Matrimonial Agreement and Division of Assets

A Matrimonial Agreement and Division of Assets is a settlement striving to sever all financial ties and restrict any future claims by spouses.

There are two ways to resolve any court case – either in court or out of court – and this area of law is no different. A Matrimonial Agreement is essentially an out of court divorce settlement striving to sever all financial ties and restrict any future claims by spouses.  This will include any future windfalls or inheritance. A Matrimonial Agreement will still require both parties to seek independent legal advice and to go through the processes of discovery in order to divide assets between the parties by consent.  Once signed, the Matrimonial Agreement can be made binding upon the parties by rule of the Court once the Judge has approved it.

 1.  Discovery of Assets 

The Discovery phase of the Matrimonial Agreement is the process of gathering all relevant information in relation to the assets of both parties. This may include for example the marital home and its contents, a holiday home, investment properties, any cars, a caravan, savings, pensions, or policies and much more. This can be a somewhat confusing and daunting process for each individual, therefore it is necessary to seek legal advice to ensure that you have considered all relevant assets.  In addition there may be a degree of reluctance  to provide full and frank discovery but be rest assured that if it is not made you will leave yourself exposed to the case being re-opened at a later stage and incur penalties as a result. The cases of Gohill v Gohil and Sharland v Sharland both from 2015 are evidence of the Court’s willingness to set aside previous Court Orders where there has been a failure to provide full and frank disclosure.

During ‘Discovery’, our solicitors at Luke Curran & Co. will work with you to review and exchange accurate and up to date information collated. Both parties will be expected to provide documentation to support such as accounts, bank statements, pay slips, details of any insurance policies, mortgage information, property valuations and so on, so that the total value of the assets can be calculated.

2.  Division of Assets

When negotiating the terms of settlement one must keep in mind that the Court has power to overrule the proposals made in the Matrimonial Agreement and decide what is appropriate. Statutory guidelines exist to assist with fair decision making as outlined in the Matrimonial Causes (Northern Ireland) Order 1978.  They take into account the following:

  • Income – the financial resources each partner currently has such as income, property and pension schemes, and any income sources which they are likely to have in the foreseeable future, such as their future earnings potential.
  • Financial needs – this covers the existing and foreseeable financial needs, obligations and responsibilities of each party.
  • The previous standard of living of the family prior to the breakdown of the marriage.
  • Age – the age of each partner.
  • The duration of their marriage.
  • Disabilities – any physical or mental disability either or both partners may have.
  • Contributions – the contributions each party has made or is likely to make to the welfare of the family.
  • Conduct – the conduct of each party (only if serious).

Fundamentally in 2000, a landmark case, White v White resulted in the introduction of the ‘yardstick of equality’ principle which meant that the courts no longer discriminate against the stay at home parent, but instead place an equal value on his or her contributions to the marriage, when compared to the money-earning partner.

There have been a considerable number of decisions of the Court of Appeal since adding more guidance as to how the law should be applied and in 2006 the House of Lords delivered a further important Judgement in the case of Miller and McFarlane:

  • The court has to try and arrive at a fair result for the husband and wife and three principles have emerged
  • Firstly, the assets of the husband and wife should be divided primarily so as to make provision for their housing and financial needs to take into the account the various criteria.
  • Typically once achieved, the matter is at an end as there is rarely sufficient resources to provide for the outgoings of two homes.
  • Secondly, where the husband and wife may have organised their affairs so that one of them is disadvantaged financially they should receive some sort of compensation for that. E.g. one spouse gives up their career to look after a child.
  • The third principle of commitment of sharing their lives so that when the partnership ends they are each entitled to an equal share of the assets unless there is a good reason otherwise. It does not necessarily result in equal division of the assets as when there are children one spouse will typically earn more than the other and that higher earning power is a substantial resource. The objective is to give both the husband and wife an equal independent financial start.
  • There is a distinction between matrimonial property and non-matrimonial property. Matrimonial property is acquired during the marriage (not by inheritance or a gift) e.g. the family home. Non-matrimonial property is property that the husband and wife bring into the marriage from the outset or by inheritance or gift.
  • In short marriages fairness can result in the matrimonial property being divided equally but not non-matrimonial property. As years go by and the marriage is longer than the distinction between matrimonial and non-matrimonial property will be less and less.

The law is not definitive and simply provides principles to be interrupted based on the facts of each individual case. This makes it all the more important that legal advice is sought at an early stage.

3.  Spousal Maintenance

Upon divorce, the court can apply various orders in relation to maintenance such as:

  • Order for periodical payments designed to meet the day to day living expenses of the party.
  • Order for secured periodical payments where a lump sum is invested to produce an income that will be paid periodically.
  • A lump sum Order – a ‘once and for all’ payment.
  • A property adjustment Order which gives the Court power to transfer or settle the parties’ property.

Periodic payments will mean that an on going financial relationship will exist between both parties. As an alternative parties are free to negotiate or the court can apply ‘Buy out of Maintenance’ orders, meaning that the individual concerned will pay a greater amount at the beginning or be given a transfer of property to avoid having to make weekly or monthly payments. This is known as achieving a ‘Clean Break’ and is often in both parties interests by allowing them to financially move on with their lives.

This does not affect a parent’s on going financial obligation to their child.

 4.  Child Maintenance 

Parents are advised to agree between themselves the appropriate amount of money that the non-resident parent should pay to the parent which the child or children reside with to meet the needs of their children. An online child maintenance calculator is available from the Child Maintenance Service to assist parents to determine a suitable amount.

If both parents have reached their own family arrangement agreement, they can apply to the Courts to have that made a rule of Court, but only via a Consent Order. In that case they will agree the amount to be paid and when. This Consent Order cannot be varied during the first 12 months.

After that period or in default of agreement between the Parents an application can be made to the Child Maintenance Service for a child maintenance arrangement which then will overrule and replace previous agreement made.

Final Note

In recent years Collaborative Law has emerged which is by definition a non-adversarial approach to divorce. The parties and their solicitors agree in writing not to go to court. They negotiate in good faith and achieve a mutually-agreed upon settlement outside of court. This route can greatly ease the emotional strain caused by the breakup of a relationship and protect the well-being of children. This is an option to be considered when possible.

All aspects of the divorce process are particularly complex and emotionally driven. Seek legal advice from Luke Curran & Co. at an early stage to explore settling matters by way of a Matrimonial Agreement to avoid prolonging the process, incurring high court costs or leaving yourself open to further litigation.

If you’d like to arrange an appointment to discuss your options, feel free to contact us at law@lukecurran.co.uk or call 02830267134.