What happens to property owned before marriage?

Obviously it is often the case that one party to a marriage will have significantly more assets than the other, which they have acquired before the marriage. But will this have a bearing upon the financial settlement in the event of a subsequent divorce?

The answer is: it may have an effect, depending upon the circumstances.

If, for example, it is a long marriage and the assets that one party acquired before the marriage have become ‘mixed’ with the other assets, then it may have little or no effect.

Take, for example, the situation where in a long marriage one party owned a house before the marriage, but that house is sold and the proceeds are then used by both parties. It may then be difficult to subsequently identify the original value of the house separately from the joint assets.

In such a situation the fact that one party owned assets prior to the marriage may have little or no bearing upon the financial settlement.

Matrimonial property

But often it will be possible to identify assets owned prior to the marriage, or at least to ascertain the value of those assets, and take them into account in the divorce settlement.

So what is the approach of the courts in such a situation?

To answer this, we need to consider the concept of ‘matrimonial property’.

In brief, assets acquired during the marriage, through the joint efforts of the parties to the marriage, are known as ‘matrimonial property’, and therefore fall to be divided between the parties on divorce.

Other assets, such as assets acquired before the marriage, inheritances or gifts to one party, and assets acquired by a party after the separation are considered to be ‘non-matrimonial’, and will therefore remain the property of the party who owns them.

But there is an exception to this. Where the matrimonial property is insufficient to meet the needs of one party then the court can ‘dip into’ the non-matrimonial assets, in order to meet those needs.

Unfair to share assets owned before the marriage

The way that all of this works can be demonstrated by a 2011 High Court case.

In the case the parties were married in 1993, at which time the husband had assets of just over £2 million.

The marriage broke down in 2009. At that time the total assets were worth about £9.7 million.

Divorce proceedings ensued, and the wife argued that the assets should be divided equally. She also claimed that she required half of the assets to meet her needs.

The husband argued that he should be entitled to more than half, in the light of the assets that he brought into the marriage. He did not, in fact, seek to recover all of the money he brought into the marriage, but just asked for a division that would give the wife 43% of the assets, leaving him with £1.37 more than her.

Considering the case, the judge concluded that it would be wrong and unfair for none of the assets owned by the husband before the marriage to be excluded from the general principle that assets should be shared equally.

The question, therefore, was: how much should be excluded?

Taking into account the fact that the marriage was quite long and the assets that the husband had brought into the marriage had well and truly mingled with marital funds, the judge decided that an appropriate figure would be £1 million.

The result of this was that the wife received about 45% of the assets, and the husband about 55%.

That still left the matter of the wife’s needs.

The judge concluded that 45% of the assets would be enough to meet the wife’s needs. There would therefore be no further adjustment in the wife’s favour, although it should be said that the judge did not exclude more than £1 million, as he considered that that would not leave enough to meet the wife’s needs.

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