Material World: The Ambit of Matrimonial Assets

Going through a divorce is hard enough, but having to sit through a Court hearing and listen to lawyers and your soon to be ex-spouse argue over what may or may not be included in the matrimonial pot of assets to be shared with you, adds to the hardship.

 

Parties often ask – “Do my assets earned before marriage have to be included? What about the ones I earned after separation? Are all the assets from the marriage included? What of my inheritance? What if my spouse made no contribution to the asset?”

 

There is no fixed definition of what constitutes a matrimonial asset.  All assets, however held by either Party, will be taken into consideration by the Court when deciding the division of the matrimonial pot.  Simply holding an asset in your sole name does not determine that it is not matrimonial. 

 

Further, even if the Court determines an asset to be a matrimonial asset, it does not necessarily mean it will be automatically included to be shared and even when the Court deems that an asset should be shared, it may not be shared equally. 

 

There is no set formula in Hong Kong for dividing matrimonial assets.  How the matrimonial assets are shared depends on the facts of each case.  The Court has a wide discretion in determining an appropriate financial settlement.  Nevertheless, there are several factors that can help you consider what may be yours to keep and what should or should not be shared, in order to limit the scope of argument.

 

Pre-marital assets

You are thinking - “Surely, assets I owned prior to marriage won’t be shared in divorce, right?” However, the answer is, not necessarily; it depends on:-

 

  • when the asset came into being, was it well before the marriage or during any cohabitation period;

  • did the other party make any contribution towards it;

  • has the asset ever intermingled with the other matrimonial assets during the marriage;

  • was the asset used by the family during the marriage; and

  • the needs of the family and the Parties at the time of the divorce.

 

However, the Family Home is considered to be a special type of asset.  Even if it was purchased/provided entirely by one spouse with no contribution from the other, it will usually be treated as a matrimonial asset available for sharing (and possibly equally).

 

What about gifts or assets which were inherited?

 

Any asset which was brought into the marriage solely by one party by way of a gift or inheritance (other than the matrimonial home), can be treated as an unmatched contribution by one Party.  As such, it can be a non-matrimonial asset, which, if it does not need to be utilised as a financial resource to support the needs of the family, can be excluded from sharing with the other spouse.

Post-separation assets

“Can I keep what I have earned/what has increased in value since we separated?”

 

Again, there is no definitive answer.  Several factors to consider include (but are not limited to):-

 

  • How soon after separation was the asset acquired?

  • What was the source of funding used for the acquisition of the asset?

  • Is the asset a matrimonial or non-matrimonial asset?

  • Was the increase in value due to an active contribution solely by one party or was it passive growth?

  • The needs of the family and size of the remainder of the matrimonial pot available to cater for the family’s needs; and

  • Whether any financial support was paid and if the other party has made any non-financial contributions to the family during the separation period.

 

Ultimately, the Court will perform a balancing exercise as to how to divide/share the assets between the Parties, ensuring a fair outcome.  As illustrated above, there is no universal formula that applies to all divorces.  Assets obtained before marriage and those acquired after separation can be considered as a financial resource to be used to provide for the Parties’ needs even if they are not included in the matrimonial pot for sharing.  The manner in which any asset is treated and distributed between the Parties is contingent on the specifics of each case and the needs of the family.

 

If you want to establish some clarity and record an understanding by you and your spouse as to how assets are to be treated upon divorce, you may want to consider entering into a nuptial agreement.   This can be done either before the marriage (pre-nuptial agreement) or after the marriage (post-nuptial agreement).   Whilst a nuptial agreement is not binding on the Court in Hong Kong, they are given increasing recognition and are expected to be given significant weight if there are no vitiating factors.   If you are interested in prenuptial agreements, please see our article here: To sign or not to sign? - CRB | Chow Ruskin Brown

 

If you wish to seek advice on the treatment of family assets upon divorce, or are interested in making a nuptial agreement, please contact the CRB team.

 

This publication is general in nature and is not intended to constitute legal advice.  You should seek professional advice before taking any action in relation to the matters dealt with above.

CRB