Division of Matrimonial Property

Helping clients reach an agreement about fair division of matrimonial property on divorce is still the biggest part of the work undertaken by most family lawyers.

Most cases will be resolved by agreement, with only a few being decided by the court.

Whatever the circumstances, the principles to be applied in reaching a fair division remain the same.

What is “matrimonial property”?

When considering how the assets should be shared, it is necessary to ascertain first what the net matrimonial assets consisted of.

 “Matrimonial property” is defined as all assets belonging to the parties or either of them at the “relevant date”, which were acquired by them or one of the parties during the marriage but before the “relevant date”. In addition it includes any property acquired before the marriage if it was for use as a family home or as furniture for such a home.

The exception to that rule is assets acquired by way of gift or inheritance from a third party. Such assets are deemed not to be matrimonial property and will be left out of account.

The “relevant date” is the date of the parties’ separation, which is generally considered to be when they stopped living together as man and wife. Matrimonial assets are generally valued at the date of separation, therefore the “relevant date” is very important in considering a divorce or separation under Scots law.

There is an exception to that rule, about valuations of assets which might be transferred by the court.

Converted assets

Essentially, therefore, any pre-marital assets or assets which were gifted or inherited during the marriage are generally left out of the equation.

There is an important point to note about such assets, though. If an asset is then converted into a new asset during the marriage, the new asset is deemed to become matrimonial property.

If such a situation arises, there is a provision in the relevant legislation which allows the court to take into account the source of funds for the new asset. Therefore it can be argued in court that the asset should be left out of the equation. There is no guarantee, however, that a source of funds argument will be accepted even where it has been clearly established. The reason is that courts have a wide discretion depending on the individual circumstances of each case. If such situations may apply to you, it is important that you take legal advice to ascertain your rights.

 

Special assets

Specific assets such as pensions and life insurance policies are treated slightly differently, to take into account the fact that they might have been started before marriage but contributed to during the marriage.

There is extensive case law on defining which assets constitute matrimonial property and which do not. These are matters on which you should seek the advice of a member of the Family Law Association.

Matrimonial debts are also taken into account when considering what should be divided. In some circumstances, there may be no assets and any agreement would have to look at the division of debt accumulated during the marriage.

 

Fair sharing

Once the net matrimonial assets have been established the question is how to share these. An equal division is the starting point but this has to be considered alongside the other important principles which govern what determines fair sharing. These include considerations relating to the economic burden of children and the need for a separated spouse to adjust financially to divorce.

 

Special circumstances

The court also has to consider whether there are any special circumstances which would justify a departure from an equal sharing. For example, the court can take into account the terms of any agreement between the persons on the ownership or division of matrimonial property.

Specifically it should be noted that the conduct of the parties, whether that be adultery or otherwise, will not be taken into account by a court when considering how the assets should be divided. However there is an exception to that rule in that if one of the parties’ conduct is financial conduct, for example they have frittered away or dissipated assets, that conduct can in those limited circumstances be taken into account.

 

Each case is different

It cannot be emphasised enough that every case is dependent on its own circumstances. Most of the case law which informs the advice family lawyers give clients, makes clear reference to the fact that the decisions have been based on the circumstances of the case before the judge and therefore while case law is useful as a guideline it by no means provides certainty as to the likely result in any particular case.

There are numerous ways in which the assets can be divided, and until the courts actually have to decide the issue the parties themselves can negotiate any settlement. This could incorporate a variety of arrangements for the division of the assets.

Unless solicitors have details of all of the matrimonial assets of both parties as at the relevant date it is very difficult to advise what should be a fair settlement. Try and give your solicitor as much information as you can about the matrimonial property at your first meeting.

As you can see, the issues are often complicated and no two cases are alike. Early advice from a solicitor is recommended even where parties ultimately decide to sort matters out directly.