What Happens If I Delay?
Delayed Claims And After Acquired Assets
If your relationship breaks down, the emotional stress of separation may mean that you delay sorting out your finances. However, if you do not proceed carefully, you may find that your spouse eventually receives what you feel is more than his or her fair share.
If you divorce, it is always best to formalise any financial settlement by obtaining an approved final order from the Court. Only by obtaining such an order is any agreement definitely binding on both of you. It is the only way to achieve a clean break, which ends any financial commitment or dependence between you. To obtain such a court order, you must value your assets at the time of the order, not at the time you separated.
Following the House of Lords decision in Miller/McFarlane in 2006, the “yardstick of equality” is less likely to apply to “non-matrimonial property” than “matrimonial property” where needs are met, which means you have a greater chance of keeping rather than sharing “non-matrimonial property”. Obviously it is important to be able to calculate this accurately.
If you have acquired assets or created them after separating from your spouse through your own hard work and efforts, such growth in your wealth known as “active economic growth” is more likely to be classified as non-matrimonial property. But if your spouse’s needs cannot be met without recourse to such property, and if you have been in a long marriage, such growth is more likely to be shared.
If you delay too long, the court is more likely to decide that such after acquired assets should be shared. Also, where assets have increased in value because of market forces through “passive economic growth”, this is likely to be classified as matrimonial property, and probably shared equally.
Where there is difficulty in determining whether the assets have increased in value as a result of active economic growth or passive economic growth, the Family Law Department at Cumberland Ellis LLP, through our Private Client, Property and Commercial Groups, benefits our clients by enjoying a network of contacts able to provide specialist valuation evidence.
Taking early, clear and effective legal advice will help you to limit the scope for disagreement. If you have already separated and anticipate divorce, a Separation Agreement could make clear which assets you wish to share on a divorce and which you will retain. If your marriage is continuing but in difficulties, a post nuptial agreement could help to distinguish what property you and your spouse intend to be matrimonial and non-matrimonial. As long as you and your spouse both each make a full, frank and clear disclosure of your financial and other relevant circumstances, and you both obtain separate legal advice, such agreements are likely to be highly influential. If you are not married, the law is different, and you should seek advice promptly.
