The basic principles used by the courts for dealing with assets accrued after separation
An area that often causes confusion in divorce cases, is what is the court’s attitude to assets accrued post separation.
We have earlier in the year posted a blog commenting on the case of Briers v Briers, which again made it clear how important it is to finalise financial matters with a clean break court order promptly in order to avoid any nasty surprises arising from claims being made years later.
Recent case law (including the Briers case) has reaffirmed certain accepted basic principles should be applied when dealing with post separation accrual. Firstly the court will categorise the asset as to whether it is classified as ‘matrimonial property’ to be shared or whether it can be argued that it sits outside the matrimonial pot. Then it will decide whether it is available for distribution. In cases where the needs of both parties cannot be met without using these assets, then the argument as to whether they are ‘matrimonial property’ can become immaterial.
The method the court then adopts is as follows:Up to date valuations of the asset are used and not the valuation at date of separation;If an asset is acquired or created by one party after separation it may be treated as ‘non-matrimonial property’ and ring fenced by that party. The court have to decide whether the asset is a completely new venture or whether it was created by the use of an asset itself created during the marriage. For example an increase in the value of a property, pension or savings that existed during the marriage is likely to be classed as ‘passive economic growth’ and should be shared accordingly. Clever re-investment of what was originally a matrimonial asset would be classed as ‘active economic growth’ and may be distributed unequally. However if for instance one party started a new business after separation which became extremely valuable, they could argue that this was a new venture.
However recent case law has also shown what a minefield this area of law can be and serves to reiterate that each case is dependent on its own facts. Just to decide whether an asset is a result of passive or active economic growth and then how it should be distributed varies widely.
It all goes to show how important it is that the financial matters are discussed at the outset of any separation and the relevant advice and assistance should be taken.
Here at Eric Robinson, we have a team of experts who can assist you with any questions you may have about the financial aspects of separation and divorce.
For further information, please do not hesitate to contact Greg Coad on 01256 225 781 or greg.coad@ericrobinson.co.uk.
We have Solicitors offices in Southampton, Hedge End, Chandlers Ford, Winchester, Lymington and Richmond-Upon-Thames.
