Christmas is a time for giving, but it’s also a time when finances are under the spotlight. While we’re busy budgeting for gifts and festive celebrations, it’s important to remember that financial decisions can have serious implications, especially if you’re going through a divorce.
The law around finances during divorce is complex, and although there’s no rigid formula, the way money is handled before and during proceedings can significantly affect the outcome. In this article, we explore the do’s and don’ts of accessing money before divorce, what happens if a spouse spends excessively or hides assets, and the Court’s powers to prevent financial misconduct.
Ownership of Monies in a Marriage
It might seem straightforward: money in your own name, such as savings, income, or a personal account, belongs to you alone. However, the family court can view all assets, whether held jointly or individually, as part of the ‘matrimonial pot’ when determining a fair division of assets.
If a bank account is held solely in one spouse’s name, the balance within it may still be considered when the Court makes a financial order. The Court will assess all the parties’ assets (including, but not limited to, savings, property, pensions and investments) regardless of ownership. They will decide how these should be divided to achieve fairness and meet the needs of both parties.
For this reason, you must be very careful when accessing or spending your own money before a divorce or whilst in divorce proceedings. This includes going overboard on Christmas presents!
The Court’s Powers
If one spouse deliberately spends or dissipates assets before or during divorce proceedings to reduce the matrimonial pot available for division, the Court will take a dim view of this conduct. Examples can include transferring money to friends or relatives, gifting assets under the guise of generosity and making lavish purchases.
Under Section 37 of the Matrimonial Causes Act 1973, the Court has the power to prevent or reverse transactions if it believes that assets have been disposed of deliberately to defeat a spouse’s financial claim. For example, if one party has already disposed of assets, the Judge has the ability to make an ‘add back’, treating the wasted funds as if they still existed for the purpose of division. If one spouse had spent £20,000 recklessly, the Court may assume that spouse has effectively already received that amount and adjust the settlement accordingly.
Practical Tips
What you can do:
- Continue using money for normal living expenses
- Keep financial records
- Seek legal advice before making large purchases or gifts to family and friends
- Remain open and honest about your finances
What you shouldn’t do:
- Attempt to hide or transfer money
- Make large gifts
- Waste money thinking that it will take those assets out of your spouse’s reach
In conclusion, you should be incredibly careful not to purposefully overspend or gift assets, especially when divorce proceedings are initiated, and keep in mind the Court’s powers under Section 37 of the Matrimonial Causes Act 1973. For further advice, please contact Niamh Wilson at niamh.wilson@swinburnemaddison.co.uk or call our Family Law team on 0191 384 2441.
