Do You Know What Factors The Court Will Consider In A Divorce Financial Settlement?
Going through a divorce is a stressful, painful process, especially when it comes to the final financial settlement. Your divorce settlement may define your lifestyle for years to come; getting it right is vital.
Fortunately, very few financial settlement cases ever reach court. A good family solicitor will do everything possible to encourage and support a couple to negotiate an agreement between themselves or with a mediator. But sometimes resolution is impossible, and parties find their only option is to have the court make a financial order.
The question that all clients want answered in this situation is, “what factors will the court consider when working out what I am entitled to in a financial settlement?”. Is it left up to the individual judge’s discretion, or does the court follow a specific formula?
Section 25 of the Matrimonial Causes Act 1973
The starting point for the courts when making a financial order is section 25 of the Matrimonial Causes Act 1973. This section contains a checklist of factors a judge must consider when making an order. Depending on the circumstances of the case, some factors may be given more weight than others.
Income and earning capacity of the parties
The court must take into account not only each parties’ current income, assets, and financial resources but their future earning capacity. The significance and weight given to income and earning capacity may vary depending on age and circumstances. The classic scenario is where a wife has stepped back from her career to raise a family, providing her husband with the ability to travel and work long hours to grow his career. It is likely that his future ability to earn money will be far greater than his wife’s and the court has a duty to take this into consideration when making a financial order.
The age of any children will also play a role in how the court views future earning capability; very young children may preclude the main carer from earning a substantial income for many years, given that they are now a single parent.
However, ultimately the courts expect that in due course even a primary carer who has spent time out of the job market will, “take proper steps to make themselves financially independent to a significant extent within a reasonable time so that by the time the children were adult the requirement for support would have at least diminished if not wholly disappeared” – Sir Paul Coleridge.
The financial needs and responsibilities of the parties to the divorce
Needs usually fall into two categories: housing needs and day-to-day income needs. The parties’ needs should be considered within the context of the available resources of the marriage and not viewed in isolation. The court will evaluate the financial needs of each party in conjunction with the other factors, paying particular attention to the needs of any children involved.
The standard of living enjoyed by the couple
This factor often causes the most controversial headlines, especially in cases involving high-net-worth couples. In cases involving a wealthy couple, English courts have a reputation for interpreting the ‘needs’ of an individual generously if the parties enjoyed a high standard of living while together.
The age of each party and the length of the marriage
If the divorcing couple are in their late forties to fifties, their earning potential will be considered differently to those in their twenties, with the emphasis being placed on pensions for older people.
If the marriage has not lasted long, the court is likely to pay close attention to each party’s contribution to the matrimonial pot. The court will also have a duty to consider whether a clean break order should be made, especially if no children are involved. But this is not always the case.
Whether any party has a mental or physical disability
If a disability is present, this may impact on the financial needs of the affected party and their ability to earn income.
The contributions of the parties
Contributions are classed as financial and non-financial. The courts have a duty not to penalise someone that has sacrificed their career to bring up the family. The longer the marriage, the less relevant individual contributions of the parties will be.
The conduct of the parties
This factor also causes confusion, especially if, from a moral standpoint, one of the parties to the marriage behaved appallingly. Unfortunately, as we have said many times before, law and morals are very different. The fact that one party may have had numerous affairs or gambled away thousands of pounds is unlikely to influence a judge. An experienced family solicitor will carefully advise you of this and make it clear that the conduct of the parties will only be taken into consideration when it is inequitable not to do so.
Examples from case law include:
- a husband that sexually assaulting his grandchildren, taking and making indecent photographs of them and communicating this on the internet, was conduct that amounted to ‘the grossest breach of ‘
- a wife’s participation in her husband’s suicide attempts to gain assets
- a wife’s refusal to live in property bought by her husband, choosing to live instead with the children of the family at her parent’s home
- a physical attack that resulted in rendering a spouse virtually unemployable
It is imperative to emphasise that each case will turn on its facts; even if your situation is like one of the above, it does not necessarily follow that the judge will take the conduct into account.
The loss of a benefit because of the divorce
This factor is normally considered when a benefit, such as the right to pension benefits on retirement, may be affected by the divorce.
The factors the court must consider when making a financial order, although consistent, each turn on the individual facts of the divorce. As such it is difficult for a couple to predict how a judge will divide their assets. Section 25 also provides the court must, before considering any other factors, contemplate the needs of any children under the age of 18 years.
Given the unpredictability of the outcome of a financial order in a divorce case, good family solicitors try to encourage couples to reach an amicable agreement between themselves. Not only are such arrangements likely to remain in place, but they also provide the couple with the confidence of knowing they can communicate and resolve any future issues that arise, as their lives forge different paths.
Saracens Solicitors is a multi-service law firm based opposite Marble Arch on the North side of Hyde Park in London. We have years of experience representing high-net-worth individuals in divorce proceedings and have the resources and expertise available to achieve swift, fair financial settlements. For more information, please call our office on 020 3588 3500.
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