Since a case known as White v. White in 2000, “the rule of thumb” is that all marital assets are divided equally for fairness reasons (almost invariably the needs of one party over the other) – unless it is necessary to depart from this “principle of equality.”
All non-matrimonial assets are not divided in a divorce – unless required to meet the needs of one of the parties.
In other words, only the property that both parties have contributed to, directly or indirectly, is available for division.
It is, therefore, vital to identify the “non-matrimonial assets” in divorce proceedings.
Non-matrimonial property is property acquired through inheritance, gifts, and property the parties bring into the marriage with them or acquired after separation.
Confusingly, there is no question of non-matrimonial property being quarantined, ring-fenced or excluded from the Court’s discretionary consideration. The approach adopted by the Courts is not always clear.
However, the following arguments must be considered when seeking to preserve assets during a divorce.
Inherited Property
Although this is arguably non-matrimonial property, in a case called P v. P (2004), the Court observed that fairness requires a different approach in different circumstances.
For instance, a small monetary gift received during the marriage may be treated differently to a land that has been within the family of one of the parties for many generations.
Pre-Acquired Assets
In the case of K v. L (2011), the wife had shares in a family company valued at about £57 million.
The Court only made an award to the husband based on his needs, albeit an award of £5 million.
Or, you may remember the case of McCartney v. Mills-McCartney in 2008.
Paul McCartney had brought £400 million into the marriage. His wife sought a lump sum in excess of £125 million but was only awarded total assets worth £24.3 million. The Judge said that where the wife and the children were comfortably housed and looked after:
Fairness requires that the wife’s needs (generously interpreted) are the dominant factor in the…exercise. Any other radically different way of looking at this case would, in my judgment, be manifestly unfair.
This principle was continued in S v. S (2014), where the total assets of the marriage were £25 million. The husband said he had brought £13 million to the marriage.
After the argument, the Judge found the pre-acquired asset was £13 million, deducted that from the £25 million, and halves the rest, giving the parties £6 million each from the marital wealth.
Any additional amount required to meet the wife’s needs would come from the non-matrimonial property (she had a potential “needs” claim for part of the husband’s £13 million).
Post-Separation Accrual
The Court usually approach post-separation accrual of value by identifying two types of accrual:
- Continuum cases – Assets or interests in place at the point of separation increase in value
- New venture cases
Continuum accrual may be shared, but the spouse who has it will likely keep the lion's share.
New venture accrual is typically the non-matrimonial property.
It is a difficult area of law. The parties may not agree on the facts and the Court may have to decide.
Once the facts are agreed or decided, the Court’s discretionary approach requires careful analysis and application in each case.
Nevertheless, despite the difficulties, identifying non-marital property from the start of your instructions and establishing your position for the Court in your financial statement and any witness statement is essential.
Types of Matrimonial Assets
Many things can be marital assets. They typically include:
- The family home - even if only one partner is listed on the deed
- Stocks and investments
- Savings accounts
- Pensions
- Businesses
- Household items like furniture
- Cars
- Property
Types of Non-Matrimonial Assets
The critical distinction between matrimonial and non-matrimonial assets is whether they are part of the family’s wealth. They must remain distinctly separate; if you had a valuable investment bond before the marriage and kept it away from the family finances, it is a non-matrimonial asset. However, if you sell the bond to pay for a new family home, it is a matrimonial asset.
- Assets that one partner owned before the marriage
- Assets inherited by one partner during the marriage
- Assets gifted to one partner
- Property acquired and solely owned by one partner that is not the family home
What Happens to Non-Matrimonial Assets?
In England and Wales, matrimonial assets are generally split 50:50 between the separating parties. The divorce court may divide them unequally if they believe that one partner is in more need than the other or if one partner can demonstrate a significant contribution to the family’s wealth.
During divorce proceedings, you fill out Form E and declare all your property, even the assets you believe are non-matrimonial. Then a Family Court Judge ‘ring-fences’ the non-matrimonial assets to exclude them from the settlement.
As the Judge’s primary goal is to provide for the partner in most need, they may include non-matrimonial assets if a 50:50 split of the marital assets are insufficient.
How Can I Protect My Non-Matrimonial Assets?
The best way to protect your non-matrimonial assets is a pre-nuptial agreement that defines the separation of matrimonial and non-matrimonial assets. This agreement is commonly signed before the wedding ceremony, although you can create one after, called a post-nuptial agreement.
As long as this agreement is freely entered into by both parties, a court will respect it. The agreement may be void if one partner was unfairly pressured into signing.
You can also place your non-matrimonial assets into a trust fund to protect them. A third-party trustee controls the assets for a defined time period on the owner’s behalf.
Contact Our Divorce Solicitors Today
If you are going through a separation and want to protect your assets, our Divorce Solicitors can provide critical legal support and advice. Contact us to book a free consultation.
