“But It Is My Money!” – PART ONE

What happens to money you put into a family home that was gifted, inherited or from a previous property or relationship?

One question I have been asked many times, and possibly more than any other question is about what happens when one spouse puts money into the family home from an outside source, and whether it is recoverable in the event of divorce? The short answer is… no. The resulting question is almost certainly “why not?”. Let’s explore it...

Types of Assets

In Family Law there are two main categories of asset: Matrimonial and Non Matrimonial. Broadly speaking, Matrimonial assets are assets accrued during the marriage and Non-Matrimonial Assets are accrued outside of the marriage. For example, properties purchased during the marriage by either party, and used for the benefit of the family, would be considered Matrimonial irrespective of whose name they are registered in.
By contrast, inheritance which is put in a separate account and never touched would be considered non-matrimonial.

How are they treated differently?

Simply put, matrimonial assets can be carved up by the Court, and the starting point for division of those assets is 50/50.  Non-matrimonial assets can be argued out of the “pot” on the basis they were not from the effort of either party but somehow externally acquired.

Can non-matrimonial money ever be shared?

There are a few instances where non-matrimonial money may be shared; if needs require that it be shared, or if it has been “mingled”. The word “mingled” means that you used money which was yours (i.e. inheritance, redundancy pay out etc) for family endeavors like paying off your mortgage or a big once in a lifetime holiday, and as such it has now become “matrimonial” in nature. With regard to needs, if there is simply not enough to meet everyone’s financial needs on separation, then the Court will usually factor in any “non matrimonial” assets, if it is a resource you or your spouse have access to, out of necessity rather than because you have any right to those monies.

Even if the Court need to “dip into” non matrimonial funds to meet needs, where the money is not matrimonial then  usually there is not the same starting point of 50/50 applied; it is a more mathematical exercise looking at what each person actually needs. Example: If you saved your entire pension prior to your marriage, your spouse may seek a share big enough to give them the same income when they retire as you i.e. £1000 per month. However, if they have been living comfortably off a smaller amount monthly paid from you to them, such as £700, you could suggest that they do not need a pension share to give them the £1000, but just to match what they receive from you now which is enough to meet their needs.

What can I do about it?

If you have received a sum of money before your marriage, such as an inheritance, and it has always been kept completely separate and not “mingled”, you can try and ask the Court to “ring fence” these funds (as long as there is enough elsewhere to meet your needs).  Alternatively, you can ask your spouse directly, in mediation or via solicitors if they will agree for you to receive back funds you put in. If agreed, then there is much that can be achieved that would fall outside the usual “rule of thumb”.

On the flip side, if you are not yet married you could consider a prenuptial agreement (“a prenup”) to set out what you would like to happen to any money you and your spouse bring into the marriage, if you ever separate. Also, if things have been rocky but you have reconciled, you may both feel reassured by a postnuptial agreement; this does the same thing as a prenup, only you enter into it after your marriage and not before.

If you are separating, reconciling or getting married and wish to discuss whether there is anything you can do to protect assets you acquired before your marriage, please get in touch and we would be happy to help you. Just call us on 01926 354704 or email: AntoniaK@moore-tibbits.co.uk.