What happens to your assets on divorce?

There is understandably a huge amount of worry for those getting divorced as to what happens to their assets – will they be able to keep them? What will be given to their ex-spouse? How will they house themselves?

Thankfully, the family courts have provided us with some guidance on how assets are divided between parties in a divorce. It is important to note that this guidance applies to those who are married or in a civil partnership, but not to those living together who are unmarried.  

There are two main types of asset:

1. Matrimonial assets – this is property acquired during the marriage otherwise than by inheritance or gift. In simple terms, it is property acquired by the married couple’s common endeavour. Examples can include: the family home (even if not both of you are the legal owner), pensions, cars and furniture.
2. Non-matrimonial assets – this is any other property. Examples can include assets inherited by one spouse during the marriage and assets already owned by one spouse before the marriage.

So, what is the difference?

Matrimonial property, more often than not, is property which is equally divided between the parties. When looking at the division of matrimonial assets it is irrelevant who originally bought or earnt the assets, if it is deemed matrimonial it can be divided.

Non-matrimonial assets are often less likely to be included in the division and so may remain with their owner. However, it is important to note that just because an asset is deemed non-matrimonial, that does not mean a court won’t include it in the assets being divided.

How does the court divide finances?

No two divisions of finances are the same. The court looks at several things individually before deciding who should receive what. Although the starting point is an equal split, the needs of each party is of paramount importance. This is particularly true where there is a child or children. Each party should be able to satisfy their capital needs with the assets they will be retaining. If needs cannot be met from matrimonial property, then non-matrimonial property may have to be shared.  

Is there any way to protect my assets?

There definitely is a way to provide yourself with more protection before or during marriage. A prenuptial agreement (before the marriage or civil partnership is entered into) or postnuptial agreement (signed after the marriage or civil partnership ceremony) is the best way; these are legal agreements with your spouse which tend to set out how you and your partner wish your assets to be divided between you both if you separate or divorce.

Further, you can make certain items (e.g., inheritances from family) specifically non-matrimonial property in these agreements.

There is one important point to note in regard to nuptial agreements, they are not fully legally binding. Although the court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications, the terms can be deviated from to the extent that is required to meet needs. Any agreement should, however, be the starting point when looking at the division of assets.

What about maintenance?

In addition to the division of capital assets, the law also provides the option of child and spousal maintenance being claimed. The respective income positions of the parties will commonly interplay with the final capital division. For example, taking on a larger mortgage on a property may be necessary to meet a person’s housing need but this will in turn increase their monthly outgoings. Child maintenance is generally dealt with in line with the Child Maintenance Service guidelines, but separating parents can look to agree matters directly and have this endorsed in their financial order on divorce.

Summary

This brief guide to matrimonial and non-matrimonial assets should provide you with some guidance and/or comfort regardless of what stage you and your partner are at.

If you are worried about certain items of yours, then it may be safer to enter into a nuptial agreement which can help to guide the court, but remember, what is written in the agreement isn’t fully legally binding.

You can also rest assured knowing that the family courts will do everything in their power to ensure that both parties will have their needs satisfied after any division of assets, and that once needs are met the principle of sharing applies to the matrimonial assets.

For those considering divorce or separation it is important to seek early professional advice and support before committing to any long-term agreements that are reached.