When are assets "ringfenced"?
When a couple separates, one of the most difficult and stressful aspects is sorting out the division of the assets. Typically, those assets will include the family home, which may be owned jointly, or in the sole name of the husband or wife. There may be savings and investments, some of which may have been brought to the marriage by one spouse and may have come from an inheritance, a gift from their family or other external source.
We are often asked whether these assets, which may have come entirely from one side of the family, or built up solely by the husband or wife before the marriage can be “ringfenced”, kept for them alone.
The answer is not simple and will depend on a range of factors. The law that guides the court in deciding how to split the assets on divorce is contained in the Matrimonial Causes Act 1973, and further guidance is set out in landmark cases that have been decided by the courts.
The court’s first priority is any children of the family who are under 18. The court then goes on to consider a list of factors including the needs and resources of both parties. The starting point in deciding how to split the assets is that fairness means equality. Therefore, the matrimonial assets should be split equally if there is enough to meet both parties’ need by doing this. The family home is usually regarded as a matrimonial asset regardless of when it was bought and whose name it is owned in.
There is sometimes a dispute over what is, and what is not, an asset of the marriage. For example, some assets may have been brought into the marriage by one partner but then used for the joint benefit of the couple and the children. Or one partner may argue that money they have received from a parent was a gift, the other alleges that it was a loan and must be repaid. Or an inheritance was received by one partner which they argue was meant for them alone and should not go into the “pot” to be divided up.
If there are not enough matrimonial assets to meet both parties’ and the children’s needs, then the “non-matrimonial” assets may need to be used to make up any deficit. In cases where the parties have enough assets to meet their needs, then the non-matrimonial assets will need to be allocated in a way that is fair and reasonable.
Consider the example of an inheritance. This would generally be regarded as a non-matrimonial asset. However, it may have merged into the assets of the marriage over time, where part of it has been used for the joint benefit of the couple. Or it may have been treated as a matrimonial asset from the beginning by being placed in a joint account and spent on joint ventures. On the other hand, if it was received by one partner at the end of the relationship when the marriage was already in difficulty, and kept separate from the couple’s other money, it is more likely to be “ringfenced” for the partner who inherited it.
If no agreement can be reached about the nature of the asset the parties may need to give evidence about the circumstances surrounding the receipt of the money. Was there an agreement about how it should be spent? Was it intended to be used jointly?
These issues can be complex. At Lawson-West we have a team of highly experienced, specialist solicitors who can advise and help you to achieve the best outcome, whatever your circumstances.
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