Family Assets in Divorce

What Are Family Assets in Divorce?

In divorce law, family assets - also referred to as familial or parental assets - are those derived from one spouse’s family, typically through inheritance, gifts, or family trusts. These assets are usually considered non-matrimonial, meaning they are not automatically subject to division upon divorce.

Courts distinguish between matrimonial assets (acquired during the marriage) and non-matrimonial assets (acquired outside the marriage), but may still consider the latter if needed to meet financial needs.

Are Family Assets Divided in Divorce?

Generally, family assets are ring-fenced and retained by the spouse who received them. However, the court may “invade” these assets if:

• The matrimonial assets are insufficient to meet the other party’s needs
• The family assets were used for joint purposes during the marriage
• The asset has been matrimonialised (e.g. used to buy the family home)

Key Factors Courts Consider

When deciding whether family assets should be included in the financial settlement, courts assess:

• The source of the asset
• Whether it was kept separate or used jointly
• The needs of both parties (especially housing)
• The standard of living during the marriage
• Whether the asset has been intermingled with matrimonial property

Can Family Assets Become Matrimonial?

Yes - through matrimonialisation. This occurs when:

• Family wealth is used to fund joint purchases
• Gifts or inheritances are deposited into joint accounts
• Family-owned property is transferred into joint names

Once matrimonialised, these assets may be subject to equal sharing.

Conclusion

If one party contributes significant familial wealth to the marriage at the outset, this is likely to be taken into account when considering the fairest way to divide the assets. Equally, if, during the marriage, one party receives significant gifts from family members, or inherits their family’s assets, these too could be ring-fenced by the court for that party to retain upon divorce. However, if those familial assets are required to meet the other spouse’s “needs”, for example their need to be re-housed, then the court is entitled to “invade” them, and they may well fall to be divided in the financial settlement. The court will take into consideration the standard of living enjoyed by the parties during the marriage when considering a spouse’s needs in the future.

Familial assets which do not legally belong to one of the parties to the marriage will not form part of the settlement, unless it can be shown that the spouse has a beneficial interest in those assets, despite the fact that they do not hold the legal title.

The importance of the source of familial assets can diminish over time. There may be, for example, intermingling of familial and marital assets, which results in the familial assets thereafter becoming “matrimonialised”. How the assets have been held and how they have been made use of by the parties during the marriage is therefore extremely important, and relevant for the court to consider when exercising its discretion upon division. The way in which the courts view familial assets is fact specific and depends upon all the circumstances of the case.

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