8 – Divorce and the dynastic estateMany spouses facing divorce are particularly concerned with howthe family court will treat assets which have been gifted or inherited.This concern is most pronounced for the landed estate owner. Inthe absence of a pre-nuptial agreement, the position in law is notstraightforward.Flora HarraginThe family court’s approachThe family court has complete discretion as to how assets are distributed upon divorce.It can redistribute or order the sale of assets as it sees fit to achieve a ‘fair’ result. Thisincludes property which has been gifted or inherited. In many legal systems, gifted orinherited property is automatically ‘quarantined’ from financial claims on divorce and leftwith the party who holds it. It is a common misconception that this applies in Englandtoo. In fact, the English courts’ primary concern when determining what is fair is not thesource of property, but the parties’ financial needs.Meeting needsThe parties’ financial needs comprise their respective needs for housing and income. Butneeds are not interpreted in the limited way one might expect. The parties’ ‘needs’ aregenerously interpreted in the light of the standard of living enjoyed during the marriage,the length of the marriage and the parties’ financial resources. So, in most casesinvolving substantial estates, ‘needs’ means a mortgage free property and an incomestream (payable, if possible, by a single lump sum). In our case of Y and Y in 2012 the onlyasset available after 26 years of marriage was a country estate, which had been in thehusband’s family for two generations and was worth £27m. The wife was awarded £8.8m(just under one third of the total). The judge ignored the husband’s plea that an order atthat level would force a sale of the estate.Assets can, and will if necessary, be transferred between the parties or sold in order tomeet the parties’ needs, regardless of the source of the asset.Sharing the matrimonial wealthThe law views marriage as a partnership. If there is more than enough to meet bothparties’ needs, the court can order the matrimonial property to be shared between theparties on divorce, on the basis that that is reasonable and fair.What constitutes matrimonial property? Assets built up during the marriage will bedeemed to be matrimonial property and shared.But assets brought into the marriage by one party or inherited by or gifted to one partyduring the marriage will be treated differently. The court will not consider those assetsto be a fruit of the marital partnership; they are external to the marriage and will bedeemed ‘non-matrimonial’. The landed estate which has been in one party’s family forgenerations is perhaps the paradigm example of non-matrimonial property (but see thewarning below). It is very unlikely that non-matrimonial property will be shared unless it isrequired to meet needs.20Rural Estates NewsletterSpring 2021
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