“What’s in the pot?”

The Family court is often asked to consider what is or is not matrimonial property when it comes to dividing the assets of divorcing couples.

This is often where one party has brought a significant amount of wealth to the family that is unmatched by the other party, where one party has created a significant amount of wealth or where there are assets that have never been used for the purposes of the family.

Examples here include such things as family businesses or farms, inherited wealth or properties that have been kept wholly separate from the family home.

Where there is sufficient money in the pot to meet the needs of the couple and their children on separation then it is often argued that non-matrimonial assets should not be shared. The Supreme Court has recently considered these principles in a case which concerned the ownership of £80 million held by Clive and Anna Standish.

This sum was just part of their overall wealth. At an earlier Court Hearing, the Judge decided that this asset was matrimonial property and divided it as to 60% in Clive’s favour and 40% in Anna’s favour which meant that Anna received £45 million. The Court of Appeal subsequently decided that this was wrong and that at least 75% of the asset in question was not matrimonial. This reduced the amount that Anna received to £25 million. Anna appealed this decision.

The Supreme Court decided that the Court of Appeal was correct deciding that in this particular case there was nothing to show for Anna that, over time, she and Clive had treated the assets in question as something to be shared between them. The Supreme Court went on to say that it agreed with the Court of Appeal that 75% of the asset in question was non-matrimonial property and would not be subject to the sharing principle. In simple terms that took that significant part of that asset out of the matrimonial pot.

Although the facts of this case are specific and deal with the significant asset that was transferred between the parties to save tax, the Supreme Court took the opportunity to clarify the Law and to emphasise that the sharing principle does not apply to non-matrimonial property.

What this means in practice

There is comment as already said that this decision is a wealth protection measure. Others have said, rightly or wrongly, that it is recognition that one party or the other should not share in resources to which they have not contributed in any way.

This clarification means that if wealthy individuals wish to protect their own wealth from a claim by their spouse in the event of divorce then if that is recorded in some way – perhaps in a Prenuptial or Postnuptial Agreement or Declaration of Trust – then the Court is likely to say that that should be respected should a dispute arise in the future.

In terms of relationship planning, therefore, the best way to preserve family wealth or greater contributions is to record those. The Law may now in fact help those who do not record their intends in this way as in the case of Mr & Mrs Standish, unless there had been a clear agreement to share certain assets during the relationship. Then, unless the needs of the parties and their children required it, the Court may well regard them as non-matrimonial with the effect that they would not fall into the pot to be considered on divorce.

That being said the best way is still to record any agreements in writing to ensure that disputes cannot arise as to what may or may not have been agreed.

Next Steps...

For advice on any Family matters, please contact our experienced team on 0800 011 6666 or email legal@timms-law.com

For more information on matrimonial assets, visit our webpage here.