Matrimonial vs Non-Matrimonial Assets

Matrimonial vs Non-Matrimonial Assets in Divorce

During a divorce, people often make the mistake of assuming that everything they own will be divided equally between the parties, or conversely assuming their pre-marital assets will automatically be ring-fenced.

This is not the case.

Within a marriage, there are two broad categories of assets: matrimonial assets and non-matrimonial assets. The differentiation is essential as it helps to determine which assets are subject to sharing equally, and which are only divided in order to meet needs.

What are matrimonial assets?

Matrimonial assets are those that have been treated as joint and/or those that have acquired during the course of the relationship, regardless of whose name is on the title. They might include the family home, other properties the couple owns, bank accounts, shares and investments, vehicles purchased together, furniture, possessions and businesses established during the marriage.

The type of asset is not important. What makes it a matrimonial asset is the fact that it was acquired by either party during the marriage or during the time you spent living together before marriage or the fact it was used by you both and treated as a joint asset.

How are matrimonial assets treated in divorce?

When negotiating a financial settlement in a divorce, the aim is to divide the matrimonial assets in a way that is considered fair and meets both parties’ reasonable needs.

The starting point may be a 50/50 split. However, the percentage can and will be adjusted to achieve a fair outcome to ensure both parties needs are met from the division. Sometimes a fair outcome will be an equal outcome and sometimes an unequal outcome will be a fair outcome. This will depend on several factors, including:

• Each party’s income and future earning capacity
• Each party’s contributions towards the marriage (financial and non-financial)
• Each party’s current and future needs
• Any special circumstances, such as a disability.

For matrimonial assets, it does not matter who originally bought the asset or who contributed to it. In the eyes of the law, both parties have a strong claim to a share of these assets.

An example of this is a property owned prior to the marriage which later becomes the family home. The owner of the property will likely have paid a significant of money towards this property (deposit and subsequent mortgage payments and possibly even renovations) but it will have been treated as a matrimonial asset in that it was used as the family home. This property will be included in the pot of assets to be divided. It may be that the pot is split equally in order to provide for both parties equally, or it may be divided unequally to account for the significant contributions if the other party is able to meet their needs from the remainder.

What are non-matrimonial assets?

Assets may be considered non-matrimonial if they were acquired by either spouse before they got married or they were brought into the marriage from an external source. Examples include:

• Properties purchased before the marriage (provided they were not used as the family home)
• Inheritances received either before or during the marriage (and provided they have been kept separate)
• Family gifts specifically intended for one spouse
• Separate business interests

How are non-matrimonial assets treated in divorce?

Parties have a weaker claim to non-matrimonial assets in a divorce. These assets are normally kept separate from the pot of matrimonial assets, which means you do not have to share them with your former spouse.

There are two exceptions to this rule:

1. The assets are needed to meet each party’s needs

Non-matrimonial assets can be shared between the spouses only if the matrimonial assets are not sufficient to meet each party’s reasonable needs.

Courts have various ways of achieving a fair distribution and tailor their decisions to the specifics of each scenario. They have wide discretion to distribute assets in a way that is fair, and that includes adding non-matrimonial assets to the matrimonial pot if it is deemed necessary.

An example of this is an investment property that was purchased prior to the marriage, and not used as the family home. If the other assets are sufficient to meet needs (i.e there is sufficient net equity to rehouse each party and meet any other capital needs) then the investment property should not need to be included in the pot as the matrimonial assets are sufficient.

2. Assets become co-mingled

Sometimes, it is difficult to determine exactly which assets are matrimonial and non-matrimonial. If the assets become blended together, then it may be impossible to unravel them for the purpose of a financial settlement. An example of this would be using an inheritance to pay for a property that is then used as the family home.

If non-matrimonial assets have been mixed with matrimonial assets or jointly used during the marriage, they may become subject to division.

Because of these grey areas, it’s important that you work with a family law solicitor to understand how your non-matrimonial assets might be impacted during a divorce. We can advise you on how your non-matrimonial assets may be viewed by the court and help you negotiate a fair settlement that meets your needs.

Ring-fencing non-matrimonial assets

When a couple is in the middle of their divorce, it may be too late to protect assets. Ring-fencing non-matrimonial assets is possible but it needs to be planned in advance.

Having a pre-nuptial or post-nuptial agreement is a proactive way to clarify asset ownership. For example, you can specify that the value of any business holding is not a part of the matrimonial assets and remains with the owner in case of divorce.

While not legally binding, the Court will give appropriate weight to a nuptial agreement when certain conditions are met, including that both parties seek independent legal advice and the agreement is fair.

Alternatively, creating a trust over non-matrimonial assets can keep them ring-fenced and away from the pot of assets to be shared. In a legal trust, a third party has control over the assets in the trust on behalf of their owner, so a spouse can not easily access them in the event of a divorce.

Another way to  ring-fence non-matrimonial assets is by keeping them entirely separate from any matrimonial assets and avoiding doing anything that might mix up the funds. For example, if you inherit a sum of money during the marriage, you might keep the money in a separate bank account titled solely in your name.

This can be difficult to maintain in practice, so consulting with a family solicitor before making any decisions regarding your non-matrimonial assets is strongly advised.

• Also see: Uncovering hidden assets in your divorce

Expert advice on marital assets

We understand that divorce can be a difficult time for those involved and the process of separating your financial lives may not always go as you expect. Seeking legal advice from an experienced divorce lawyer can help you understand your rights, protect your assets and achieve a fair settlement.

Osbornes Law is acknowledged for having one of the leading teams of divorce solicitors, boasting 50 years of experience and being one of the largest teams in the field.

To speak with our team, please:

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