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How to deal with assets acquired after separation

In advising clients on the resolution of finances on divorce, one question which occurs
from time to time is how the law deals with any assets which have been acquired by one (or even both) of the parties since the date on which they separated or have risen in value since that date..

The matrimonial “pot”

This non-technical phrase is used to describe the assets owned by

  • each party separately and/or
  • both of them jointly.

All these assets are automatically taken into account UNLESS

  • it can clearly be shown that some of the assets have arisen since the separation AND
  • it is not necessary to include them to achieve a fair solution.

Calculating the assets

The starting point is

  • ALL the assets are valued or the values are agreed
  • A decision then has to be made whether any of the assets have been acquired since the separation or the value of assets increased AND if so
  • Whether all or any part of the assets acquired after the separation or the increase in value should be taken into account.

Examples

1. Take the case of a husband and wife, called, for the sake of this example, Bill (B) and Jill (J).

  • B and J separated in 2014.
  • Neither B nor J had taken any steps to obtain a divorce or to resolve financial matters between them until 2017
  • At the time of their separation in 2014,
    • B had assets in his sole name of £500,000
    • J had assets owned solely by her valued at £300,000
    • The parties jointly owned a house which in 2014 was valued at £8000,000.
  • By 2017
    • The assets in B’s sole name have increased in value to £600,000
    • The assets in J’s sole name have increased in value to £360,000
    • The value of the jointly owned house is now £1,200,000.
    •  It is not suggested by either party that the increase in the value of the assets is in anyway attributable to any special skill or enterprise by either party: such increases are merely a reflection of market changes.
  • The answer is that, short of an exceptional feature, such a serious and debilitating long-term illness illness being suffered by one of the parties resulting in a particular requirement for a higher share of the assets, they will otherwise be divided equally.

2. Suppose that between 2014 and 2017

  • J, who is a scientist, had  invented and patent a battery for mobile phones, which trebled the battery life and the battery could be recharged in 60 seconds.
  • All the work on this technique took place after the separation in 2014.
  • B knew nothing about J’s work and success until the divorce proceedings started in 2017. 
  • J has sold her invention for £3m.
  • Accordingly the value of J’s assets have risen  from £300,000 in 2014 to £3,360,000 in 2017.
  • Although the usual rule is that all assets are to be valued at the time the financial matters are dealt with (i.e. 2017 in the above example), it is inconceivable that the court would not credit J with all or at the very least, the vast majority of the £3m which arose purely from her own skill and efforts and with no contribution from B. Such an approach, departing from the usual rule that everything is divided equally, on the grounds of overall “fairness’ and in recognition of J's sole contribution to the valuer of this asset.

It will be seen that these issues have the potential to be very complicated and often the subject of disagreement. They often require a detailed analysis and explanation of the derivation of some of the assets which have to be divided as part of the divorce process.

 

Our family department have a great deal of experience in this area. As always, sound, early advice is strongly recommended and is invariably beneficial. If you would like more information or some preliminary, confidential advice, please contact Carline Gayle-Buckle on 01926 491181 or email CarlineG@moore-tibbits.co.uk

Have a question or need some help? Call us today on 01926 491 181

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