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Short Marriages/Division Of Assets On Divorce.

Should all assets be divided equally or not ?

This is the question the Court of Appeal were asked to decide in the recent case of Sharp - v – Sharp.

Background

The husband and the wife were both in their early 40’s. They started living together in 2007 and married in June 2009. They had no children. Divorce proceedings began in December 2013. They were together for a total of 6 years – 18 months pre-marital cohabitation and 4 years married. 

Both came from modest backgrounds and worked hard to achieve successful careers.

The wife was a City Trader and the husband worked in IT. They both earned similar basic salaries of around £100,000. The wife received significant annual bonuses that totalled £10,500,000. In November 2012, the husband took voluntary redundancy. 

Whilst the parties had no deliberate or agreed intention to maintain a strict separation of their finances, they did split restaurant bills and utility bills. The husband did not know how much the wife received in bonuses.

 

First Court decision

The total assets amounted to £6,900,000 of which £4,700,000 was held by the wife in her bank accounts.

The Judge stated that couples, in effect, subscribe to the sharing principle when they marry unless they choose to opt out (or attempt to do so) with a Pre-nuptial Agreement. He concluded that no sufficient reason had been given for departing from equality of division. The wife said the husband should only receive £1,300,000. The husband was awarded around half of the assets. The wife could not accept this decision and decided to Appeal. 

 

The Court of Appeal’s decision

The wife was successful and the husband’s award was reduced to £2,000,000. 

In recent years, decisions have been based on meeting “needs” and this is generally the principle factor in the majority of cases including those couples who have significant joint wealth. 

In cases which are not based on “needs”, the general approach applied by the Courts and lawyers is the equal sharing 50/50 allocation. 

The leading Judge in this case rejected the automatic application of the sharing principle in those cases not based on “needs”. He stated that an automatic application of a 50/50 split in every case is inappropriate when the law requires the Court to consider all the circumstances of the case. He went on to say that fairness may require a reduction from a full 50% share or the exclusion of some property. 

The Court’s recent decision raises almost as many questions as it answers. These include how long a marriage has to be defined as “short” and at what stage is someone entitled to share wealth generated by their spouse. 

In my opinion, couples should not take a more relaxed view and attempt to rely on this decision as a reason not to share assets. Couples should consider entering into a Pre-nuptial Agreement, which although not strictly binding can be taken into account by the Court. 

In conclusion, what may justify a short marriage and the circumstances in which these principles apply will, unfortunately, be open for argument. 

For further information on family matter contact Marie Whittaker or Lee Marston for a free, no obligation interview on 0161 764 5266