When couples Divorce, they are free to reach their own agreement as to how their assets should be divided. This can then be incorporated into a “clean break” Consent Order during Divorce, to make the agreement legally binding and dismiss future claims.
If spouses cannot agree, they can ask the Court to decide. The starting point is an equal division of assets built up during the marriage. However, the Court would look at the circumstances to decide whether it would be fair for one spouse to receive more. This could be because of making large contributions to the marriage such as inheritances, which were not generated by the spouses joint efforts or because of “needs”. Where someone had a greater need, say due to a lower income or being the primary carer of children, they may receive more to meet their housing needs. Needs generated as a result of the marriage are always the Courts first concern, especially the need for a home for the children.
However, there are those cases were the above factors are not present and the spouses are in similar financial positions. For example, similar ages, similar incomes, with no children or perhaps shared care of children. In those cases, their needs are the same and assets built up during the marriage were divided equally, irrelevant of whose name the assets were in.
But the Court of Appeal in the case of Sharp & Sharp recently overturned this principle in certain cases.
This was a short, childless marriage, involving significant assets where both spouses housing needs could easily be met. Both spouses had their own successful careers. Neither spouse knew a lot about the others finances and savings. They kept them separate and had their own savings accounts and investments. The wife had earned more than the husband and saved more during the marriage as a result.
The Court said that because they both had their own careers and built-up personal savings and investments, in their sole names, without any contribution from the other, then the assets built up in their sole names were to be retained after the divorce by them individually, and not split 50/50. The joint assets, shared by them both, such as their home, were divided equally.
This particular case has set a precedent for short, childless marriages where both parties worked and had a combination of individual and joint assets. In this case ‘short term marriage’ was 18 months of co-habitation before marriage, followed by 4 year as a married couple.
It is unknown yet as the effect this will have on future divorce cases, but it is likely to fuel more arguments during divorce proceedings. Negotiation through solicitors and Mediation are likely to be needed now more than ever, to try and agree and avoid an application to Court.
If you or someone you know is about to marry or still in the early stages of a marriage it may be wise for both parties to understand that if they are happy for their partner to keep assets in their sole name, then they should be prepared for the fact that if the marriage breaks down they may not have any rights to those assets in the future.
Ross Hubbard, Solicitor at Hopkins commented “This is a significant ruling. Solicitors had operated on the presumption than even in a short childless marriages, assets built up during the marriage, no matter who owned them, would be divided equally. This changes that. It is important to stress however, that it only applies to short, childless marriages, when the spouses had kept the finances separate and when the parties housing needs can easily be met from the assets available.”
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