On Divorce: What do you actually “need”?
Posted on 9th November 2016
Financial “Needs” are always considered before a court makes a financial order to resolve the distribution of money of a marriage.
WHAT IS A FINANCIAL ORDER?
When a marriage ends there are lots of financial decisions to make. For example, whether to sell the family home, how to divide up your savings, possessions, other property and pensions; and whether one of you should pay maintenance to the other. A ‘financial order’ is a court order that sets out these decisions. There are a number of the different financial orders a court can make.
A court can make these financial decisions for you if you cannot agree how to divide up what you own yourselves or whether one of you should pay maintenance to the other. It goes without saying that it is much better (and cheaper) if you can agree. If this is the case you send an order to the court and ask the Judge to approve your agreement. Either way, the order that is made is called a financial “order”.
Before determining financial needs a court will start by looking at the financial resources available to each party and the standard of living enjoyed by your family before the marriage broke down. It’s an analysis of what income and assets are available in the family pot, there is no calculator that can tell you what the right answer is as this is a delicate balancing exercise in each case.
Usually, the primary needs are accommodation for your children and you and your spouse. There also needs to be consideration of both parties’ current and future income. Your respective income upon your retirement also needs to be looked at, this will usually come from pensions.
In June 2016, the Family Justice Council published Guidance on ‘Financial Needs’ on Divorce. This originated from one of the Law Commission’s objectives for consistent financial orders to be made throughout the country.
The Guidance principally covers 2 areas to identify:
- What are your needs and at what level should they be met; and
- The duration of provision for your needs and the transition to independence which is reasonable and at the earliest point
WHAT DOES THIS MEAN?
The Family Court must consider :
- What are your needs both for capital and income
- Should continuing financial support be ordered for one party to pay the other – the court will look to minimise any undue hardship; if there is ongoing support then the court will need to consider;-
- If the financial support could ever end and if so when i.e. to give that party time to adjust; and
- If an order should or should not be made for preventing this term from being extended
- Each case is to be considered on its merits
- The extent that it is possible in light of the choices the parties made within the marriage;
- The length of the marriage;
- The marital standard of living;
- The husband’s and wife’s expectation of a home, and
- The continued shared responsibilities (importantly, child care).
Practically speaking you need to ensure that you have the right information before the court, for example, detailed budgets, childcare options and costs, availability of re-training, realistic future salary and length of time since employment and more.
“We acknowledge the fact that in a significant number of cases independence is not possible, usually because of age but sometimes for other reasons arising from choices made during the marriage”. (The Law Commission)
So how might you – or those around you – be affected by this family law issue and what steps you can take to address this issue?
If you are splitting up, you should discuss matters with your lawyer. For example, if it’s foreseen that you will retire and will need a pension provision on retirement this will be a focus for settlement. Or, if you are parents and it’s foreseen that the children will need to be cared for financially. Children change everything in relation to the dependence or independence of the spouse who is the main carer.
It is fair to say that from considering recent case law, life-long support is now the exception rather than the rule.
Every family is different so if you need help with any of the issues raised, or would like to speak to someone in confidence to find out how these issues might affect you and what to do next, do get in touch. We offer initial fixed fee advice sessions.