Ring Fencing Assets On Divorce

Posted November 7 2017

This useful article is written by Winchester solicitor Joanne Houston of Just Family Law, just-family-law.com

Ring Fencing Assets On Divorce

Is it possible to ring fence assets on divorce? In other words, keep certain assets out of the pot for division? It depends on the asset, and it depends on all the circumstances. But yes, there are assets that can be protected. And there are one or two prudent steps you can take.


I have a friend who’s a magician. She puts on brilliant shows, and her husband of ten years is her glamorous assistant. She binds him securely with magic ropes and manacles, and covers him with a magic tablecloth, and he disappears. But none of this seemed to bother him much until lately.

However now he says he’s had enough. He says he’s fed up with sharing the limelight with a bunch of rabbits. He wants a divorce and furthermore he wants half of everything.

Is It A Matrimonial Or Non Matrimonial Asset?

“Everything?” my friend asks. “Can he really claim half of everything?”

I advise her that non matrimonial assets can sometimes be kept out of the pot for division. Unless ‘needs’ predominate.

So what are ‘non matrimonial’ assets? They can include:

  • Assets built up before the marriage
  • Inheritances
  • Businesses

But if there aren’t enough matrimonial assets left to fulfil her husband’s needs for example for housing, non matrimonial assets can be used to plug the gap.

Inheritances

My friend throws up her hands with relief. “Thank goodness!” she cries. “I won’t lose my magic cabinet.” She’s particularly fond of this extraordinary antique as her grandfather left it to her in his will. Her magician ancestor, The Great Mirando, is famous for disappearing within the depths of this very cabinet during a lost weekend in Blackpool.

My friend has never used this cabinet in her performance. It’s too fragile. She’s always kept it in storage. I advise her it’s unlikely her husband would be successful in claiming against its value.

If she had sold the cabinet, and for example bought the family home with it, that would have been an entirely different question. Her husband would have a much stronger claim.

I have written previously about Protecting Inheritance On Divorce.

Businesses

I advise my friend that her husband might make a claim over her business.

“What business?” she wants to know, looking puzzled.

“You’re the sole proprietor of a magician’s business. Your husband might ask for a valuation of your business assets. He might make a claim for maintenance if your income is significant.”

She laughs. She tells me her assets comprise trick cards and scarves and table clothes, magic chains and manacles, and, of course, three rabbits and a rather malodorous hat. They really have no value at all. And as for income, there isn’t any. She does it all for charity. My friend and her husband live off their wages from their respective jobs. He works in a shop. She works in an office.

I have written a recent post about Protecting Your Business On Divorce.

Transfer Them To Someone Else?

My friend has a savings account and some shares. She’s thinking of transferring them to her sister. I advise her not to do this. Both she and her husband must give full and frank disclosure of their finances. A Form E Financial Statement is usually used for this purpose, and a statement of truth is signed. She risks a court order freezing her assets, and a hefty costs order if she starts to transfer her assets to her sister. And if she hides assets, that could lead to imprisonment for contempt of court.

Even though my friend has taken a course in advanced escapology, it’s advisable not to run this kind of risk.

How Are Assets Split On Divorce?

My friend doesn’t need to worry about the magic cabinet she inherited, nor her magician’s business. And she realises she must be upfront about her assets and income. But she wants to know what will happen to their house, their savings and shares and pensions, and their caravan in Morecambe.

I advise her the starting point for division is a fifty fifty split although there are special considerations. These include the care of children, the extent of the couple’s wages and their earning capacity. Also their standard of living during the marriage, and their ages. The length of the marriage is important, too. As is their health. Lastly what the couple put into the marriage financially, and their individual financial needs.

I advise her I would need to consider all their financial details, and all their circumstances, to give her an idea of the final outcome.

Is there Nothing To Be Done?

The good news is she has met someone new, a fellow magician. It’s early days, and she wants to get her divorce sorted out first, but who knows, this could be the real thing. I advise her if they decide to tie the knot, she ought to think about a prenuptial agreement. She says she will certainly keep this idea up her billowy sleeve along with her magic cards and scarves.

Contact Joanne Houston of Just Family Law on 01962 217640 for a free telephone consultation on this or any other family law issue

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