Dividing assets in a divorce is often one of the most contentious parts of ending a marriage. To get you prepared for the process, it is important to get familiar with the different types of assets and how they are usually split.
The first step is to understand the terminology related to assets, such as distinguishing between matrimonial and non-matrimonial assets when getting a divorce as this could make a difference to your Financial Settlement after your divorce.
What’s the difference between matrimonial and non-matrimonial assets?
In a divorce, there are two types of assets that you may need to divide - matrimonial and non-matrimonial assets. The distinction between ‘matrimonial and non-matrimonial’ assets has its origin in the speech of Lord Nicholls in the case of White:
“… property owned by one spouse before the marriage, and inherited property whenever acquired, stand on a different footing from what may be loosely called matrimonial property. According to this view, on a breakdown of the marriage these two classes of property should not necessarily be treated in the same way. Property acquired before marriage and inherited property acquired during marriage come from a source wholly external to the marriage. In fairness, where this property still exists, the spouse to whom it was given should be allowed to keep it. Conversely, the other spouse has a weaker claim to such property than he or she may have regarding matrimonial property.”
Here’s what they are and how the two differ from one another:
Matrimonial Assets
Matrimonial assets are financial assets that you and/or your spouse have acquired during your marriage. This typically includes things such as the family home, savings and pensions.
However, there can be some other high-value matrimonial assets, for example, co-owned business ventures entered after the marriage, property investments and fine art.
Non-Matrimonial Assets
Non-matrimonial assets are financial assets acquired by you and/or your spouse before your marriage or after your divorce. This typically includes things like inheritance, property that was purchased before your marriage and family businesses.
Division of Assets in A Divorce
Matrimonial and non-matrimonial assets are both considered when agreeing on a Financial Settlement between you and your partner. The Financial Settlement is an official agreement that ensures both parties receive a fair share of the family’s finance after the divorce.
How are matrimonial assets divided?
Matrimonial assets will always be shared out between you and your spouse during the divorce, even if it’s money that you have inherited or earned as part of your job. A 50/50 split of such assets is always a starting point when discussing your Financial Settlement.
However, the parties’ income, financial needs, living conditions, the welfare of any children they have, liabilities and conduct of each party are all factors that are considered when the court decides on how assets are to be distributed.
How are non-matrimonial assets divided?
Non-matrimonial assets may be excluded from the Financial Settlement. To do so, one of the parties must apply to the court but the request isn’t always granted.
The extent to which non-matrimonial assets can be used in a Financial Settlement is a difficult and often complex issue that requires careful consideration from the courts.
For example, if the matrimonial assets you own are not sufficient to guarantee the financial security of your ex, the court may decide to include non-matrimonial assets in the Financial Settlement to make the arrangement fairer.
How are pensions divided?
If you paid a pension while you were married, your pension pot will be considered a matrimonial asset and will be subject to division in the case of a divorce.
The court usually views pensions as a type of retirement savings, so your ex-spouse may be entitled to a portion of your pension through a ‘pension sharing order’ from the court.
The Pension Sharing Order defines how much each party will get from the other’s pension (if any) by setting out a percentage of the transfer value. The percentage is decided after carefully considering the financial situation of each spouse to determine what would be a fair distribution.
What happens to the family home?
Generally, people expect the family home to be shared 50/50 between the two partners; however, that’s not always the case. Sometimes, when non-matrimonial assets have been used to secure the deposit for the property or non-matrimonial inheritance has been used to make mortgage payments, the split could be different.
The court has to take into account all circumstances, including the financial future of your children, to make sure that the jointly owned property is fairly divided between you and your ex-partner.
How are high-value matrimonial assets divided?
In some cases, when high-value assets, such as businesses, investments and incentive schemes are involved, people attempt to intentionally omit these from the financial settlement to avoid sharing them with their ex-spouse. However, this is actually illegal, as it’s considered “concealing assets”.
If you are found to have attempted to conceal assets, you may be liable for costs and you are likely to have a less favourable outcome of the financial arrangements in your divorce. This is why when it comes to dividing business assets in a divorce, it’s usually best to seek advice from an experienced solicitor.
Will I need to pay my spouse maintenance?
The court will always look to balance the financial resources of the divorcing couple, so if you have a higher income than your ex-spouse you will likely be required to pay them an amount considered to be fair. This could be done in one lump payment or in periodic/monthly payments (maintenance), depending on what the court deems most appropriate.
Each case will be assessed separately to decide what the best solution is and whether spousal maintenance should be paid, as well as the amount required.
Protecting Your Assets During a Divorce
If you believe that some of your assets should be considered non-matrimonial and should not be included in the division of finances, you can make a request to the court to have them excluded from the settlement.
Assets that could be considered non-matrimonial could include:
- Inheritance received after the separation
- Property you owned before the marriage
- Valuable pension you had before the marriage
- Business set up before the marriage
To have the best chance of success in having your request granted, you must be open and honest about your assets from the very beginning of the divorce proceedings. Also, if your matrimonial assets are sufficient to cover your ex-spouse financially, this would play a positive role, as well.
How we can help
At Witan Solicitors, we are experienced in dealing with all aspects of family and financial issues during a divorce. We can talk you through the intricacies involved in the division of both matrimonial and non-matrimonial assets and will protect your interest as you seek a fair settlement.
If you would like to discuss any aspect of financial proceedings with an expert family lawyer, email us at info@witansolicitors.co.uk or fill in our contact form. We have offices in London, Birmingham and Northampton.
