It can often be a major source of disagreement as to precisely what assets should be accounted for when agreeing a financial settlement as part of a divorce, especially those gained after separation.

Whilst one party may view post-separation assets as forming part of the matrimonial pot, the other may see these assets as being earned solely due to their hard work following separation and that they should therefore be ring-fenced from any sharing as non-matrimonial property.

As with many issues in financial proceedings, the treatment of these assets very much depends on the circumstances of the case. However, the Court has given us some guidance on this issue, which it is important to consider.

Example Cases of Post-Separation Divorce Assets

One of the leading cases in this area, is Rossi v Rossi [2006] EWHC 1482. In this case, Mr Mostyn QC set out several principles in regard to the treatment of post-separation assets.

It was established that an asset that has been acquired post the parties’ separation, may be treated as non-matrimonial property (i.e. ringfenced), if it can be said that the asset was created or acquired by that party by virtue of their own “personal industry” and not by merely using an asset that had been created or acquired during the marriage.

In the latter case of JL v SL (No.2) [2014] EWHC 360, where he was now Mostyn J, Mostyn J went onto to clarify that if there was post-separation accrual that related to a totally new venture that was unrelated to the matrimonial partnership, then this could be regarded as entirely non-matrimonial property and not shared.

Active v Passive Growth

Distinguishing between the growth of an asset which is as a result of the personal industry of one of the parties, (in this context roughly referring to active growth) and the increase in value of an asset, which is not attributable to the particular actions of the owner (passive growth), is key.

In Rossi, Mostyn QC held that passive economic growth on matrimonial property, which arises after the couple’s separation, will generally qualify as matrimonial property.

In JL v SL, Mostyn J expanded on this, stating that for assets that were existing at the date of separation, any passive growth achieved after separation would be likely to shared equally, while any active growth after separation may be shared unequally (i.e. to benefit the party responsible for the active growth), but this is not guaranteed.

Passive growth is more likely to be seen on the value of assets, such shares, pensions, property or savings.

No Distinction and Needs

However, other cases involving divorce assets post-separation have fought back against a strict delineation between matrimonial and non-matrimonial property, including CR v CR [2007] EWHC 3334, which encouraged a broad view of viewing assets as part of a financial continuum with fewer strict distinctions between what could be attributed to one party or the other.

Further cases such as C v C [2018] EWHC 3186 (Fam) have also emphasised the overarching idea that although post-separation accruals can in theory be ring-fenced as non-matrimonial property, in practicality they may still be shared if one party’s reasonable needs or compensation require.

As the above guidance shows, each case is different and the treatment of post-separation assets will depend on the particular circumstances of the parties’ relative needs, time that the asset or venture came into being and the efforts gone to by the parties to grow the asset.

If you would like to discuss the division of your finances after separating or as part of a divorce, please get in touch with our team.