Info & Advice

Can informal marital agreements over assets be used in divorce?

Request a Free Consultation with a Solicitor

An informal marital agreement is where a couple set out their finances and assets before marrying, listing who owns what, and how it will be divided in the event they separate or divorce. However, in order to be considered a legally binding document, certain criteria must be met, such as full and frank financial disclosure, or each party obtaining independent legal advice at least 28 days before the wedding, amongst other things. Any agreement falling foul of these rules is unlikely to be upheld in court, and will be viewed as designed: an “informal” document not necessarily intended to be legally binding.

Of course, there is nothing to prevent you drawing up an informal marital agreement, but there is no guarantee in the event of a divorce that it will hold any weight in law. For an agreement to be recognised by the court it must:

  • Be contractually valid and not be entered into under duress
  • Be made by deed and contain a statement that the parties understand its effect
  • Not be made within 28 days of the marriage/civil partnership
  • Contain disclosure of each party’s financial position
  • Both parties must have received independent legal advice at the time the agreement was formed

Even if the above rules are followed to the letter, it is important to know that, as the law stands, marital agreements, whether formal or informal remain unenforceable in their own right. Although formally drawn up nuptial agreements are, without a doubt, regarded as a valuable tool to safeguard assets in the event the relationship breaks down.

Essentially, the best way to ensure your marital agreement is binding and seen as valid by the court, is to have it written correctly, and fairly. Each provision in the agreement must be entirely fair and must not favour one party over the other.

My partner has emailed me with a list of assets they wish to retain if we divorce. Will this be upheld by the court?

Generally speaking, whether an emailed list of favoured assets one party to a marriage wishes to retain in the event of divorce largely depends on when they were acquired, and, at the point of divorce, whether they had been used by the parties during the marriage. In a short marriage, where it is clear who bought what into the relationship, it is more likely the court would put the parties into the position they were in when they married. The court always operates from the position of fairness, and if both parties needs are met, this may include honouring the list of assets they wanted to retain.

The position is slightly different when the marriage is longer. Over time, assets acquired by one party before a marriage tend to become absorbed into the matrimonial pot, particularly when they are used for the benefit of the family as a whole. For example, if one party had a holiday home which has been used as such by the family. Here, it is likely the property in question would be considered a matrimonial asset and included in the pot for distribution.

It is important to say that an email listing items in and of itself is unlikely to be persuasive. This is because over the years, the courts have set out stringent rules that must be followed where parties wish a marital agreement to be binding. Otherwise, they are likely to be treated with the level of informality deserving of such a document.

Can my partner pass off any of their assets as gifts?

Whilst gifts from relatives or friends of one party are usually classified as belonging to that individual and remain with them upon divorce, the picture can become complicated when these gifts are converted into something else during the marriage. Common examples are when a party has received money from their parents and then uses this on a house renovation project, or where they have used this money to buy a car, which the parties then share. The gift of the money has therefore been converted into both the house and car, and has become a matrimonial asset.

As sharing is one of the key principles applied by the court when dividing assets upon divorce, the starting point is that the spouse not gifted the money would be entitled to their share of it on divorce. The onus would then be on the receiving spouse to show that it would be unfair to split it equally as part or all the funds used were a non-matrimonial asset.

Inherited assets or heirlooms of value passed down through the family can be treated differently in divorce due to their nature and source. The court’s general view is that their value should be ring-fenced for the party who inherited them, and therefore, the sharing principle is unlikely to apply. This way, such assets can continue to be passed down the family line as intended. That said, the position is not completely straightforward because in some cases these assets may need to be used or sold if there are insufficient matrimonial assets to meet both parties needs.

What about gifted money on divorce?

It is extremely common for couples to receive financial assistance from their respective parents when purchasing a home or other large asset. But if the couple subsequently divorce, what happens to their parents financial contributions then? The answer depends on the funds that are available to meet the parties needs, how the financial assistance was provided, and if any formal legal documents were drawn up.

An informal marital agreement simply won’t cut the mustard. Not having a formal document detailing the financial assistance and the repayment terms can make it harder for the money to be returned to the parents if the parties divorce. It could be argued to be either a soft loan or an outright gift.

The importance of having formal legally binding documents setting out how assets should be dealt with in the event you divorce cannot be overestimated. Informal marital agreements are likely to create greater confusion and underline why proper legal documents are so important.

Related Articles

Load More

Podcast: Listen Now