Is it possible to ring fence and protect assets on divorce, to keep certain assets out of the pot for division? Yes, you can sometimes protect assets but it depends on all the circumstances. In this blog we consider the following vital questions and some prudent steps you can take. Scroll down to find the answers:
- Is it a matrimonial or a non matrimonial asset?
- Is it possible to protect inheritances?
- Can a business be ring fenced?
- Is transferring assets to someone else the answer?
- How are assets split on divorce?
- What’s the best way to ring fence and protect assets?
Let’s start with an example …
I have a friend who’s a magician. She puts on brilliant shows, and her husband of ten years is her glamorous assistant. But now he’s saying he’s fed up with sharing the limelight with a bunch of rabbits. He wants a divorce and furthermore he wants half of everything.
Is it a matrimonial or a non matrimonial asset?
I advise her that non matrimonial assets can sometimes be kept out of the pot for division. So what are ‘non matrimonial’ assets? They can include:
- Assets built up before the marriage
But if there aren’t enough matrimonial assets left to fulfil her husband’s needs for example for housing, non matrimonial assets can be used to plug the gap.
Is it possible to ring fence and protect inheritances?
My friend throws up her hands with relief. “Thank goodness!” she cries. “I won’t lose my magic cabinet.” She’s particularly fond of this extraordinary antique as her grandfather left it to her in his will. Her magician ancestor, The Great Mirando, is famous for disappearing within the depths of this very cabinet during a lost weekend in Blackpool.
In this particular case it may be possible to ring fence and protect assets on divorce. This is because she has never used her valuable inheritance in her business and she has never allowed it to be used as a matrimonial asset.
If she had sold it, for example, and bought the family home with the proceeds this would be an entirely different question. Her husband would have a much stronger claim.
Read my recent blog on Protecting Inheritance On Divorce for some helpful tips.
Can a business be ring fenced?
I advise my friend that her husband might make a claim over her business if it has any value.
She laughs. She tells me her assets comprise trick cards and table clothes, magic chains and manacles, and, of course, three rabbits and a rather malodorous hat. They really have no value at all. And as for income, there isn’t any. She does it all for charity. My friend and her husband live off their wages from their respective jobs. He works in a shop. She works in an office.
In this case, the business has no value either in terms of assets or income. What would happen if it did? See my recent post about Protecting Your Business On Divorce.
How about transferring assets to someone else?
My friend has a savings account and some shares. She’s thinking of transferring them to her sister.
Not a good idea. She risks a court order freezing her assets and a hefty costs order. And if she hides assets this could lead to imprisonment for contempt of court. Both she and her husband must give full and frank disclosure of their finances (how to do this is explained in my recent blog).
Even though my friend has taken a course in advanced escapology it’s advisable not to run this kind of risk.
How are assets split on divorce?
What will happen to their house, their savings and pensions, and their caravan in Morecambe?
I advise her the starting point for division is a fifty fifty split although there are special considerations. These include the care of children, the extent of the couple’s wages and their earning capacity. Also their standard of living during the marriage, and their ages. The length of the marriage is important, too. As is their health. Lastly what the couple put into the marriage financially, and their individual financial needs.
What’s the best way to ring fence and protect assets on divorce?
The good news is she has met someone new, a fellow magician. It’s early days, and she wants to get her divorce sorted out first, but who knows, this could be the real thing.
I advise her if they decide to tie the knot, she ought to think about a prenuptial agreement. She says she will certainly keep this idea up her billowy sleeve along with her magic cards and scarves.
Contact Joanne Houston on 01962 217640 for free advice on ring fencing and protecting your assets on divorce. In this 20 minute session we will review your matrimonial financial situation and how you can achieve your objectives.
See my blog about how to get the best financial settlement on divorce.
Did you know there are different rules for Short Marriages?
JUST FAMILY LAW are specialist divorce and family law solicitors offering personalised legal solutions. We offer collaborative law which is especially relevant in providing solutions tailored to your family’s needs. This includes same sex couples and their families. Visit our website just-family-law.com The topics covered in this blog post are complex and are provided for general guidance only. Therefore if any of the circumstances mentioned in this blog have application to you, seek expert legal advice.
image credit: Ungár Anikó bűvész by Fortepan/Urbán Tamás on Wikimedia Commons« Go Back