How should a property be divided when you divorce or separate?
The dissolution of a civil partnership or divorce is incredibly stressful for everyone involved. Our team of specialist family law lawyers at Harper Macleod LLP understand how difficult this can be. We’re here to listen and to help you through the process.
What is matrimonial / partnership property?
When instructing a family lawyer, “step one” will generally be to identify what constitutes “matrimonial property” or “partnership property” in a client’s situation. We do this to establish the net value of the matrimonial / partnership property so that we can thereafter consider what division is fair. Generally speaking, “matrimonial / partnership property” includes anything that was acquired by either party (as an individual or jointly) during the marriage / civil partnership and held at the date of separation. Examples of “matrimonial / partnership property” can include heritable property, money held in bank accounts, pensions, businesses, shares, vehicles, and other types of property such as furniture.
Two important exceptions that fall outside the definition are any assets that were acquired during the marriage / civil partnership as a direct result of inheritance or any assets that were gifted to either party. So, for example, if one of the parties to the marriage inherits an asset during the marriage / civil partnership and this asset remains in the same form at the date of separation, the inherited asset will not form part of the matrimonial / partnership property.
The clear definition of matrimonial and partnership property (provided by the Family Law (Scotland) Act 1985) means that if an asset held by either party at the date of separation was acquired prior to marriage or civil partnership, it will not form part of the matrimonial / partnership “pot.” The exception to this rule relates to benefits in pensions and interests in life insurance policies. Here, a proportion of these assets will be regarded as matrimonial / partnership property, reflecting the value of such assets throughout the relevant period, i.e., during the marriage / civil partnership until the date of separation.
Further, another important exception is where a property was acquired by either party prior to marriage / civil partnership but was intended to be used as the matrimonial / partnership home or contents of that home, then this too will be regarded as “matrimonial / partnership property” (notwithstanding the pre-marriage or pre-partnership acquisition).
Generally, however, if an asset was acquired prior to marriage / civil partnership, it will not make it into the “pot” for division.
In order to establish the “net matrimonial / partnership property,” any debts incurred by one or both parties during the marriage / partnership and held at the date of separation would be deducted from the total value of the matrimonial / partnership assets.
We commonly come across situations where inherited, gifted, pre-marriage, or partnership property is used / sold / altered during the marriage or partnership. The asset may no longer exist in the same form at the date of separation, or it may not exist at all. Funds arising from the sale of such an asset may have been used during marriage / civil partnership to acquire another asset that subsequently formed part of the matrimonial / partnership property. This could form the basis for an argument that this situation is a “special circumstance” justifying an unequal division of the matrimonial / partnership property. This, along with other factors, can be considered in looking at the situation overall to provide advice about what constitutes a fair share of the net matrimonial / partnership property when assisting a client to resolve the financial issues following a separation.
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