How to Protect Your Assets from Divorce in the UK
Are you concerned about safeguarding your assets from divorce? Whether you’re about to get married or facing a separation, it’s an important topic to address.
In this guide, we’ll cover how you can protect your assets both before marriage and during divorce proceedings.
Understanding Asset Types in Divorce
When facing divorce, it’s vital to understand two primary asset categories: matrimonial assets and non-matrimonial assets.
Matrimonial Assets
Matrimonial assets encompass all financial assets acquired during your marriage. Under UK law, both parties are entitled to a share of these assets, regardless of who provided the funds. These typically include:
• Property
• Pension plans
• Investments
• Savings
• Vehicles
• Furniture
• Other shared possessions
It’s worth noting that assets acquired before marriage, such as a family home, may sometimes be considered matrimonial assets.
Non-Matrimonial Assets
Non-matrimonial (or premarital) assets are financial assets you acquired before marriage. Unlike matrimonial assets, you can request to exclude these from your Financial Settlement. Common examples include:
• Inheritance
• Family businesses
• Property purchased before marriage
Are premarital assets protected from divorce?
They can be if the court grants your request to exclude them from the financial settlement. However, this isn’t guaranteed.
Asset Protection Strategies
The most effective approach to asset protection is preparation. If you have assets you wish to shield from potential divorce, it’s far easier to take precautions before marriage. However, even without prior measures, there are still steps you can take to protect your assets during divorce proceedings.
Protecting Assets Before Marriage
Prenuptial Agreement
A prenuptial agreement (prenup) is the most robust option for protecting your assets from divorce. It’s a contract between you and your spouse-to-be that outlines asset ownership and division in case of divorce or separation.
Despite their effectiveness, prenups often carry a stigma, perceived as unromantic or unfair. However, making these arrangements while your relationship is strong often leads to more rational and equitable decisions about asset division.
As divorce lawyers, we frequently witness the consequences of couples neglecting this precaution. We, along with the Family Justice Council, advocate for the normalisation of prenups. Rather than viewing it as preparing for divorce, consider it as safeguarding your family’s future.
Are prenuptial agreements legally binding?
In short, no. However, they’re becoming increasingly reliable for asset protection if they adhere to strict guidelines:
• Signed well in advance of the wedding
• Full financial disclosure from both parties
• Independent legal advice for both parties before signing
Even with these precautions, a prenup may not be accepted in court if there have been significant changes to either party’s financial situation.
Postnuptial Agreement
A postnuptial agreement, as the name suggests, is made after marriage. While not fitting strictly into pre-marriage protection, it’s a precaution you can take to safeguard your assets should your relationship end in the future.
Like prenups, postnups aren’t currently legally binding. However, if both parties fully understand the contract’s implications and haven’t signed under duress, a postnup can carry significant weight in court.
Loans
Family wealth is a common concern when it comes to asset protection. When family members gift substantial sums, they often worry about its fate in case of divorce.
Structuring financial assistance as a loan rather than a gift offers better protection. In a divorce, loans are more likely to be viewed as debts requiring repayment, preventing the money from being split with an estranged spouse.
To ensure protection, create a formal loan agreement detailing the amount, reason for lending, and repayment terms. This should be signed when the money is lent.
Trusts
Trusts, like loans, can protect family wealth by ensuring assets remain with intended beneficiaries. However, trusts can be challenged during divorce proceedings. If you’re considering using a trust to protect family wealth, it’s crucial to seek proper legal advice to ensure it’s set up correctly.
Protecting Assets During Divorce
Even if you haven’t taken prior precautions, there are still ways to protect your assets during divorce:
Seek Proper Legal Advice
This point cannot be overstressed. Engaging a skilled divorce lawyer early in the process is invaluable. Divorce is complex, and making decisions without proper legal counsel can have serious repercussions.
An experienced divorce lawyer can guide you through the process, help protect your assets, and work towards a satisfactory outcome. At RLK Solicitors, we’ve specialised in family law for over three decades. Whether settling out of court or protecting your interests in court, we have the expertise to achieve the best possible outcome for you.
Ringfence Pre-Acquired or Post-Acquired Assets
If you have non-matrimonial assets to protect, it’s crucial to ringfence them throughout your marriage. The protection of non-matrimonial assets weakens if they’ve been used to support you and your spouse during marriage. This includes money withdrawn from trusts or gained from additional properties.
Be cautious about using assets acquired after separation to support your spouse before finalising the divorce settlement. Doing so could grant them rights to these assets.
Don’t Hide Assets
It’s tempting to try hiding or protecting assets during divorce, whether through trusts, third-party transfers, or offshore accounts. Resist this urge. Courts frown upon such behaviour. Not only will asset transfers likely be reversed, but your actions may negatively impact the final settlement.
If you have assets to protect, consult your divorce lawyer. They can advise on the best steps to take without jeopardising your position in court.
Don’t Move Out of Your Family Home
While it might be uncomfortable, avoid leaving your family home if possible. Departing leaves your spouse with the house and any children, potentially strengthening their claim as the primary carer with greater housing needs.
However, only remain if it’s safe to do so. If staying isn’t safe, consult a divorce lawyer immediately. There are ways to ensure your safety without negative repercussions from moving out.
If you must leave, avoid moving in with a new partner. In the court’s eyes, this combines your finances and can impact your final settlement.
Protect Your Right to the Family Home
In divorce settlements, property is often the most valuable joint asset. Knowing your home is protected or that you’ll receive a fair share can provide peace of mind during this unsettling time.
The best way to protect your family home is to consult a divorce lawyer. They can advise on necessary actions. Remember, family homes are typically considered matrimonial assets, entitling both parties to a share under UK law.
If the property is solely in your partner’s name, you may need to take action to protect your rights. For homes registered with the Land Registry, you can file a ‘matrimonial home rights notice’ or ‘home rights notice’.
Protect Other Properties
For properties owned before marriage, you can request their exclusion from the financial settlement in Family Court. This can offer some protection if the request is granted.
For properties in your partner’s name, you can register unilateral notices to prevent disposal or mortgaging during divorce proceedings. However, you’ll need to prove your interest in the property for the notice to be granted.
Guard Your Assets from Divorce with RLK Solicitors
Protecting your assets during divorce requires careful planning and expert guidance. Whether you’re considering marriage or facing divorce, the team at RLK Solicitors is here to help. Our experienced family and divorce team ensure we can provide the advice and representation you need to protect your assets effectively.
Don’t hesitate to get in touch for a consultation tailored to your specific situation.
Harpreet specialises in cases involving children both under the umbrella of court proceedings as well as on a conciliatory basis. Harpreet has experience in other aspects of family law namely divorce, separation and financial remedy.
Harpreet is a law graduate from the University of Birmingham. She began her legal career with DFLP (now Lodders) and then moved to Mercy Messenger where she qualified as a Legal Executive in 2014. Harpreet joined RLK Solicitors in October 2023, having previously worked in a Legal 500 ranked specialist family law firm.
