How Are Third Party Assets Dealt With In Divorce?

 When couples divorce, disputes often arise around the distribution of the marital assets and which of the parties should have what. Sometimes however the dispute is about the rights of third party’s (often extended family members) as to whether they can claim all, or part of, what is ostensibly a marital asset. A common example is where the parents of one of the spouses claim a share of the sale proceeds from the respective spouses’ family home, arguing they loaned the parties’ some or all of the money to buy the property.

Sometimes the other spouse may oppose such a claim made by the opposing spouses’ parents, arguing that the money was, for example, a non-repayable gift and not a loan.

Clearly there will then be a dispute between spouses and the parents of one spouse, the latter seeking repayment of a capital sum whilst the other spouse opposes trhe claim. In such cases, how are these issues resolved if the case is before the court?

Firstly, it must be remembered that, in general, a decision of the family court in divorce cases will only be binding on the parties to the divorce. This means that, in this example, the parents of one of the spouses will need to be joined into the proceedings as a party.

What is intervening?

Where a third party is claiming an interest in property that, at first sight, appears to be a part of the family assets, intervening in the financial application will formally add the third party to the proceedings as a separate party. In our example, doing so would entitle the parents to actively take part in the case, to file evidence and be heard at a final trial concerning their alleged interest. Any decision by the court about the parents share would then be binding on both spouses and on the parents.

However, intervening in this way comes with many uncertainties for the Intervenor. There is the risk that the claim will not succeed although doing nothing to make a claim will mean they may not receive justice either. There is also a costs risk. If an intervenor is unsuccessful in establishing a property claim through the court, they will probably be ordered to pay the legal costs of the successful party, as well as having to pay their own legal fees.

Each case is different and so it is vital that specialist family law advice is sought concerning the relative strength of an individuals’ case and the legal costs and other risks that could be involved with intervening or opposing an intervention.

How to protect your assets for the future

Many families are now looking into how they can best protect their interests in advance should divorce or another dispute as to property ownership arise within marriage. Judges in the family court have a very wide discretion to make findings based on the evidence before them and so iron clad protection is never guaranteed. That said, parents making loans, for example, should seek their own independent legal advice before loaning any money to properly protect or document the nature of the funds they contribute to a marriage.

Further, a cohabitation agreement, or, in the context of marriage, a pre-nuptial agreement, properly entered into, can also be useful in protecting family-owned assets and defining an extended family’s interest in individual assets right from the outset.

We at Leeds Day have a very experienced Family Law Team all of whom are well versed in the pitfalls a spouse may encounter within the divorce process. Our solicitors are also highly experienced in handling complex, sensitive family matters that ultimately cannot be resolved any other way than through court action.

If you would like more information on the wide nature of the services we offer our Family Law clients then please contact us on 0844 567 2222, send an email to family@leedsday.co.uk