sharing them between the parties if required. The forefront of the court’s decision of whether to include non-matrimonial assets will be the needs of the parties and any children. If the matrimonial pot is insufficient to provide for these needs, then non-matrimonial assets will be taken into account.
In addition, there may be other contributing factors to the court deciding to share the assets. For example, in M v M [2004] EWHC 688 (Fam), the post-separation assets amounted to £5.434 million as a result of the husband’s hard work. However, as the husband failed to make adequate interim provision and the parties had been financially linked throughout, the judge awarded the wife 50% of the assets.
This means that any assets accrued post separation but before the divorce is final, may be at risk of sharing.
How to protect your assets post separation
To minimise the risk of non-matrimonial assets being shared, parties should keep them separate from their marriage as this may enable you to be able to ring-fence the assets on divorce.
If you would like any further advice on the above, please do not hesitate to contact our Family Finance team on 0345 450 5558 or enquiries@stephens-scown.co.uk.