Henry Hood examines how asset management during a marriage can influence a divorce settlement in the FT Adviser

Henry’s article was published in the FT Adviser, 23 November 2021, and can be seen here.

Henry Hood, Head of our Family & Relationships department, reflects on a recent High Court decision that underscores how the management of assets during a marriage can significantly influence their treatment upon divorce.

In WX v HX [2021] EWHC 241, a couple with a 33-year marriage and £55 million in assets faced a complex division of wealth. The husband, a high-earning banker, had used both his income and pre-marital assets to support the family, while the wife preserved her £14 million inheritance, keeping it separate from the family’s finances.

The court ultimately ruled that the wife’s assets retained their non-matrimonial character, while the husband’s had become matrimonialised through mingling and shared use. As a result, the matrimonial assets were split equally, but the wife retained her inheritance, leaving her significantly wealthier post-divorce.

This case illustrates the legal distinction between matrimonial and non-matrimonial property, and how the treatment of assets during a marriage can affect their classification. The court emphasised that non-matrimonial assets can become matrimonial if they are mingled with family resources and treated as shared.

The husband’s frustration was understandable, having contributed significantly to the family’s wealth while enabling the wife to preserve her own.

The judgment highlights the importance of foresight in financial planning within marriage. While such considerations may seem unromantic, tools like nuptial agreements offer clarity and protection, allowing couples to define how assets should be treated in the event of divorce. Without such agreements, asset management decisions made during the marriage may have unintended and lasting consequences.

Read the full article on the FT Adviser website [external link].