Family assets and the court's powers to distribute them on divorce

Divorce and family assets

When a couple decides to divorce, there are usually financial issues to be sorted out. Most of those issues relate to maintenance (support) and family assets.

What are family assets?

Family assets are normally assets owned/earned by the spouses during their marriage. Examples are a family home (often called the ‘matrimonial home’), a car, savings, a holiday cottage, a boat, and a pension.

Normally assets owned by either spouse before the marriage, do not constitute family assets. However, depending on the circumstances, if one spouse owns an asset before marrying, but buys it so the spouses can live together or use it together, that asset will be considered as a family asset. Thus, a matrimonial home can be a family asset in that situation.

Courts powers to distribute family assets

The court has a wide discretion to redistribute family assets. Each case is decided on its merits so it is difficult to predict what a court will do in any given case, but children must always come first in any financial arrangements on divorce. Under the Matrimonial Causes Act 1973 (MCA 1973), the courts can order:

  • periodic child and spouse maintenance (support) payments and an order that those payments be secured against property;
  • a lump sum payment;
  • a property adjustment order, whereby property will be transferred from one spouse to another if the judge feels this is necessary to come to a fair arrangement;
  • a ‘clean break’ distribution without ongoing support payments (such an order is not final, however: if circumstances change dramatically in the future, the court may ‘reopen’ the order).

Factors the court considers when making its orders

Under s 25 of MCA 1973, the factors the court will consider when deciding what orders to make include:

  • the extent of the family’s resources (thus it is important when you are thinking of separation or divorce to have a good idea of your family’s assets and debts, together with income and expenses);
  • the family’s current and future financial needs, obligations and responsibilities;
  • the family’s standard of living before the breakdown of the marriage;
  • the age of each party, and how long the marriage lasted;
  • physical and mental disability;
  • contributions to the family, including the contribution of looking after the home and taking care of the family;
  • the conduct of each of the parties if, in the opinion of the court, it would be unfair to disregard it;
  • the value of any benefit which that party will lose the chance of acquiring.

Little guidance is provided in MCA 1973 on how the above factors should be applied and what weight should be given to each, so guiding principles have emerged from the courts in financial provision cases.

Following the House of Lords rulings in White v White, Miller v Miller and McFarlane v McFarlane, when deciding on how family assets should be distributed, courts should consider the following principles:

  1. financial and domestic contributions should be treated equally;
  2. the ‘yardstick of equality’ should always apply (ie, ensuring that the contribution of a child-carer, for example, is recognised and they are not discriminated against compared to the wage-earner) unless there are good reasons to depart from it;
  3. the needs of the parties must be satisfied first;
  4. there is to be compensation for any economic disadvantage suffered by a party;
  5. if (3) and (4) have been met, then the principle of ‘sharing’ the fruits of the marriage applies.

Orders regarding the matrimonial home

Often the matrimonial home is the most significant asset of the family. There are usually three types of order made regarding the matrimonial home:

  • an order for immediate sale and division of proceeds;
  • a transfer of the home into the sole name of one spouse;
  • postponement of the sale of the home (most commonly until the children grow up or until the wife’s circumstances change).

If title to the matrimonial home is in your spouse’s name, and you are worried about that the spouse may sell it or take some other step, then you can register a document registering your matrimonial home rights.