Property  

How the courts tackle devious disposing of assets in divorce

  • Describe some of the issues around the disposal of assets by divorcing couples
  • Explain steps that will help keep the assets in the marriage
  • Describe Angelina Jolie's actions regarding the couple's vineyard
CPD
Approx.30min

If seeking to set aside a disposition to secure the return of a matrimonial asset, the presumption alone is not enough to get you over the line if you want the asset back.

As with almost anything, prevention is better than cure and stopping an asset being disposed of is much more effective that setting aside a disposition, however, it can be done in the right circumstances.

The first step is usually to make the receiver of the disposed asset a party to the proceedings. This is most commonly a family member who the exiting spouse can suggest they ‘gifted’ an asset or shareholding to. Or in cases, usually more motivated by spite, they might be purchasers of an asset at well below market value.

If they are joined to the proceedings then the court has fairly extensive powers to set aside the disposition, which in the main will mean ordering that the asset is returned to the family pot for appropriate consideration and division.

However, the disposition can only be set aside (or put back in the pot) if the court is satisfied that doing so will affect the orders made when considering how to split the assets.

In short, if the asset is de minimis – that is, too small to be meaningful or taken into consideration – or if one party might be very likely to keep the asset out of the matrimonial pot on other grounds, then there is little point in setting aside the disposition.

You have to satisfy the court that putting the money back in will actually make a difference to the outcome of the overall case. This discourages disproportionate applications being made.

Protection for third parties

There are also protections in placed for honest third parties who might find themselves at risk of losing an asset they bought fair and square.

The court cannot take the asset from the third party and put it back in the pot if the asset was received by them for valuable consideration, usually cold hard cash, and when they bought it in good faith without any knowledge of what the exiting spouse was up to.

This protects the honest buyers losing their asset when there was no conspiracy and they had no knowledge of what skulduggery was afoot. 

In practice, sizeable gifts to friends and family in the three years prior to the divorce petition raise far more eyebrows than purchases. The idea that being given a valuable house or shareholding by a family member just as their marriage hits the skids makes it very hard to believe that the receiver did not know something was off.