Protecting Premarital Wealth
The distinction between matrimonial and non-matrimonial wealth is critical in English financial proceedings. What is the difference? What should we look for?
Matrimonial property is usually secured during the marriage, is usually divided equally, to reflect the nature of the relationship. Usually this will include the family home, investments, savings, business and company assets, and pensions built up during the relationship, irrespective of whether the assets are held in joint names or the sole name of one of the parties.
Non-matrimonial property includes assets secured before the marriage, after separation, or as a result of inheritance or personal gifts, and is often treated differently. However, need may require, the division of non-matrimonial assets, between the parties to the marriage, particularly, if there has been mingling of funds during the relationship.
More recently, the source of an asset has now become more important than its title, following the decision in the Court of Appeal case in Standish v Standish, when applying the sharing principle to the family assets. The wife in this case was motivated by the Court of Appeals reduction of her award from £45m to £25m, to reflect the contributions made by way of non-matrimonial property contributions. This case will now also be before the Supreme Court yet again this year for further consideration, so watch this space.
The family home is also often singled out by the family courts as an asset that is often shared, even if originally funded by non-matrimonial assets. However, this is not always the case, and the court may decide not to adopt this approach if the level of contribution from pre-acquired wealth such as inheritance is so disproportionate to make it unfair to the originally contributing party. This might be particularly the case if the family home was originally inherited.
It is therefore essential to secure expert family and other professional advisers’ advice when managing premarital and inherited wealth. In short it is very important to maintain the distinction between matrimonial and non-matrimonial property and assets.
In an ideal world, non-matrimonial property should not be put into joint names or mingled (mixed) with matrimonial property.
Premarital and Postnuptial agreements can be used to offer protection and clarity to the parties to a marriage, and ultimately the family courts in the event of relationship breakdown and unresolvable dispute. These agreements are becoming increasingly common, particularly in cases where there are family business interests to protect, it is a second marriage (where parties have built up family wealth, they wish to preserve for themselves and their children), or more traditionally, there is inherited wealth. Whatever your circumstances, we can offer you the reassurance and peace of mind. Getting the right advice an early stage is critical.
Whilst marital agreements are not automatically binding, they can be highly influential in determining the outcome of financial proceedings, and settlement negotiations. The family courts have made it clear that parties who enter into such agreements, with the benefit of expert advice and are fully aware of their implications, should expect to be bound by them, particularly if the outcome is on balance fair in the circumstances of that individual case.
If you require expert professional advice for you or your family please do not hesitate to contact me for an initial no commitment consultation.