How are parental and familial assets treated by the courts in divorce?

Familial assets are those derived from one spouse’s family. These assets are usually categorised as non-matrimonial and ring-fenced, as they were derived outside of the marriage by way of inheritance or gift to one spouse from their family. By contrast, “matrimonial” assets are assets which have been built up during the course of the parties’ marriage, as a result of their joint endeavours, to which the court applies the sharing principle in the first instance. The starting point is therefore that these assets will be shared equally.

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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