As we all know, a divorce can take some time to complete. And many people are not prepared to leave their lives on hold until their divorce is finalised.
And getting on with your life may include purchasing assets, whether they be a new home, an expensive car, jewellery, an interest in a business, or some other kind of asset.
In this article we will look at the implications of purchasing assets during ongoing divorce proceedings, explaining some of the pitfalls and other matters that should be considered by anyone contemplating buying any sort of asset of significant value before their divorce is finalised.
But before we do so we need to explain briefly the law on asset division on divorce.
Sorting out asset division on divorce is obviously all about the concept of marriage being a joint venture. Fairness therefore dictates that both parties should benefit from the fruits of the marriage.
But note that phrase: “fruits of the marriage”.
It is of course quite possible that, at the time of the divorce, one or both of the parties possess assets that are not “fruits of the marriage”. They may, for example, be assets that they owned prior to the marriage, or assets that they acquired after they separated from their spouse.
Generally speaking, it would not be considered fair for the other party to benefit from such assets in the divorce settlement.
Accordingly, the law uses the concept of “matrimonial” and “non-matrimonial” assets.
“Matrimonial” assets are assets that were acquired during the marriage, through the joint efforts of the parties to the marriage, and all other assets are “non-matrimonial”.
Thus assets acquired before the marriage or after the parties separated are non-matrimonial, as are such things as gifts to one party or inheritances received by one party, as these are not acquired through the joint efforts of the parties.
The general rule on divorce is that only matrimonial assets fall to be divided between the parties on divorce, with non-matrimonial assets remaining the property of the owning party. It may therefore be that a party will be able to buy assets during the divorce using only non-matrimonial assets belonging to them, without any adverse effect.
However, there are two major provisos to the general rule.
Firstly, it is often the case that during the marriage non-matrimonial assets will become mixed up with matrimonial assets, so that it is no longer possible to say which is which. In such a case all of the assets are likely to be considered matrimonial.
Secondly, even if assets are clearly non-matrimonial the court can still award them, or part of them, to the spouse that didn’t own them, if the court considers this necessary to meet the financial needs of that spouse.
Having explained the concept of matrimonial and non-matrimonial property, we will now have a quick look at how the law decides who should have what in a divorce settlement.
Subject what we said above, asset division on divorce is simply a matter of dividing the matrimonial assets between the parties.
And all else being equal this may simply mean that the matrimonial assets will be divided equally between the parties.
But there may be reasons why an equal division is not appropriate. We have already mentioned perhaps the most important of these: the financial needs of the parties, including for their income and their housing. If one party has greater needs than the other, they may be entitled to more than half of the assets.
Other reasons for an unequal division include such things as the duration of the marriage, the age of the parties and the contributions of each of the parties to the welfare of the family, including any contribution by looking after the home or caring for the family.
Once it has been decided how the assets should be divided it will be necessary to give effect to that division. This may mean each party keeping certain assets that they own, and it may mean that assets are transferred from one party to the other, or that assets (such as the former matrimonial home) are sold, and the net proceeds of sale divided.
Another point to bear in mind is that a divorce settlement is not necessarily only about dividing assets. It may, for example, also be appropriate for one party to pay maintenance to the other, whether it be spousal maintenance or child maintenance.
OK, having looked briefly at the law on asset division on divorce, we now return to the subject of this article, i.e. purchasing assets before the divorce is finalised. We will start with one of the biggest possible pitfalls: where the purchase may defeat or diminish the other party’s financial claim.
As we have seen, the primary purpose of a divorce settlement is to divide the matrimonial assets fairly between the parties. And the matrimonial assets are fixed as at the date the parties separated.
Of course the value of the matrimonial assets may naturally change after the parties separate, especially if there is a significant period of time between the separation and the divorce. But the law will not generally allow either party to do anything that is likely to significantly reduce the value of the matrimonial assets, as this could obviously mean that the other party would receive less.
Accordingly, if the court is satisfied that one party is about to make a property transaction with the intention of defeating or diminishing the other party’s claim on divorce then it may make an order preventing them from proceeding with the transaction. And if the transaction has already been carried out then the court may make an order setting aside the transaction.
Obviously, this could be very relevant to any asset purchases prior to the divorce settlement, as the purchase could have the effect of reducing the value of the matrimonial assets. Anyone contemplating buying property during the divorce should therefore be aware of this, and the possibility of the purchase be stopped or set aside, with all of the additional expense that that would entail.
But even if the purchase does involve matrimonial assets but doesn’t affect the value of those assets (i.e. the purchase merely changes the type of asset, for example cash into property), there could still be problems for the purchasing party.
For example, as we have seen, the court may require that, in order to give effect to a divorce settlement, certain assets should be sold. This could obviously mean that the party buying the asset will not only have their wish thwarted, but will also be put to the additional expense of selling the asset, not to mention wasting the cost of buying it.
Of course, this would depend upon the type of asset involved. But if, for example, it is a new property (many people will want to buy a new home for themselves after the divorce) then the costs of the purchase and sale could be substantial, including stamp duty, estate agents’ fees and legal fees. No one is going to want such costs to be wasted.
And there are other potential problems with buying assets during a divorce.
What if, for example, the asset was purchased jointly with a new partner? This could lead to further complications, with the new partner possibly becoming involved in the divorce proceedings.
And what if the purchase was of a property, with the aid of a mortgage? As we have seen, the divorce court may order one party to pay maintenance to the other. If the court considers the mortgage to be excessive then it may not take all of the mortgage repayments into account when calculating the amount of maintenance, with the result that the paying party is not able to afford the mortgage.
And generally speaking the divorce settlement may be such as to mean that the buying party is unable to afford the upkeep of the new property.
And lastly on a related note, it can be tempting for a party to ‘jump the gun’, by buying an asset from money that they expect to receive as part of the divorce settlement. They may find themselves disappointed when the receive less than they expected.
In short, there are many possible pitfalls and issues involved in buying assets during a divorce. So, apart from waiting for the divorce to be finalised, what can you do to avoid them?
If you wish to purchase an asset before the divorce is finalised then it may of course be possible to agree the matter in advance with your spouse, either directly or through their solicitor. This may obviously prevent any possible problems down the line.
But the best thing to do is of course to seek legal advice before taking any action. A family law expert can tell you whether any such purchase is a good idea, and of the possible pitfalls it may entail, ensuring that if you decide to proceed then you are at least fully informed. You may well find that the relatively small cost of such advice will save you considerably more in the long run.
We at Walker Family Law have expert family lawyers who can provide you with the advice that you need. To contact us simply complete the form, here.
One of the first questions most people will ask when considering a divorce is “How much will my divorce cost?”. It’s a difficult question to answer, because every case is different, but Kit O’Brien has answered the question to the best of her ability for you:
“Most of the costs relate to resolving issues about your finances and your children, not your actual divorce. We will often encourage you to deal with the actual divorce yourself, where it is now a very straightforward online process. There are a couple of things you need to look out for, but we will talk you through those.
We will do everything we can to help you resolve your issues swiftly and cost effectively. We will always resolve the options to solve matters out of court, which really should be your last resort. We appreciate that costs are, understandably, a real concern for our clients. We will discuss at the outset of every case, how much we think the work you want us to do will cost, and we will talk with you about how our work can be funded.”
According to the 2021 Census there were then 134,000 people in same-sex marriages in England and Wales, and 67,000 people in same-sex civil partnerships. In addition, of course, there were many same-sex cohabiting couples, who were neither married nor in a civil partnership.
Whilst these figures may represent only a small proportion of all couples, (less than 0.5% of the population aged 16 and over in England and Wales were in same-sex marriages or civil partnerships), they do represent a significant number of people. And for all of them, their legal rights are of course of paramount importance.
In this article we will look at how, over the last twenty years, the law has changed to provide legal recognition to same-sex relationships. We will also look at particular legal issues that can arise for same-sex couples.
Prior to December 2005 it was not possible for same-sex couples in England and Wales to enter into a legal relationship. This obviously meant that they could not enjoy the benefits of a legal relationship, including the right to make financial claims should the relationship break down.
All of that changed with the passing of the Civil Partnership Act 2004, which came into effect in December 2005, enabling same-sex couples to enter into a civil partnership.
Legally, a civil partnership is essentially the same as a marriage, in all but name. Civil partners have similar legal benefits and protections to married couples and, apart from the terminology, the procedure on dissolving a civil partnership is similar to the procedure on dissolving a marriage (referred to as ‘dissolution’, rather than ‘divorce’).
Although same-sex couples may now get married (see below), civil partnership still exists, and in 2019 it was extended to opposite-sex couples. Indeed, the latest statistics for civil partnerships, for 2022, show that of the 6,879 civil partnerships formed in England and Wales in that year, 83.7% were by opposite-sex couples, with only 1,119 same-sex civil partnerships being formed in the year. (The highest number of same-sex civil partnership formations was in 2006, with 14,943 formations.)
In 2013 parliament passed the Marriage (Same Sex Couples) Act, which introduced same-sex marriage in England and Wales for the first time, thereby giving same-sex couples the same legal rights as opposite-sex couples.
The first same-sex marriages took place in March 2014, when the Act came into effect.
The Act also enabled couples in a civil partnership to convert the civil partnership into a marriage.
The law and procedure on divorce, and on sorting out financial arrangements on divorce, is exactly the same for same-sex couples as for opposite-sex couples. However, care should be taken if the couple should move abroad, as same-sex marriage is not recognised in all jurisdictions. This can mean that the couple cannot divorce in a country where same-sex marriage is not recognised and, importantly, that financial orders may not be enforceable in that country.
The latest statistics for same-sex marriage, for 2022, indicate some interesting trends. There were a record 7,800 same-sex marriages in that year, representing 3.2% of all marriages. And of all same-sex marriages in 2022, there were more female same-sex couples marrying (62.8%) than male. This was the highest proportion of same-sex marriages between female couples compared with male couples since same-sex marriage was introduced in 2014.
So same-sex legal relationships are now on an equal footing with opposite-sex legal relationships. But that does not however mean that same-sex couples do not face different legal issues compared to opposite-sex couples. They can face very different issues, particular when it comes to children.
Obviously, many same-sex couples wish to have children together. There are a number of ways that they can do this, each with its own legal implications.
The first possibility is that one of the couple already has a child by a previous relationship. Here, the legal situation is the same as it would be with an opposite-sex couple. The party who is not the parent will have no legal standing in relation to the child, unless granted it by a court, for example by way of adoption (known as a ‘step-parent adoption’) – see below.
If the couple are married or in a civil partnership then the step-parent can also obtain parental responsibility for the child, giving them the right to be involved in important decisions relating to the child, for example relating to the child’s education and health. Parental responsibility can either be obtained by entering into a parental responsibility agreement, agreeing that the step-parent share parental responsibility for the child (any other parent with parental responsibility will also have to agree), or by the step-parent obtaining a parental responsibility order from the court.
Otherwise, the couple may have children by sperm donation or artificial insemination. In either case the birth mother (i.e. the mother who gave birth to the child, who may not necessarily be the biological mother) will automatically be one of the child’s legal parents.
The identity of the other legal parent will depend upon how the child was conceived, and in what circumstances.
If the child was conceived through sperm donation at a UK registered clinic, the second legal parent will be chosen on the paperwork at the clinic, at the time of the sperm donation.
If the child was conceived through sexual intercourse or through artificial insemination (but not at a UK registered clinic), the other legal parent will be the biological father. However, if the birth mother is married or in a civil partnership at the time of conception, and the child was conceived through artificial insemination, the husband, wife or civil partner will be the child’s other legal parent, even if they are not the biological parent.
The last possible way for a same-sex couple to have children that we will mention here is via surrogacy, which we will discuss below.
We have mentioned step-parent adoption above. Adoption is also a possibility where there are no children. Anyone aged twenty-one or over may apply to adopt a child. In most cases, the child must have had their home with the prospective adopter for a minimum period before the application can be made. The length of the period depends upon who is applying for the adoption order.
For example, if the child was placed with the applicant by an adoption agency then the child must have had their home with the applicant(s) at all times during the period of ten weeks preceding the application, and in the case of a step-parent adoption the child must have had their home with the applicant(s) at all times during the period of six months preceding the application.
A same-sex couple may choose to have a child via surrogacy, whereby a woman (the ‘surrogate’) carries and gives birth to a baby for them. In this case, the surrogate will be the child’s legal parent at birth, even if she is not genetically related to the child. The other legal parent will be the surrogate’s spouse or legal partner or, if she is single, the man who donated the sperm, if he wants to be the father.
The surrogate can, however, nominate a second legal parent, for example the intended mother or non-biological father, provided that the intended second parent consents.
Otherwise, the couple can only become legal parents by applying to the court for a parental order. The application must be made within 6 months of the child’s birth, and the couple, or one of them, must be genetically related to the child – in other words, be the egg or sperm donor. They must also have the child living with them.
Note that the surrogate, and her partner if she is married or in a civil partnership, must give consent to the making of a parental order. The consent must be given no earlier than six weeks after the birth of the child, and it must be given freely and unconditionally, with full understanding of what is involved.
If a same-sex couple who have children separate then they will need to sort out arrangements as to with whom the children will live and, if with just one parent, what contact the other parent should have with the children
Applications to the court for child arrangements orders work in the same way as for opposite-sex parents, although there can be issues if one party is not the legal parent of the child.
We will now bring this article to a close by briefly discussing two other issues: property rights and domestic abuse.
As we have indicated above, same-sex couples who are married or in a civil partnership have the same property rights on relationship breakdown as opposite-sex married and civil partnership couples.
But same-sex cohabiting couples have no such rights, just as their opposite-sex counterparts. They will therefore have to look to the legal ownership of any property, or claim a share in the property, for example through making contributions to the purchase of the property.
The last point to mention, and it is an important one, is that same-sex couples have the same right as any other couples to seek legal protection from domestic abuse, including physical violence and coercive and controlling behaviour.
Accordingly, a victim of domestic abuse in a same-sex couple, whether married or not, may apply to the court for non-molestation and occupation orders.
A non-molestation order is an order prohibiting one party from molesting, threatening or otherwise harassing the other party.
An occupation order is an order that regulates the occupation of the parties’ home, for example by requiring one party to vacate or not to return to the matrimonial home (or, in the case of an unmarried couple, the home in which they both lived).
The above summary sets out the basic law relating to same-sex couples. For most couples it will indeed cover everything they need to know. But a short summary like this cannot possibly cover everything, and nor is it intended as a substitute for tailored legal advice. Accordingly, if you have a same-sex legal issue then you should seek the advice of a specialist.
Walker Family Law have specialist family lawyers who can help you with any same-sex couple family law issue. For further information regarding divorce and separation see here, for further information regarding child arrangements see here, for further information regarding cohabitee property disputes see here, and for further information about domestic abuse, see here.
