Sharing assets acquired following separation but before divorce

Many couples do not divorce for some considerable time following their separation. A common reason for this is that they want to avoid attributing blame in the divorce paperwork. In order to do so, under the current law they have to wait until they have been separated for at least two years before being able to divorce on the basis of that period of separation. Law reform has been passed to allow for no fault divorce, but the new law is not expected to be implemented until the autumn of next year.

The family courts cannot make financial orders about how a couple’s property and money will be divided until divorce proceedings have at least reached the midpoint in the process. This means that the couple’s assets may be shared long after the couple has separated. If one party’s financial position has significantly improved, this may give rise to arguments that sharing assets that have been acquired after the end of the marriage would be unfair.

Whilst such assets may be labelled ‘non-matrimonial’, there is no guarantee that they will not be subject to a Court Order requiring them to be shared. The extent to which they accrued because of the marriage is relevant. For example, a bonus is more likely to be shared if success in the job has been achieved with the help and support of the former spouse during the marriage. On the other hand, a gift or inheritance, which has no connection with the marriage is less likely to be shared.

However, the overriding question, which will determine most cases, is whether the parties’ needs can be met without sharing the assets acquired post separation. If both parties cannot re-house, for example, then even an asset acquired since separation by one party is likely to be taken into account when orders are made about how the property and money should be divided, regardless of their source or link to the marriage.

In cases where a couple has agreed not to divorce until they have been separated for two years, it is sensible to enter into a Separation Agreement. This is a written document in which they set out their agreement about how the finances are to be divided. Whilst this is not legally binding on the Court, if entered into properly with each having independent legal advice, it will regarded as strong evidence of the parties’ intentions and will help to avoid disputes at the time of the divorce and financial arrangements being finalised.