Husband's family assets protected in divorce settlement

20 August 2011

A judge has ruled that a wife is not entitled to a £7 million share of her husband’s £25million fortune in a divorce settlement, because the money was inherited and therefore not joint matrimonial wealth. The woman was awarded a £3.3 million settlement, on top of £1million of assets she had already received from her husband during their marriage.  This shows the importance courts place on distinguishing assets built up by joint effort throughout a marriage, as opposed to inherited wealth.
The husband’s wealth was derived from agricultural land and estates given to him by his father, along with shares in his fathers company that had been sold in the 1980's.  To some, this may seem a fair ruling so as not to break up the property and assets built up by the father. To others, after what had been a 25 year marriage this could seem like an unjust outcome, especially in some circumstances where a wife may have, as in this case, given up a career to care for children or run the family home. In the Scottish courts, it has been recognised that there are many different financial circumstances during a marriage and a ‘one size fits all’ approach to a divorce settlement would not be practical. Consequently, after dealing with any alimentary issues if there are children involved (which for the courts will be a priority ahead of a spouses settlement), the courts do have considerable discretion as to the type of order for financial provision they will make. Assets acquired before, during and after the marriage can be treated very differently depending on how they were received.
In Scots law, the ‘clean break’ principle is always preferred, and a number of scenarios are possible. An order can be made for the payment of a lump sum, or the transfer of property such as a house. This could be done in installments if the amount is not realisable. Particularly where the property is the matrimonial home and jointly owned and children who are still under 18 are involved, the court could order the transfer of one spouse’s half to the other. The court can also order payment of something called a ‘periodical allowance’ that can continue until a specific time, and can also be varied by the court if there is a change in circumstances. However, the ‘clean break’ principle is preferred by the court, who also have powers to make any incidental orders regarding the couple’s property, and can if need be dictate who occupies the family home.
Whilst the first principle of financial provision is that the net value of the matrimonial property should be shared fairly between the divorcing couple, it is important here to note the word ‘matrimonial’. Not all property will be classed as such and the distinction, as in the case above, can be of crucial importance in deciding a settlement.
Matrimonial property means all property belonging to the couple (spouses, or civil partners) that was acquired during the marriage, and in the case of the family home, that was bought in contemplation for use as a family home, or bought during the marriage up until the date specified that the couple separated. Importantly, property acquired before a marriage, after the specified date of separation, and property acquired during the marriage by way of a gift or succession to one of the parties, is not classed as matrimonial property and will therefore not be available to be claimed in the event of divorce proceedings. Other property, such as savings, investments, vehicles and furnishings also falls under these rules. It is also worth pointing out that if one of the parties inherits – for example – a large cash sum, and invests half of it in a house, that half has therefore been converted into matrimonial property, but the remaining money has not.
So based on this principle, it seems that the court in the case above followed the same rules and assessed the needs of the wife rather than dividing up non-matrimonial assets, even though she had lived in the house, worth a considerable amount of money, throughout the marriage. Her legal team had asked for more but the judge thought £4.3million a ‘generous assessment’ of her needs.

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