When a couple divorce one of the most difficult elements can be the division of assets. Much depends on the types of assets involved and the question of what constitutes a non-matrimonial asset can be an expensive source of contention between divorcing couples.
Matrimonial assets are those that are jointly owned or acquired during the marriage which are capable of distribution between spouses on divorce. They typically include the matrimonial or family home, irrespective of how and when it was acquired. Non-matrimonial assets on the other hand are those that have been acquired by either spouse before the marriage or after separation, and any inherited property.
Types of matrimonial assets:
- The family home
- Pensions
- Savings and investments
Types of non-matrimonial assets:
- Personal gifts
- Inheritances received by either spouse before, during or after the marriage
- Assets acquired by either spouse prior to or after the relationship and marriage, including property which has not been treated as the matrimonial home
Certain assets can fall within a grey area and in those cases, the Court has broad discretion. It is important to establish at the outset whether there are any assertions that an asset is non-matrimonial as a decision will need to be made at an early stage on whether it will be proportionate, both in terms of the costs and time involved in investigating the issue. When looking at whether an asset is matrimonial it is necessary to ask:
- When was the property acquired?
- How it has been used?
- Has it been kept separate from the matrimonial assets?
- What were the parties’ intentions?
When assets are mixed with marital assets this is called ‘mingling’ and a spouse can assert that this has the effect of converting non-matrimonial assets into matrimonial assets capable of distribution. This could occur when one spouse uses their savings to help purchase the jointly owned family home. Similarly, if one spouse receives an inheritance during the marriage by way of a sum of money and spends it on something that benefits the family as a whole, such as a car, then it is more likely to be classed as matrimonial.
Are they treated differently?
The case of White v White distinguished between matrimonial and non-matrimonial assets – “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”.
As a starting point, the matrimonial assets are divided equally and non-matrimonial assets are typically set aside and only shared if it is necessary to meet the other party’s reasonable needs. Despite there being a distinction between the two types of assets, it does not strictly follow that non-matrimonial assets are automatically protected from the division of assets on divorce as they are capable of division also. Much depends on the parties’ needs and if they take priority; such needs will include capital needs such as a property to live in and income needs to meet essential expenditures.
How can you protect non-matrimonial assets?
The preferred position is not to mingle non-matrimonial assets because of the risk that in doing so a claim against those assets could arise on divorce.
If you and your partner agree on how the matrimonial and non-matrimonial assets are to be treated in the event of the relationship ending, you can record the agreement within a pre-nuptial agreement. Where an agreement is reached after you have got married, the agreed terms can be incorporated within a post-nuptial agreement. These documents are not legally binding but can be persuasive evidence showing the intentions of both parties in the event of the marriage breaking down.
In summary, the Court’s approach to non-matrimonial assets is fact specific and much depends on the overall matrimonial assets available for distribution. If the needs of the parties are the overriding factor then the Court has discretion to draw upon non-matrimonial assets in seeking to achieve a fair outcome for both parties to enable them to move on with their lives.
