Business Law: Amanda Crowe on the division of family assets in the event of divorce
- Credit: Archant
A key issue which can arise during any divorce case relates to the origin of the family assets and whether all of a family’s assets should be divided equally, regardless of how they were acquired.
If one party has acquired a large fortune in their sole name, is it fair and reasonable to require this party to share these assets with their ex-spouse on divorce?
The total asset pot to be considered on divorce can be made up from a multitude of sources. Assets may have been built up through the couple’s joint endeavours or one spouse may have inherited some funds before or after marriage. A spouse may also contribute assets as the result of a gift or windfall, either before or after marriage, or may have obtained large sums of capital and income through hard work after the parties have separated but not yet divorced.
In determining the division of assets on divorce, the court has a wide range of orders it can make. The court is required to look at a number of factors including the origin of the family assets. The court will try to identify Matrimonial Property (assets that have been acquired during the marriage) and Non-Matrimonial Property (assets that one party has brought with them into the marriage, acquired by inheritance or gift after the marriage or accrued after separation). Any assets identified as Non-Matrimonial property represent a contribution to the family asset pot by one spouse that is unmatched by the other. The court will also take into account the length of the marriage and if the marriage has been a short one (less than three years), the principle of fairness may determine whether the other spouse should have a share in the Non-Matrimonial Property.
However, the court is also bound to assess the needs of each party. Each party has basic requirements such as housing and having sufficient income to make ends meet and there may even be further requirements beyond those. If there is insufficient Matrimonial Property to meet a party’s basic requirements, the court may choose to ignore where the assets originated and simply allocate the combined Matrimonial and Non-Matrimonial Property according to the needs of the parties.
It is often prudent that parties do seek some form of legal advice as any type of family law related issue can be difficult, stressful and emotional. The cost of legal proceedings is a natural concern for most people and it is important that couples try to keep legal costs in proportion with the level of assets to be divided.
: : Amanda Crowe is a solicitor at Barker Gotelee.