Are premarital assets protected in divorce?

Premarital assets are generally protected in divorce unless required to meet the other spouse’s needs. Assets acquired by the parties prior to the marriage may be considered non-matrimonial and ‘ringfenced’.

Premarital assets are non-matrimonial because they were not built up during the course of the marriage, but owned prior to its inception. If one party contributes significant premarital wealth to the marriage, this is likely to be taken into account when considering the fairest way to divide the assets.

In contrast, matrimonial assets are those which have been built up during the course of the parties’ marriage, and to which the court applies the sharing principle in the first instance, such that the starting point is that they should be shared equally.

Since premarital assets are not immediately subject to equal sharing, it is often the case that the party bringing them into the marriage can retain them. If, however, those premarital 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 usually take into consideration the standard of living enjoyed by the parties during the marriage when considering a spouse’s future needs.

The importance of the source of premarital assets can diminish over time. There may be, for example, intermingling of premarital and marital assets, which results in the premarital assets thereby becoming “matrimonialised”. How the assets have been held and made use of by the parties is therefore extremely important, and relevant for the court to consider when exercising its discretion upon division.

Premarital assets are often matrimonalised and consideration will be given to whether the asset was treated as a separate and distinct asset of one party, or whether both parties drew on and relied on the asset.  In N v F [2011] EWHC 586 (Fam), Mostyn J concluded that whether premarital assets should be recognised depends on whether it was ‘mingled’ with matrimonial assets, and if so, for how long. If the court does decide to recognise a party’s premarital wealth, it must then be decided how much should be excluded from the matrimonial pot. The court will then examine the fairness of the proposed award. In this case, only £1m of the husband’s pre-acquired wealth of £2.1m was ringfenced, due to consideration of the wife’s needs. 

The way in which the courts view premarital assets is fact specific, and depends upon all of the circumstances of the case. It is therefore extremely important that your case is framed in the best possible way from the outset.

Working exclusively with high and ultra-high net worth clients means that premarital wealth is often a significant factor for Vardags’ clients. We know that deploying a well thought out argument at the very outset of a case in those circumstances is key, and have extensive experience of the way in which to do so to achieve the best outcome for clients.

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