During divorce, people often make the mistake of thinking all assets will be divided, but this is not necessarily the case. When we talk about matrimonial assets, we generally mean any financial property which has been acquired by either party since pre-marriage cohabitation. But what types of matrimonial assets might you be required to share with your ex if you divorce? Here’s our non-exhaustive list of examples:
During divorce, people often make the mistake of thinking all assets will be divided, but this is not necessarily the case. When we talk about matrimonial assets, we generally mean any financial property which has been acquired by either party since pre-marriage cohabitation. But what types of matrimonial assets might you be required to share with your ex if you divorce? Here’s our non-exhaustive list of examples:
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Property
It is probably not surprising to learn that the principal asset within this category is the family home. But there are also many other types of property that may be included in the matrimonial pot for distribution.
- The family home (including any outstanding mortgage). Although this is treated as an asset, it may be substantially reduced if the outstanding mortgage is large.
- Holiday homes and/or property that is rented out.
- Parking spaces or vacant land, although this type of asset may not appear to have any extrinsic value, there may be potential to increase it by obtaining planning permission.
- Working farms – this also crosses over with business assets and requires specialist valuation. Adding to this complex task is the fact that many farms are passed down through generations, with family partnerships being commonplace.
Personal finances and investments
Although many couples won’t have investments or shareholdings, most of us have a current account and pension. Here are some things that may be included:
- Your pension – in order to value this correctly, each party must obtain the Cash Equivalent Value (CEV) of the pension from the provider.
- Financial assets, such as savings and current accounts. Balances in these accounts are likely to vary depending on when salary is paid, or savings deposits are made. Whilst the balance may appear large when you separate, it could decrease significantly by the time you receive your final divorce order.
- Investments, endowments, insurance policies. Beware of issues such as hidden fees and capital gains tax if you decide to liquidate these types of assets. Term life insurance is not considered a divorce asset because it has no value unless the policyholder dies. In contrast, whole life insurance can include a “cash value” which may be withdrawn by the policy holder in some circumstances.
- Personal belongings such as vehicles, furniture, art. Obtaining a valuation of such items can be difficult, especially cars which can be affected by age, mileage, and condition. If you own a classic car, for example, the resale market is generally narrow, so it may not be worth as much as you think.
- This includes loans, credit cards, overdrafts and can include any tax which is due to be paid.
- Any asset you are likely to receive in the foreseeable future, such as a monetary gift or inheritance.
Personal Property
Valuing household items such as furniture and white goods, usually tends to revolve around the cost of replacing them rather than what they’re worth. Imagine having to set up home with nothing but your clothes, and you can understand exactly how much it could cost to establish separate households. The most common items include:
- Clothing and jewellery.
- Collections – designer handbags, shoes, antiques, other types of collections.
- Vinyl records, CDs, or DVDs, although these things may not present as a high value asset, again, they can be expensive to replace.
- Washing machine, dryer, dishwasher, fridge/freezer, cooker.
- Sofa, other soft furnishings.
- Electrical items, such as vacuum cleaner, kettle, microwave, etc.
- Beds, sheets, pillows, duvets, covers, etc.
- Cars, boats or caravans that might have been purchased.
Business and shares
Business assets and shares can be complex to value and divide, often involving accountants and other professionals, sometimes at substantial cost. So whether you or your spouse own a business, or you own it together, the issues surrounding business assets are likely to be significant.
- Business assets, whether owned jointly or in yours or your ex’s sole name.
- Any other assets, such as share options or trust interests.
- Business vehicles and other property such as offices, warehousing.
Digital assets
Despite the nebulous nature of digital assets, it is becoming increasingly common to include them in prenuptial agreements, and, subsequently, divorce settlements. The following is a list that you might need to consider:
- Personal entertainment digital assets – many couples own digital content, such as large music collections or movie downloads. Since only one person can retain the files, they can be quite costly to replace.
- Loyalty reward points – if you spend on a credit card or travel extensively, you may have accrued a significant volume of reward points. In most cases, they cannot be transferred between parties, but their value can be offset against other assets by way of compensation.
- Ownership of a domain name, website, blog, or Instagram account which has been registered using matrimonial money. If these platforms have accumulated subscribers which have, or could be, converted into passive income, it may be considered a marital asset warranting inclusion.
- If you own a patent with potential for future monetisation, or if you are already receiving royalties from something you invented and licensed, they could be viewed as an income stream.
- Although digital photographs have no monetary value, they will have sentimental value. In addition, many are now involved in creating Non-Fungible Tokens (NFTs) which are works of digital content bought and sold using cryptocurrency. Since it often takes many years for the legal sphere to catch up with technological advancements, it will be unusual for the court to deal with this. However, they should still be counted as divorce assets if either party owns any.
As you can see from this article, the definition of what can be considered a matrimonial asset is wide, and hopefully we have covered things in our list that you otherwise wouldn’t have previously given a second thought to including. Because of their more non-traditional features, valuing some of these assets can sometimes be difficult to achieve. So you may find you have to work with a professional to ensure they are properly valued. If you are getting divorced, you should begin the process of valuation as early as possible, because extra time may be required to explore their unique qualities.
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