Navigating Matrimonial Property in Divorce Proceedings

Iona Whyte, Family Law senior solicitor at Wright, Johnston & Mackenzie LLP, gives a timely explanation of how matrimonial property works in Scotland.

December is just weeks away and families up and down the country are preparing for festive fun.
But another gloomier day is also fast approaching – National Divorce Day – which lands on the first working Monday of the New Year.

It’s a day when solicitors often see a spike in couples instigating divorce proceedings.

Why this date? There are lots of theories. Perhaps they don’t want to cause family turmoil during the holidays, maybe they’re readying their finances for the new tax year or maybe they have simply decided to use the New Year to make a fresh start.

In anticipation of this annual influx of inquiries, I want to shed light on a crucial aspect of family law in Scotland – the legalities around matrimonial property upon separation.

Who owns what?
In Scotland, when a married couple decides to part ways, their financial circumstances must be sorted out. One of the primary considerations is establishing what does and doesn’t constitute matrimonial property. This is equally applicable to civil partnership separations.

So, what exactly is matrimonial property? It encompasses all assets acquired by the parties during the course of their marriage. This includes property and assets obtained after the date of marriage and before the date of separation.

However some assets obtained before marriage may be deemed matrimonial property. For example a house purchased for use as a family home (regardless of whether it was bought before marriage), and the furniture or household items for this family home, would fall into this category.

Whether the couple intended to marry when they acquired this property is irrelevant – they still had the intention to cohabit at the time of purchase.

If, however, a property was initially acquired by one party for their personal use but later became a shared family home, it would not be deemed matrimonial property.

The waters do become murkier when looking at assets acquired pre-marriage, which were sold during the marriage and the proceeds used to purchase something else. In this instance the new item will be considered matrimonial property.

The same is true for liabilities incurred during the marriage that remain outstanding as of the separation date. Liabilities, alike any asset, are to be shared.

The exceptions
In Scotland, there are two notable exceptions to the rule that all property acquired during the marriage is considered matrimonial property. These relate to inherited assets and gifts received during the marriage from third parties.

If gifts were exchanged between spouses, they’re matrimonial property. But if you receive a gift from a third party (for example antique earrings from a relative) your spouse has no claim on them.

It gets a little tricker when the intended recipient is unclear. A wedding gift would be considered joint property, and if it’s not clear who the recipient was, the circumstances around the gift would need to be examined.

For that reason, if you receive a large gift, it’s advisable to retain evidence such as the gift tag or any accompanying letter.

Let’s also look at gifts that transform over time. If, for example, money or inheritance from a family member is used to make a joint purchase, it can become matrimonial property. In such cases, the receiving party must present their argument for why they should be credited with the gifted funds during the separation process.

And, finally, the age-old question - what happens to the engagement ring upon divorce? In Scotland, the answer hinges on the fact that it was a gift given prior to the marriage. So, unless there was a prior agreement to return the ring if the wedding was called off, there is no obligation to return it. If however, there were such an agreement, return of the ring would likely be required for example, in the case of a family heirloom.

 

This article first appeared in The Scotsman