Is My ISA Included in the Divorce?

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Section 25 of the Matrimonial Causes Act (1973) is the law which provides the guidelines that the English courts apply when they are considering a financial order. This act covers claims relating to property and assets.

The aim of a financial settlement on divorce is to ensure that any assets are split fairly. Note that ‘fair’ does not necessarily mean ‘equal’ as the division should leave the parties in a position ‘of equal standing’.

A Court’s definition of ‘property’ includes a wide range of assets including:

  • Actual property, such as a family home
  • Pensions
  • Savings
  • Investments
  • Shares
  • Interests in a business
  • Life policies
  • Personal belongings including jewellery, cars, pets etc.

All savings and investments are to be disclosed as part of the divorce process, even if these are held in your sole name. This is because savings will typically be considered ‘matrimonial property’; namely assets that have been acquired during the time you have been married from the ‘joint enterprise’ of both spouses.

Individual Savings Accounts (ISAs) are, by their nature, a savings vehicle that can only be held in one name. Whether you have a Cash ISA (similar to a savings account) or a Stocks and Shares ISA (typically invested in the stock market), your investment will be held in your single name.

Despite this, you are required to disclose an ISA as part of your financial settlement. This is because the savings are likely to be a ‘matrimonial asset’ i.e. they were built up during the time you were married.

The only exception to this is if you are able to prove that money in an ISA is a ‘non-matrimonial asset’; namely that the money was accrued outside the marriage, for example:

  • You brought the savings in the ISA to the marriage
  • You have accrued the money in your ISA since you separated
  • You received the money in your ISA during the marriage from a source outside the marriage (such as a gift or inheritance)

Splitting the money in an ISA can be difficult as you cannot transfer the funds to the other party.

If it is a Cash ISA you may have to withdraw any money that you are giving to your spouse. If it is a Stocks and Shares ISA you may have to cash in some or all of your investment.

Is a Junior ISA I hold for my child also included in the divorce?

If you hold any money in a Junior ISA then this money will be in your child’s name, and belong to your child.

If you are going through a divorce then there may be some circumstances when savings held in your child’s name might be included in your joint financial assets.

For example, the other party may have moved money from their own account into your child’s account in order to try and exclude the funds from any financial settlement.

 


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