“But It Is My Money!” – PART TWO
Written by Antonia Kirby
7th November 2024
What happens to money you receive by gift, inheritance or other means after separation?
Following on from my first blog by this same title, another issue which sometimes arises is the receipt of money by inheritance, redundancy, or even unexpected share returns following separation, and even sometimes following an agreement having been reached.
Let’s paint a picture; you have been married a long time, then you decide to separate and have reached an agreement as to what to do with your finances. Then, a couple of years later, one party sells one of the assets you agreed for them to retain and makes a lot more money than expected.
Another scenario could be an inheritance has been received either just before, or just after separation.
Types of Assets – recap
We explored the two classes of asset in “But its my money” part one. In these instances, technically all of the receipts would be non-matrimonial.
In situations post separation, it becomes much more about timing and needs, as opposed to mingling and needs.
What is the general rule?
As we previously explored, the “matrimonial pot” can be divided by the Court and the starting point for that is 50/50. Non-matrimonial assets can be argued out of the “pot” on the basis they were not monies arising out of the marriage. In cases where the acquisition happened after separation, there is usually more of a leaning for it to be excluded, than if it were acquired before the marriage took place. This is always dependent on the financial profile, however, of the couple getting separated.
Inheritance
I have dealt with two matters within 6 months of one another with post separation inheritance, and both were treated differently in the case. In the one case, the assets were limited, and there was a large inheritance equaling the sum of the other party’s pension. The only other asset was a house. In that case, it was necessary to acknowledge the inheritance as an asset available to that party, and consequently, my client received more of the other available matrimonial assets. This was a needs case.
In the other, the assets were into the millions, and there was a modest inheritance which accounted for less than 7.5% of the total value of the pot. We sought to have the inheritance excluded as it was nothing to do with the marriage, and frankly, a drop in the ocean of the parties’ wealth. That argument was successful. The type of case is critical to the outcome.
Share Proceeds and other windfall
This entirely depends on the nature of the windfall. For example, if you were to receive a personal injury payout assessed based on the cost of your future needs and due to an imposed disability, it is likely this would be ringfenced as money received for a specific purpose.
If shares are sold very shortly after separation, and for such a sum that the entire financial landscape of the relationship changes, it would be very hard for them to be overlooked entirely. If an agreement has already been reached, and several months thereafter, the shares are sold for a surprising amount of money, provided that all disclosure was given and “above board”, then it may be possible to ringfence these sums.
What can I do about it?
If you have are in negotiations when a windfall arrives, you can try and negotiate the figure out of the settlement, on the basis that it did not arise out of any efforts of the marriage, and you would have been able to meet your needs without it. It is more difficult if without access to those funds, there is not enough to go around; in those instances, you may need to make peace with giving away slightly more of the matrimonial assets, in order to ensure everyone can meet their own needs, as in reality that is likely what a Judge would do. If you reach an agreement but are not quite ready to start the divorce process, you can have a Separation Agreement prepared to record any agreement between you and your spouse, which would latterly form the basis of any agreement between you.
If you are separating, or getting divorced and wish to discuss whether there is anything you can do to protect assets you acquired after your separation, or need help in negotiating a settlement, please get in touch and we would be happy to help you. Just call 01926 354704 or email: AntoniaA@moore-tibbits.co.uk.
Antonia Kirby
Antonia is a Senior Solicitor in our family team having joined in March 2024. Antonia studied law at the University of Cardiff and qualified as a solicitor in 2015, joining the Law Society’s Specialist Family Panel in 2016.
Any relationship breakdown is a highly stressful life event and Antonia will spend time listening and focussing on her client’s individual needs with particular importance given to the needs of any children of the family.
Antonia is determined and proactive, providing clear, strategic and cost-effective advice with compassion. She prides herself in being approachable and understanding and provides clear practical advice to help clients stay grounded and resolve cases as swiftly and amicably as possible.
With a wealth of experience in all aspects of family law, Antonia provides advice on:
- Divorce and separation
- Cohabiting and unmarried couples
- Child arrangements and disputes
- Adoption/Special Guardianship
- Asset division
- Domestic abuse
- Pre and Post nuptial agreements
- Separation and Cohabitation Agreements
Providing clear and constructive advice, Antonia excels in finding creative solutions in all aspects of family law whether that be by negotiating a settlement outside of the court process or robustly litigating within it.
Outside of work Antonia enjoys cooking, singing/performing, learning languages and spending time with her children and her friends.
