Matrimonial property such as the family home or family income is regarded as an ‘asset’ of the marriage. Nonetheless, under English law, property owned by either spouse before the marriage does not become owned jointly, in other words there is no ‘community of property’ between husband and wife as exists in certain other legal systems. For example, if a wife inherits her mother’s house, she can then dispose of it, sell it; leave it in her will to her children or to her favorite charity without consulting her husband. It remains her sole property throughout her lifetime. If the marriage breaks down, however, this seemingly clear doctrine. I.e. that there is no community of property in English law, becomes less clear-cut. Inroads have been made into the principle because the courts have such very extensive powers under statute to intervene, where there is a dispute in divorce proceedings over ‘who gets what’. The judges have at their disposal wide-ranging court orders which enable them to redistribute assets, whether owned by the husband or the wife in a manner that they think is ‘fair and reasonable’.
Not only does property such as the matrimonial home, as well as family income, become an ‘asset’ of the marriage but, on its breakdown, other meaningful assets can become subject to court orders in the court’s endeavor to reach an equitable division between the parties. Another important exception to the doctrine that there is no community of property in English law is found in the intestacy rules. These allow a surviving spouse to inherit a large proportion of an estate where the deceased husband or wife left no will.
The matrimonial home
Irrespective of questions of whether she owns or part-owns the family home, a wife was given the right to occupy the matrimonial home under the Matrimonial Homes Act 1983. This right of occupation under earlier legislation is now re-enacted in the Family Law Act 1996 where the right to occupy and register it as a charge — so that it is valid against third parties — is now called ‘matrimonial home rights.’ This right of occupation applies to the matrimonial home only, although other property may be subject to a court order in a final divorce settlement.
Pledging the matrimonial home
Over the last ten years, there have been a number of cases which have involved a husband who has persuaded his wife to pledge the matrimonial home with his bank against his business debts. Your husband has run into financial difficulties in his business. He has asked you to come to the bank with him to sign a guarantee to the bank for extra funds for his business. The bank has asked that your family house, which you own jointly with your husband, should be given as collateral for the loan and has prepared forms for you to sign to that effect. You are reluctant to sign but are very anxious not to let your husband down. You must take legal advice. The courts have taken a protective attitude towards married women in these circumstances. They have recognized that while the pattern of family life has changed and that some women can exert their independence, others are vulnerable to their husband’s influence. The overriding consideration for the courts is whether a woman who appears to be acting in a way which is to her manifest disadvantage, is given an opportunity to exercise an independent judgment before committing herself to giving their home as collateral for her husband’s debts. Where banks or other lenders have reason to think that a husband has prevailed upon his wife through emotional pressure into pledging the matrimonial home, they are under a duty to
• have an interview alone with the wife
• explain to her what acting as a surety entails
• warn her of the risks to the property
• tell her to seek independent advice.
Lawyers who are consulted by the wife are also under a duty
• to advise on the nature of the charge
• to satisfy themselves that the wife is free from her husband’s ‘undue influence’
• not to proceed further with the transaction if they take the view that it is not in the wife’s interests to enter into the mortgage.
Husband and wife automatically acquire parental responsibility for the children of their marriage. but it is worth noting that parental responsibility covers such basic concerns as decisions over the children’s religion, education, consent to marriage etc. If the parents separate, of course, the courts can be asked to alter the relationship between parent and child: for example, the courts can determine the question of how much contact a divorced father or mother should have with their children although both will be expected to continue to share parental responsibility. The obligation to maintain their children survives a marriage breakdown.
Tax position of husband/wife
in 1990, the tax laws were changed so that husband and wife now have separate tax identities. Instead of the married man’s allowance, there is now a married couple’s allowance which is transferable between the spouses. Until 1990, husband and wife had been taxed as one person, unless the wife opted to have her earnings separately taxed; even then, her unearned income was still treated as the income of her husband. Gifts between husband and wife are not liable to capital gains tax.