When advising clients on divorce proceedings we often hear “That won’t be counted in the divorce because it’s in my name, right?” or conversely “Everything will be split 50/50 won’t it?”. Unfortunately, it’s not as simple as either stance. Understanding the distinction between matrimonial and non-matrimonial assets is important as this can determine which assets are divided in a divorce.
What are Matrimonial Assets?
Matrimonial assets are accumulated during a couple’s relationship, which stretches from pre-marriage cohabitation until they separate. Matrimonial assets include property, investments, savings, family businesses, and possessions (cars, furniture, electronics etc). It doesn’t matter who paid for that asset during that period or whose name it is in, it will be considered part of the matrimonial ‘pot’.
Many people do not realise that pensions are also considered a matrimonial asset as usually they are funded by income earned during the marriage. In the event of a divorce, the Court will try to achieve an equality of income and assets for a couple. The pension pot of each party will be assessed, and if there is a disparity between the two, a Pension Sharing Order will be considered whereby a sum of one spouses’ pension will be transferred to the other.Often during the period of a marriage, funds will become mingled e.g. one person may sell a property they purchased prior to the relationship and use the proceeds towards the family home, and therefore this money will become a matrimonial asset.
For marriages longer marriages, e.g. over 10 years old, it is more difficult to persuade the Court that an asset isn’t matrimonial. It is important to note that any time spent living together as a couple prior to the marriage will be counted towards the total length of the marriage, provided that there has been a seamless transition from cohabitation to marriage, and therefore, the starting point to calculate the length of marriage is the date the couple started to live together.
What are Non-matrimonial Assets?
Non-matrimonial assets are usually acquired prior to the marriage/cohabitation/engagement period or after a couple separate, and no mingling has taken place. This could include inheritance, gifts, and property purchased under a sole name. The key here is that the assets must remain distinct and separate from matrimonial wealth.
Whilst matrimonial assets are subject to the sharing principle between the parties, non-matrimonial assets are sometimes “ring-fenced”. For example, the Court may decide that the parties should retain their non-matrimonial assets because there are sufficient matrimonial assets for both of their future financial needs to be met. On the other hand, the Court may decide to use the non-matrimonial assets of one spouse to meet the needs of the other, depending on the needs of each party and if these assets are needed to top up the provision.
The Court is more likely to consider arguments about non-matrimonial assets in a short childless marriage, than in a longer-term relationship or one where children’s needs are paramount.
How are Matrimonial Assets and Non-Matrimonial Divided in Divorce?
When a couple separate, they must come to an agreement about how their finances are divided. If they cannot reach an amicable agreement, the Court will look at factors such as each spouse’s income, their future earning capacity and reasonable needs, the duration of the marriage and age of each party when considering a financial settlement, rather than who originally bought or paid for an asset.
There is no specific formula that the Court will use when considering non-matrimonial assets as part of a financial settlement, and it will make a decision based on the facts of the case.
Pre-nuptial Agreements
Pre-nuptial agreements are largely used to protect pre-marital property and assets, especially if there is a disparity between how much each party brings to the relationship or attitudes towards spending.
Whilst pre-nuptial agreements are not legally binding documents in England and Wales, they are designed to persuade a Court to use its discretion as to what Order to make when dividing assets as part of a divorce. If freely entered into, case law supports the view that the Court will abide by the terms of a pre-nuptial agreement, unless it considers that the terms are unfair.
Drafting a pre-nup is often a helpful way to obtain clarity on what either party considers to be a matrimonial asset at the outset of the relationship, and the opportunity to have open discussions and reach a consensus as to what would happen if they separated in the future.
How we can help
The division of assets on divorce can be complex. The general principle is that matrimonial assets will be shared, whereas non-matrimonial assets will not be, but the Courts have wide discretion to do what they consider is fair. Each case will turn on its own facts and if one party’s needs cannot be met from their share of matrimonial assets alone, the Court can order that non-matrimonial assets are used.
We have extensive experience in dealing with the financial consequences of divorce, can help you with the protection and distribution assets, to achieve a speedy and cost-effective resolution of financial issues. We aim to achieve the best possible result for our clients and settle finance issues without the need to go to Court but where this is not possible, we have a successful track record in taking tough action in Court proceedings.
If you would like any advice on divorce and financial settlements, or any area of Family Law, then please contact THP Solicitors on 0118 975 6622. We offer a fixed fee appointment for £100.00+VAT where one of our Family & Divorce solicitors would be happy to discuss the above, or any other legal matters.