When a couple separates, life often continues to move forward, new opportunities arise, jobs change, savings grow, and sometimes, new wealth is created. But what happens if one spouse builds up money or assets after the separation but before the divorce is finalised? Can that wealth be ring-fenced as their own, or could it still be shared as part of the divorce settlement?
This question, increasingly common in modern divorces, sits in a grey area of family law. While the courts aim for fairness, the line between matrimonial and non-matrimonial property is not always clear, especially when separation stretches out over time.
What counts as matrimonial property?
Under family law, the starting point for any divorce settlement is the Matrimonial Causes Act 1973, which gives judges a broad discretion to divide assets in a way that achieves fairness.
The focus is on the matrimonial asset pot and encompasses the wealth built up during the marriage through the joint efforts of the couple. Typically, this includes the family home, pensions, savings, and investments accumulated up to the point when the marriage effectively ended. But the law does not set a strict cut-off date at separation. Instead, judges look at the broader picture, such as how and when the wealth was acquired, whether the couple’s financial lives had already diverged, and what each party now needs to move forward.
If one spouse earns or acquires new wealth after the separation, whether that money is considered part of the matrimonial pot will depend on a complex mix of timing, context, and fairness.
How separation changes the picture
The longer and clearer the separation, the stronger the case for treating newly acquired wealth as belonging solely to the spouse who earned it. A couple who separated six months ago might still be seen as financially intertwined; whereas one who has lived apart for five years probably won’t be.
In shorter separations, perhaps where the couple are still sorting out the practicalities of living apart, the court might see any new assets as a continuation of the marital partnership. For example, if one spouse receives a large work bonus only a few months after moving out, the other could argue that it was earned thanks to opportunities developed during the marriage.
But where the separation is long and distinct, the courts are more likely to recognise that the financial bond between the spouses has been severed.
The nature of the new wealth
The source of the wealth is often just as important as when it was earned. Courts tend to make a distinction between passive and active growth. If an existing matrimonial asset, say, a jointly owned property or an investment portfolio, simply increases in value after separation, that growth is generally seen as part of the matrimonial property. It arises from the same asset base created during the marriage, not from any new effort by one spouse.
However, if one partner creates entirely new wealth through fresh endeavour, such as a new business venture, a new job, or a lucrative investment that has no connection to previous joint assets, the court is more inclined to treat that wealth as non-matrimonial. The logic is that this new income or asset was not generated through the marital partnership.
That said, the distinction isn’t always neat and tidy. Take the example of a spouse who continues to run a business that began during the marriage and whose value rises sharply after separation. Even if the increase occurs later, the court may still see the underlying business, and the skills, contacts, or capital that made it possible, as part of the marital foundation. This was the reasoning in Jones v Jones [2011] EWCA Civ 41, where the Court of Appeal decided that only part of the business’s increased value was matrimonial, with the remainder treated as separate because it resulted from the husband’s post-separation efforts.
The role of needs and fairness
Even when new wealth is clearly non-matrimonial, it is not automatically excluded from consideration. The court’s overriding objective is fairness, and that includes ensuring both spouses, and any children, have their reasonable needs met. If one spouse’s post-separation wealth is the only way to meet the other’s needs, the court can still award a portion of it, even if it technically arose after the separation.
For example, if one partner earns a substantial income after the separation, while the other has been the main carer of the children with limited means, the court may consider this new wealth when determining maintenance or property adjustment orders. The principle is that needs can sometimes outweigh strict ownership boundaries.
Disputes over post-separation wealth
Disagreements over post-separation finances are common, particularly where one spouse believes the other is unfairly attempting to shield new assets from division. Full financial disclosure remains a requirement during divorce proceedings. Each party must complete a Form E, setting out all income, savings, and assets, even those obtained after separation.
If a spouse attempts to conceal new earnings or property, the court can draw adverse inferences and may impose cost penalties. Judges will look closely at when the wealth was created, whether the parties were still financially entangled at that point, and whether it is connected to earlier joint assets.
Transparency is essential, and keeping thorough financial records can make all the difference. Demonstrating that post-separation wealth was derived solely from new, independent effort, rather than from the legacy of the marriage, helps strengthen any claim that it should be excluded from the marital pot.
Protecting new wealth after separation
For spouses who begin building new wealth after separation, taking early steps to protect it can help prevent disputes later. One practical tool is a separation agreement. This is a formal written document outlining how finances are to be managed while awaiting divorce. Although not legally binding in the same way as a court order, separation agreements are generally upheld if both parties had independent legal advice, made full disclosure, and signed freely. They can set out that any new assets or income acquired after the date of separation belong solely to the individual who earned them.
Another safeguard comes once the divorce is underway. A clean break order can be sought to formally end the financial relationship between spouses, preventing future claims against any wealth acquired later. Until such an order is made, however, financial ties remain open, meaning either spouse could, in theory, bring new assets into play.
It is also sensible to keep new money or investments separate from any remaining joint accounts or property. Maintaining a clear paper trail — for example, showing that a deposit for a new home came from post-separation salary or savings — can be persuasive evidence if questions arise later.