Post-separation accrual in divorce: how the courts treat assets acquired after separation

In a previous article, I explored how assets that one party brought into the marriage will be treated on divorce. Today, I look at the other end of the timeline and think about what happens to assets that are acquired after the date of separation, otherwise known as post-separation accrual in divorce. 

First off, it should be acknowledged that the treatment of post-separation accrual is a nuanced and evolving area, and its treatment will largely depend on the wider circumstances of the case. While it is advisable to take independent legal advice specific to your circumstances, this article provides a general overview of the principles that are applied. 

As a huge advocate of resolving matters outside of the family court, readers should also note that while the below article outlines how a judge may assess matters, it is intended to highlight the legal principles that can guide parties toward earlier resolution. 

What is post separation accrual? 

Post-separation accrual refers to any increase in wealth or acquisition of assets by either party after the date of separation, but before the financial settlement is agreed. Examples may include a bonus from work, profits from a new business venture, inheritance, investment growth, or savings from income. 

The question is whether these assets should be included in the matrimonial pot for division or ring-fenced as non-matrimonial property. 

Will these assets be shared in the divorce? 

When considering what is matrimonial, some classes of assets are easier to categorise than others. For example, inheritance received after separation is easily distinguishable as it comes from outside the marriage and is not something earned or built up jointly. 

Although the law in this area is complex, the courts of England and Wales have attempted to develop a framework through case law to distinguish between different types of post separation accrual: 

1: Active vs passive growth

• Passive growth refers to the natural increase in the value of an asset (like shares, houses or pensions) and courts will generally include this within the marital assets to be shared.
• Active growth, on the other hand, results from one party’s “personal industry” or their efforts post-separation. If the asset stems from significant personal contribution, it may be ring-fenced as non-matrimonial. 

2: Bonuses and earned income 

• Bonuses earned post-separation are contentious. In Rossi v Rossi [2006], Mr Justice Mostyn suggested that bonuses should only be considered non-matrimonial if they relate to a period commencing at least 12 months after separation, although it was accepted there was an element of arbitrariness about this number.
• When considering what is fair, Mostyn J also gave thought to the continuing non-financial contributions after separation of the domestic party, to which a value cannot be attributed. 

3: New ventures

• Where a party starts a new business or investment post-separation, the courts assess whether it was funded by matrimonial assets. If not, and the venture is entirely independent, it may be excluded from division.

4: Inheritance

• Inheritance received after separation is generally treated as non-matrimonial. However, if the other party’s needs cannot be met from matrimonial assets, the court may include it in the settlement. This sentiment applies to all non-matrimonial assets and is explored further below. 

Needs, compensation and sharing

The principles of needs, compensation and sharing - established in Miller v McFarlane [2006] - are well known amongst family practitioners and continue to guide the courts, with many legal arguments being underpinned by these concepts: 

• Needs: If one party’s financial needs cannot be met without accessing post-separation accrual, the court may include it. This means that even if one party can successfully persuade the court that a certain asset should be treated as non-matrimonial, it could still be shared – especially where children are involved. 
• Compensation: Where one party has suffered economic disadvantage due to the marriage, compensation may be awarded. However, “compensation cases” are extremely rare and considered only in exceptional circumstances. 
• Sharing: Assets generated during the marriage are generally shared equally, which is based on the principle that marriage is a partnership of equals that both parties contribute to. While the starting point is 50/50, this can be departed from in some cases, usually on the basis of needs, or where there has been a short marriage. 

What can you do to protect your position? 

• Act quickly: It may become more difficult to argue that new assets should be included in the matrimonial pot if there has been a long delay between separation and the time of the financial settlement. Courts are likely to consider any delays in the proceedings when deciding whether to include post-separation assets. 
• Keep records: If you earn or acquire something after separation, keep clear records showing how and when it happened.
• Get legal advice: Every case is different. A solicitor can help you understand your position and protect your interests.