Divorcing? Do your assets include inherited or pre marital wealth? How will it be treated on divorce?

8 April 2012

Hot off the press is a Judgment given by the Family Division of the High Court on 11th March 2011 in the case of N and F on this interesting issue which arises surprisingly often in divorce cases. How should the Court treat money brought into the marriage by one of the spouses, whether received as an inheritance or having been built up by other means? If the marriage has been fairly lengthy should the Court ignore wealth brought into the marriage and simply divide all the assets equally between the divorcing couple? The answer is that the Court’s decision very much depends on the facts of the case. In this particular matter, at the time of the marriage the husband had assets worth over £2million. By the time of the divorce the couple’s assets had risen to £9.7million. The wife wanted an equal share of all the assets; the husband wanted some, but not all of the wealth he had brought to the marriage to be ring fenced for his sole benefit. The Court emphasised that in many cases where there are modest assets the parties needs will determine how the assets should be split. Usually this means attempting to ensure that both parties are appropriately rehoused, preferably mortgage free. Often there is no money left over after this exercise, from which to award to one of the spouses a sum reflecting the amount they originally brought into the marriage. But in a case such as this, where there ought to be enough to go around (despite the Judge commenting that this “is not a very big money case”!) how did the Court approach it? In the end the Judge decided that it would be fair to exclude £1million from the pot which the husband could retain, to compensate him for the wealth he had brought into the marriage. Can a general principle be drawn from this? Pre marital property is sometimes excluded because it is a financial contribution made by one spouse unmatched by an equal contribution by the other. But the longer a marriage goes on the harder it may be to exclude that property and the easier it is to say that the mingling of financial resources, coupled with the passage of time and the parties own joint enterprises and efforts undertaken during the marriage can only mean a fair result requires that the couple’s assets should be divided equally. Of course in the case of a short marriage, fairness may mean that the non contributing spouse should not be entitled to a share in the other’s property. Their “needs”, perhaps for housing, may not be the determining factor. The Judge in N and F was keen to emphasise that the Court should always undertake a final check to see if the resulting division looks fair particularly in terms of the percentage of the overall assets that the husband and wife would each receive. This may all seem very arbitrary. If you are in a similar situation and would like to be advised how the Court may deal with the division of your assets on divorce, please contact one of our dedicated Family Law Team, who will be pleased to advise you in a free initial consultation, by telephoning 01245 228106, or by completing the on line contact form. The above is not legal advice; it is intended to provide information of general interest about current legal issues.