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Non-Matrimonial Wealth – Can This Be Protected On Divorce?
Reading Time: 4 minutesThroughout divorce, possessions accumulated in the course of the marriage (otherwise known as matrimonial assets) are usually equally divided. However, in some cases, you may believe that these assets must be protected, particularly if you began the marriage with notable pre-acquired capital or received significant inheritance prior to, throughout the matrimony, or post-separation.
In England and Wales, the lawful segregation of matrimonial and non-matrimonial assets arose in the case of White v White [2000] UKHL 54 and is an important factor for divorce, as non-matrimonial assets are treated separately by the courts when settling the split of finances. Decisions regarding financial settlement and the Court’s view of non-marital capital tend to be fact-specific, but the Family Team at Myerson have provided guidance below to help you.
- Matrimonial Vs non-matrimonial assets
- Pre-acquired wealth
- Gifts
- Inheritance
- How to protect your non-matrimonial assets on divorce
- Concluding thoughts
Matrimonial Vs non-matrimonial assets
Marital assets are assets or possessions that you or your spouse acquired during your matrimony. Matrimonial assets can include, but aren’t exclusive of:
- The marital home and other real estate.
- Pensions and savings accounts.
- Cars, bikes, and other vehicles.
- Furniture and other household possessions.
- Stocks, bonds, and other economic investments.
To begin with, the sharing principle would be applied by the Court to matrimonial assets; however, the individuals’ needs, and financial capital will decide whether there is to be any deviation from the default standing.
On the other hand, non-matrimonial assets are any resources which were either:
- Acquired by one party prior to the marriage
- Received by one party as a gift
- Inherited by one party
Non-matrimonial assets, like the ones mentioned above, are unlikely to be split between the divorcing parties; however, this is not guaranteed. It cannot be confirmed that every non-matrimonial asset will be eliminated from the divorce settlement.
Each case will be evaluated by the law based on the facts and assessed based on fairness, therefore these assets may not be disbarred from the financial settlement if they are essential to meet the needs of either party.
Problems arise where these assets mix throughout the marriage, as it can be hard to establish which assets can be deemed non-matrimonial. Blending of distinct assets is often the case in longer marriages.
Our Family Lawyers cover the three common categories of non-matrimonial assets in greater detail below.
Pre-acquired wealth
The handling of pre-acquired wealth throughout divorce proceedings is based on the level of contribution and how the asset is treated by the parties in the marriage (White v White). The Court will assess the extent to which the marital parties kept the wealth distinct, particularly how independent the assets were to the matrimonial pot. The Court will examine what additional matrimonial assets there are and, if separated, would they meet the needs of both parties. Should the assets be deemed sufficient, the Court will still consider the pre-acquired wealth as a resource available to both.
Gifts
The law clearly states that gifts from spouses are considered matrimonial. Parties cannot reclaim any gifts that were given to their partner throughout the marriage unless the present was subject to a clear stipulation, such as, that it is to be returned should the marriage end.
Gifts received from external parties during the marriage are seen as a greyer area. Gifts from family or friends tend to be classed as individual gifts and remain the asset of the individual on divorce.
However, distinctions become blurred when the gifts are converted into additional assets during the marriage; for example, a gift of money which is then used to buy a shared car. The car would then be deemed a marital asset.
Inheritance
Compared to the law in other jurisdictions, inherited gifts cannot be ring-fenced from distribution. However, upon divorce parties may argue that inherited assets should be non-matrimonial, and the ‘yardstick of equality’ may be negligible here.
The Court will dispense inherited assets as they would any other financial resource where the parties’ and children’s requirements can’t be reached without access to it.
Under s25(2)(a) of the Matrimonial Causes Act (MCA) 1973, the Court may need to take into account ‘…other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future’.
Consequently, where a party expects to receive a future inheritance, the other may proclaim that the Court should regard this resource.
Yet, the courts have been reluctant to assign much weight to future assets that a party is due to inherit based upon reasons of uncertainty (HRH Tessy Princess of Luxembourg v HRH Louis Prince of Luxembourg and Anor [2018] EWFC 77, [2019] 1 FLR 1203).
How to protect your non-matrimonial assets on divorce
To protect your assets if you are divorcing, we recommend signing a pre-nuptial agreement or a post-nuptial agreement (if you already have a spouse). Despite these agreements not being legally binding in England and Wales, the Court will consider the signed martial documents when determining how to split your assets on divorce.
Both agreements provide procedures by which you can attempt to ring-fence any non-matrimonial resources. In accordance with the landmark case of Radmacher (formerly Granatino) v Granatino [2010] UKSC 42, the courts established that such marital agreements are to be given reasonable weight, if established conditions are met, such as that both parties seek independent professional legal advice.
Building a trust over non-matrimonial assets is another productive option to protect resources. In a legal trust, a third party is awarded with control over assets on behalf of the beneficiary for a limited time.
Concluding thoughts
Understanding the best methods for protecting your assets can be exhausting and complex. The basic principle states that marital assets will be divided, and non-matrimonial assets won’t, a theory of fairness guides the courts, and the judges are accredited with wide discretion.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.
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