“All that I have, I share with you”: The Division Of Matrimonial Assets Explained.
There is a very common misconception that separating spouses are automatically entitled to “half” of everything when it comes to financial proceedings in divorce. This concept is known as the Yardstick of Equality, and whilst it is always the starting point, it is no longer the default outcome for all matrimonial finance cases.
The Matrimonial Causes Act 1973 provides the factors which the Court must consider when deciding a fair outcome. These are: -
- The welfare of any minor children of the family;
- The income, earning capacity, property and other financial resources of each party;
- The financial needs, obligations and responsibilities of each party;
- The standard of living enjoyed throughout the life of the marriage;
- Any physical or mental disabilities of either party;
- Any contributions made by either party towards the welfare of the family;
- The conduct of the parties, if it would be inequitable to disregard it;
- The value of any benefit lost by either party as a result of the divorce.
The objective of the Yardstick of Equality is "to ensure the absence of discrimination", for instance, between a wage earner, and a child-carer, thereby recognising the non-financial contribution of the parent caring for children.
That said, case law has developed over the years and now sets out the grounds upon which it can be appropriate to depart from the Yardstick of Equality. Both parties now usually have a strong claim to share equally in all matrimonial property built up during the marriage, and a lesser claim to any matrimonial property which was acquired before the marriage, brought into the marriage by an external source or the product of a sole endeavour.
The Courts now recognise that there is a case for saying that a party should be allowed to keep their non-matrimonial property brought into the marriage, or inherited, earned or gifted to him during the marriage. Although, this can only apply if the case is one of sharing, rather than one of needs.
What is a “sharing” case?
The “sharing” principle is the starting point for all cases and it is based upon the Yardstick of Equality.
The Court’s view at the outset will always be that the parties should share equally in the fruits of the marriage, so long as they were equal parties to the marriage, and unless there is a good reason to depart from the sharing principle.
What is a good reason to depart from the sharing principle?
- “Needs” based cases: Sometimes, once the matrimonial finances are untangled, there just isn’t enough to go around. The Court will prioritise the needs of the parties and any minor children over everything else in this situation. This will often result in an unequal division of the matrimonial assets.
- Short, childless marriages: Due to the short length of some marriages, the Court may depart from the sharing principle. Although, the door has been left ajar for future cases as to the extent to which pre-marital wealth can be ring-fenced regardless of the length of the marriage.
If you are worried how your assets may be treated upon divorce, contact us today on 01745 536030 to see how we can help.