The Law on Matrimonial vs Non-Matrimonial Assets in Divorce
Divorcing couples often get confused when it comes to matrimonial assets and how they're divided. Did you know for example, that non-matrimonial assets can be viewed differently to let's say savings or the family home?
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How Are Matrimonial vs Non-matrimonial Assets Viewed In Divorce?
During divorce proceedings, the distinction between matrimonial and non-matrimonial assets is critical.
Negotiating a divorce settlement that is fair and reasonable requires that both parties understand the difference in asset type and how they are viewed by the court.
Matrimonial assets are those acquired during the marriage and shared by both partners, typically including the family home, savings, and pensions.
In contrast, non-matrimonial assets refer to property obtained before the marriage, after separation, or as a gift or inheritance to one spouse exclusively. The differentiation is essential as it helps to determine how assets are split in a divorce.
The evaluation of assets in the context of a divorce is a complex process. Courts assess several factors, such as the duration of the marriage, each partner’s financial contribution, their future needs, and the welfare of any children involved.
It requires a fair and equitable division of matrimonial assets, ensuring that each party’s contributions to the marriage and respective needs are recognised.
Non-matrimonial assets, however, may not be subject to equal division and are often treated separately unless they have become intermingled with matrimonial finances.
It’s often worth getting initial advice on your financial agreement from financial settlement solicitors before turning your agreement into a legally binding order.
- Asset division in divorce distinguishes between assets acquired during and outside the marriage.
- Courts consider various factors to achieve fair division while prioritising children’s welfare.
- Non-matrimonial assets may not be divided equally unless intertwined with matrimonial finances.
Evaluation of Assets in Divorce Proceedings
When divorcing parties divide their assets, they undergo a comprehensive evaluation process to determine what constitutes matrimonial and non-matrimonial assets. The distinction is crucial for fair apportionment.
During divorce proceedings, the court examines both parties’ financial contributions to the marriage. This includes income, assets brought into the marriage, inheritances, gifts, and any increase in the value of non-matrimonial assets. The objective is to establish a clear overview of:
- Assets acquired during the marriage
- Assets owned before marriage or acquired independently
Matrimonial assets are typically subject to division, as they are deemed as jointly accrued through the marital partnership. Non-matrimonial assets may not be divided if one party can demonstrate that these assets were acquired independently and not intermingled with matrimonial finances.
What does a Judge look at when reviewing your divorce settlement?
The courts consider future needs to ensure a fair financial settlement.
This includes the potential earning capacity, health, and overall welfare of both parties post-divorce. The central aim is to reach an equitable division, reflecting each party’s contributions and future requirements.
This should include:
- Housing needs
- Income and pension provisions
- Childcare responsibilities
Each party’s future financial security is a pivotal factor in achieving a balanced and just resolution to splitting assets on divorce.
Division Strategies for Matrimonial Assets
In divorce proceedings, the equitable distribution of matrimonial assets is crucial. Strategies employed can significantly affect both parties’ financial futures.
Successful negotiation requires a clear understanding of each party’s financial position, which comes through open and frank financial disclosure.
Here are some negotiation tactics you can use to help with the negotiation process:
- Open Communication: Parties should aim to maintain transparency about their assets and expectations.
- Prioritisation: Individuals must determine which assets are pivotal to their post-divorce welfare.
- Compromise: Willingness to concede on certain assets can facilitate an amicable agreement.
- Professional Advice: Solicitors or mediators can offer invaluable guidance and represent interests effectively.
The way that couples come to a financial settlement will depend on many factors, but there are some considerations to make on the distribution of assets, for example, are assets going to be divided:
- Proportionally according to contributions,
- By needs basis considering each party and children involved.
Many couples do this themselves, in what is known as a kitchen table agreement, however, it’s always recommended that both parties receive independent legal advice from a family law solicitor to ensure the agreement you’ve reached is fair.
Definition of Matrimonial and Non-matrimonial Assets
Identifying assets during a divorce is a crucial step. However, the classification of these assets is essential in understanding what is considered shareable and what can remain the property of an individual.
The legal framework surrounding asset classification in divorce is based on whether assets are deemed matrimonial or non-matrimonial.
Matrimonial assets are typically those acquired during the marriage and used by the family or intended for joint use. The family home, even if acquired by one party before the marriage, can be considered a matrimonial asset if it becomes the family residence.
Savings, pensions, and investments made during marriage are usually included in this category.
In contrast, non-matrimonial assets are generally those acquired before the marriage or after separation. They might also include inheritances or gifts to one party, business assets owned before the marriage, or anything agreed upon as separate in a prenuptial agreement.
This distinction is pivotal when the courts determine equitable distribution.
Differences Between Matrimonial and Non-matrimonial Assets
The key differences between matrimonial and non-matrimonial assets hinge on the timing of acquisition and the intended use of the assets.
Matrimonial assets are acquired during the marriage and are intended for joint use or to benefit the family unit.
- The family home (matrimonial home).
- Savings accumulated during the marriage.
- Pension contributions during the marriage.
- Vehicles and properties purchased for family use.
Non-matrimonial assets are acquired before the marriage or after separation. They can be inherited by one party or received as a gift during the marriage.
- Personal gifts or inheritances.
- Businesses started by one party before the marriage.
- Assets defined as separate by a couple in a prenuptial agreement.
When making a divorce financial settlement, both parties must provide full financial disclosure of their assets to the court.
Courts consider factors such as the length of the marriage and the needs of each party to name a few when determining how to split assets fairly.
We have written in more depth about the factors a court considers when deciding on a financial order.
Case Law Illustrating Asset Division
In divorce proceedings, courts have set precedents on how matrimonial and non-matrimonial assets are divided. These decisions serve as a guideline for future cases.
White v White (2000) established the ‘yardstick of equality’ where assets are generally divided equally unless there’s a good reason not to. In Miller v Miller; McFarlane v McFarlane (2006), the Supreme Court articulated the principles of needs, compensation, and sharing as applied to both matrimonial and non-matrimonial assets.
The landmark judgement in Charman v Charman (2007) clarified the treatment of non-matrimonial assets, with the court setting a high threshold for departing from equal sharing.
Financial situations unique to each case can shift outcomes as in Jones v Jones (2011), where the husband’s pre-marriage wealth significantly influenced the division of assets. The case of Waggott v Waggott (2018) highlighted that earning capacity is not a matrimonial asset and therefore should not be equally divided.
Following these cases, the family courts prioritise a ‘fair’ distribution, tailoring decisions to the specifics of each scenario. Lawyers lean heavily on precedents when advising clients on likely settlements. For example, F v F (Financial Remedy Orders) (2012) underscores the dependency on judicial discretion in asset division.
These cases illustrate that the origin of the asset (matrimonial or otherwise) and contributions made by each spouse are pivotal considerations. They impact current legal strategies, where parties present evidence aiming to classify assets as non-matrimonial to justify an unequal split.
Can I protect Non-matrimonial assets & property?
In the event of a divorce, parties must understand how non-matrimonial property can be protected from potential claims.
This section looks at the mechanisms such as pre-nuptial and post-nuptial agreements, along with trust and inheritance considerations, which can be employed to safeguard these assets.
Pre-nuptial and Post-nuptial Agreements
Pre-nuptial agreements, made before marriage, and post-nuptial agreements, made during marriage, serve as essential tools in designating which assets shall be considered non-matrimonial. These legally binding documents can outline:
- Ownership: Specific listing of assets owned prior to the marriage, such as property, businesses, and future inheritance.
- Division: Agreed terms on how assets should be divided in the event of a divorce, which can include non-matrimonial assets.
Whilst strictly not legally binding, ensuring these nuptial agreements adhere to the legal requirements and are deemed fair by the courts can afford them significant weight in divorce proceedings.
Trusts in Divorce
Trusts in divorce can be an effective method for protecting inherited assets or property from matrimonial claims.
A trust can be set up to hold assets separately from the marital estate. The trust deed stipulates how and to whom the assets are to be distributed.
Inheritance, when received either before or during the marriage, can be safeguarded by keeping a clear record of the inheritance as separate from marital finances.
To keep inheritance as a non-matrimonial asset, you will need to avoid actions that may be seen as integrating the inheritance into the marital assets.
By remaining vigilant and using these strategies, individuals can work to ensure that their non-matrimonial property is protected in the unfortunate instance of a divorce.
Frequently Asked Questions
In divorce proceedings, the distinction between matrimonial and non-matrimonial assets is pivotal in determining how property is divided. A proper understanding of these terms can influence the outcome of a divorce settlement.
Are assets acquired before marriage subject to division upon divorce?
Assets that one party acquires before marriage are generally considered non-matrimonial. However, they may be subject to division if they have been commingled with matrimonial assets or used for the benefit of both parties during the marriage.
How do I know what I am entitled to in a divorce?
The law around divorce entitlement can be complex, it’s no wonder newly separated couples ask ‘What am I entitled to in a divorce‘. You will need to weigh up all of the factors a Judge will consider to ensure a fair and reasonable outcome is reached.
These factors can include the length of a marriage, the needs of both parties, future earnings potential, and so on.
To what extent are gifts given to one spouse considered joint property within UK law?
In the UK, gifts given to one spouse are not automatically considered joint property. They can remain the individual property of the recipient unless they have been integrated into the family’s finances or used for the common benefit of the couple.
Does inheritance constitute a matrimonial asset for division purposes in a divorce?
Inheritance is generally regarded as a non-matrimonial asset and thus not subject to division, unless it has been mingled with matrimonial assets or used for the family’s benefit, which may lead to its consideration within the matrimonial pot.
Which assets are typically excluded from settlements in divorce proceedings?
Typically, assets excluded from divorce settlements include those acquired before marriage, gifts, and inheritances that haven’t been intermixed with matrimonial finances, as well as assets acquired after separation.
How are properties purchased after separation handled in the context of divorce in the UK?
Properties purchased after separation are generally seen as non-matrimonial property. They would not be included in the marital pot for division unless the purchasing funds come from matrimonial assets or there was an intention to share them with the spouse.
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