One of the most pressing concerns for individuals going through a divorce or dissolution of a civil partnership is ‘who gets what’ when it comes to the division of matrimonial property.
Matrimonial Property
Throughout the marriage or civil partnership, couples will acquire assets, some of which will be owned solely by the individual, and others which will be jointly owned. The jointly owned assets are known as ‘matrimonial property’ and it is these assets which parties must decide upon how they are to be divided. In order to identify the matrimonial property, both parties should do the following:-
- Establish the date of separation on which the parties ceased to cohabit as husband and wife or as civil partners.
- Identify all assets owned either jointly or by the individual at the date of separation. Property acquired after the date of separation will not constitute as matrimonial property.
- Consider the assets and identify any non-matrimonial property by reviewing the circumstances in which they were acquired. Assets owned by the individual prior to the marriage or assets gifted to the individual will not be considered as matrimonial property. However, such assets must remain in their original form, otherwise they may be considered as matrimonial property. For instance, where gifted or inherited money is used to purchase a new property during the marriage, that property would be classified as matrimonial property.
- Both parties must value the said assets and liabilities at the date of separation. By providing an accurate value of all matrimonial property, the process of dividing the assets and liabilities and finalising the financial separation will be more straightforward.
Once the matrimonial property has been identified, both parties must decide upon how this is then to be divided between them. There are two options available to the parties in this regard. They can either agree privately with the option to enter into a Separation Agreement to formalise the agreed terms, or they can leave it in the hands of the court to decide upon the division of their matrimonial property. If the parties choose to enter into a Separation Agreement, it is at their own discretion to decide upon the division of their matrimonial property. Provided the agreement is fair and reasonable, the divorce will likely be able to be processed quickly through the court. It is advisable to seek independent legal advice from a family law practitioner with regard to the preparation of a Separation Agreement.
‘The Principles’
If an agreement cannot be reached, it will be left for the court to decide how the matrimonial property should be divided. In doing so, the court will apply the principles set out in the Family Law (Scotland) Act 1985. The principles on financial provision are as follows:-
- Section 9(1)(a) - The first and usually the most important principle is that the net value of the matrimonial property requires to be shared fairly. “Fair” means “equal” unless there is a compelling argument to justify a fair but unequal split.
- Section 9(1)(b) - The Court requires to take fair account of any economic advantage derived by either party from the contributions of the other, and any economic disadvantage suffered by either party in the interests of the other party.
- Section 9(1)(c) – The Court should take fair account of the economic burden of caring for children under the age of 16.
- Section 9(1)(d) - If one party has been dependent to a substantial degree upon the financial support of the other, then there should be provision to enable that party to adjust over a period of not more than three years.
- Section 9(1)(e) - The Court should seek to relieve serious financial hardship that may be suffered as a result of divorce.
‘Fair Sharing’
Generally, the court will look to divide the matrimonial property ‘fairly’ between the parties. This does not necessarily mean everything will be shared equally, however, it is usually the starting point. Some factors which may justify unequal sharing include:-
- Prenuptial agreements
- The source of funds used to acquire matrimonial property
- If the matrimonial property is used for business
- If one party loses matrimonial property or somehow puts it out of reach
- The cost of valuing the property or transferring the property
It is worth bearing in mind that fault or behaviour will not be taken into account except in so far as on occasions where one party has reduced the net value of the matrimonial property through alcohol or drug misuse or gambling.
Economic Advantage and Economic Disadvantage
The court will consider whether one spouse has enjoyed an economic advantage as a result of contributions made by the other spouse. The court will also take into account whether the other spouse has suffered any corresponding economic disadvantage in the interest of the spouse on the family.
The most common example of economic advantage and disadvantage is when one spouse stops working to look after the children. In this instance, the court may order a periodical allowance in favour of the financially dependent spouse, to assist them whilst they try and get back to work and into a position to earn independently.
Both parties must provide evidence to the court in order to support any argument they may have for the unequal sharing of matrimonial property.
‘Clean Break’
When making orders for financial provision, the court aim to achieve a financial ‘clean break’ between the parties. It is therefore more likely for property transfers and capital sums to be awarded as opposed to periodical allowances. The court has the ability to order a payment of a lump sum; the transfer of property; a periodical allowance or a pension sharing order. Such orders are at the discretion of the court but are commonly used to ensure that the matrimonial property is divided ‘fairly’ between both parties.
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