The principle of ‘sharing’ which assumes that an equal share of the matrimonial assets is awarded to divorcing couples, is typical in most cases. However, this is subject to a party’s needs being met and reviewing the requirements if children are involved. As such, the treatment of assets and how these are divided are very much dependant on a case’s individual circumstances, and it may be that not everything is divided 50/50. However, if a divorce settlement has not yet been agreed, and if couples do not divorce immediately, how does the ‘sharing’ principles apply to post-separation earnings or an increase in value to assets? Especially if one party develops a new revenue stream following the separation or starts a new business?
If there are assets or finances a spouse wishes to protect from a divorce settlement, departure from the equal sharing principle will depend on the case’s circumstances. Courts will assess the individual needs of each party to ensure any provision is fair.
What can be included in post-separation assets?
The Court will typically establish the following regarding the treatment of post-separation assets:
A `passive` increase – Where a property naturally increases in value, or other assets such as pensions, or pre-existing shares increase in value. The Court may conclude that this should be incorporated within the assets to be divided if they were already part of the matrimonial assets when the couple were together.
`Active` economic growth – Where the value of pre-existing assets increase due to something one party has done. As with all elements of a settlement, the Court will thoroughly consider a case’s specific facts and use its discretion.
New ventures – If a new venture is started after separation, and it is done through separate funding not connected to the marriage’s assets, there is a higher chance that this will be treated as non-matrimonial property. Therefore, it is less likely it will be subject to the equal sharing principle. It will be the Court’s responsibility to make a judgement on what it considers to be fair depending on the circumstances.
There are several principles involved in deciding what marital assets should be included. Many notable cases highlight the issue of post-separation divorce assets, which make it clear that it is essential to distinguish between passive, active and new venture growth of a post-separation asset. We look at some of these leading cases below:
Waggott v Waggott  in which it was held that post-separation earnings were not considered matrimonial and should not, therefore, be shared unless a party’s needs required it. Moylan LJ specifically said that;
‘any extension of the sharing principle to post-separation earnings would fundamentally undermine the court’s ability to effect a clean break…’
In another example, Rossi v Rossi  EWHC 1482, Mr Mostyn QC set out several principles regarding the treatment of post-separation assets.
It was established that an asset that has been acquired post the parties’ separation may be treated as non-matrimonial property (i.e. ringfenced) if it can be said that the asset was created or acquired by that party by virtue of their own “personal industry” and not by merely using an asset that had been created or acquired during the marriage. However, Mostyn QC held that passive economic growth on matrimonial property, which arises after the couple’s separation, will generally qualify as matrimonial property.
What are Consent Orders and Financial Agreements?
To formalise a financial agreement and make it legally binding, you or your solicitor must ask the Court to formalise the agreement in a ‘Consent Order’. However, you may not need to attend any hearings. If you cannot reach an agreement on a financial settlement with your ex, the Court will decide what is fair and make a financial order that you both must legally abide by.
Read our previous article – Financial Settlements and Divorce
Expert Divorce Financial Settlement Solicitors Kingston
If you are looking for divorce financial settlement solicitors in Kingston Upon Thames, then our matrimonial finance solicitors will be able to provide you with practical advice regarding all divorce financial settlement matters, consent orders, ancillary relief proceedings, financial orders, and clean break agreements. Regardless of the complexity of your situation, at Rose & Rose, our experienced family law team has the capability and expertise to guide you through the most complicated legal issues and are dedicated to providing the highest level of service to our clients at all times.
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