What Happens to Assets Sold or Transferred Before Divorce?

When couples separate, disagreements often arise about money and assets.

This can be particularly complicated where trusts or recently sold or transferred assets are involved. A key issue is whether those assets should be included in the financial settlement or treated as separate (non-matrimonial) property.

Sometimes concerns arise that one spouse has moved or sold assets to prevent the other from making a financial claim. If this happens, the court has powers to investigate and, in some cases, step in.

If you are aware that your spouse has sold/transferred, and you believe he has disposed of the assets with the intention of defeating your matrimonial claims, you could make an s.37 application to the Court to either freeze or reverse the sale/transfer or alternatively freeze the net proceeds of sale if the same can be located and accounted for. This is also the case if the roles are reversed and your spouse believes you have tried to dispose of the assets with the intention of defeating their matrimonial claims.

What is a Section 37 Avoidance of Disposition Order?

A Section 37 Order allows the court to stop, freeze, or even reverse a transaction if it believes a spouse has disposed of assets to defeat the other person’s financial claims in divorce proceedings.
For example, the court may intervene if someone:

• Transfers money or property to a family member or friend
• Sells an asset for less than its true value
• Moves assets into a trust shortly before divorce proceedings

If the transaction took place within three years before a financial claim is made, the court may assume there was an intention to defeat the other spouse’s claim unless proven otherwise.

If that intention is established, the court can set aside the transaction unless:

• The asset was sold for a fair price; and
• The person who received it acted in good faith and did not know about the intention to avoid a claim.

Freezing Assets or Sale Proceeds

If an asset has already been sold, the court may freeze the proceeds of sale instead, provided the money can be traced and identified

Costs Risks and Legal Advice

Applications of this type can be complex and carry significant legal costs risks, particularly if the application is unsuccessful. It is therefore very important to seek specialist legal advice as early as possible — whether you are concerned about your spouse’s actions or you are being accused of disposing of assets.

How We Can Help

At Wilson Browne Solicitors, our Family Law team has extensive experience advising on complex financial matters, including trusts and high-value assets. We can help you understand:

• Whether assets are likely to be included in a financial settlement
• The risks of transferring or selling assets during separation
• Your options if you believe your spouse has tried to hide or move assets

If you need advice about divorce finances or asset disputes, our team is here to support you.

Contact us today, or call 0800 088 6004.