When you get divorced, a legally binding agreement is made on how assets and liabilities, such as debts, are divided. This is called a financial settlement. It can include physical property such as houses and cars, as well as pensions and savings.
Why do you need to protect your assets?
When you marry, both you and your spouse become entitled to a share of any assets accumulated during your marriage, even if one of you isn’t working or is earning less than the other party. These are called matrimonial assets.
Non-matrimonial assets are acquired before you marry. Examples could include your share of a family business or inheritance. The starting position is that these are excluded from the matrimonial pot, but there are complicating factors where the court may make the decision that they should be included and, therefore, your spouse could have a claim against them.
Be prepared by protecting your assets before marriage
Draw up a pre-nup
If you have assets you wish to protect, you should consider drawing up a pre-nuptial agreement, or pre-nup, before you marry.
A pre-nup is a written agreement that outlines who owns certain assets and how they should be divided if you divorce. Although they are often associated with high-profile celebrities, it’s a common misconception that assets must be of high value to be included.
It isn’t always easy to speak to your fiancé(e) about drawing up a pre-nup as it may be seen as being unromantic or planning for the marriage to end before it has even begun.
We advise you to be open and honest about your motivation for wanting a pre-nup, such as wanting to protect any children or for certain assets to remain within the family in the unlikely event that the marriage breaks down.
Choose a time when you are both feeling calm enough to have a rational conversation about it, so never during a disagreement, and emphasise that it will protect both of you and help to maintain financial stability.
Although a pre-nup is not legally binding, the court may consider it as part of your divorce case if there were no significant changes to the couple’s financial situation during the marriage.
Find out more about it in our blog, ‘What is a pre-nuptial agreement and why do you need one?’
Protecting your rights to claim on your home
Even though the family home will be deemed a matrimonial asset, so both parties will be entitled to a share, if the property deeds and/or mortgage are only in your partner’s name your share may not be what you consider fair.
You can prove you have a beneficial interest in a property through a Declaration of Trust (DoT), signed by both you and your spouse, which sets out how each of you contributed towards buying the house and paying towards the bills and maintenance.
You can also get a Matrimonial Home Rights Notice from the Land Registry which includes a note on the deeds stating that you live at the property. This is only valid whilst you are married, becoming invalid when you divorce.
Loans
If a parent or family member gifts you a significant amount of money, they might be concerned about what will happen to it should you divorce. In the event of a divorce, money given as a loan, rather than a gift, is much easier to protect as it will be viewed as being needed to be repaid. A loan agreement, drawn up when the money is given and stipulating that it will be paid back if a divorce occurs, can help prevent any misunderstandings.
Trusts
We talked about Trusts in our blog, ‘Wills and Trusts – what’s the difference and why do you need both?’
Some Trusts entitle beneficiaries to claim an asset but not to sell it. For example, if you married again and remained in the family home, a Trust could stipulate that it would be inherited by children rather than being sold and the proceeds given to a new spouse.
Trusts can be challenged during divorce, so it’s crucial that they are set up correctly by a solicitor.
Protecting your assets during marriage
A post-nuptial agreement can also be drawn up after the marriage has taken place. Again, it is not legally binding, but it may offer protection in the same way as a pre-nup if the court considers it.
Protecting your assets when you separate
You should be aware that supporting your spouse after separation, but before you divorce, using assets you’ve ringfenced could result in them claiming a right on those assets.
Protecting your assets during divorce
Seek legal advice
We cannot stress highly enough the importance of having an experienced divorce lawyer to advise and represent you throughout the entire divorce process to protect your rights at each stage of proceedings.
Be open and honest about your assets
Although it may be tempting to attempt to protect assets by hiding them, the court will not look favourably upon you and your actions will likely negatively impact your final settlement. We always advise you to speak to your solicitor about the best way to protect assets.
You must also not take or copy financial documents relating to your spouse without permission.
Try to remain under the same roof as your spouse if it is safe to do so
Although living together in the family home may be difficult, leaving the house may strengthen your spouse’s claim on it. If you have to leave for your or your children’s safety, this will not jeopardise your position.
Try to avoid moving in with a new partner as your assets will be deemed combined, which can impact your final settlement.
Protecting your assets after divorce
Don’t forget to get your Will amended if your wishes have changed.
How AGR Law can help you
Divorce is a complex matter, and likely to be a very emotional and uncertain time for you too. Incorrect legal advice or not having someone knowledgeable to fight for your rights can have serious consequences.
We encourage all couples, where possible, to agree how to divide assets to negate the need for lengthy, costly and stressful court proceedings. A mediator can assist with this by facilitating discussions and a consent order can then be drawn up by us to make the agreement legally binding.
If your case does have to go to court, we will fight your corner until matters are resolved.
Call us on 0116 340 0094 or email hello@agrlaw.co.uk to find out more.