Financial Settlements – What the Courts consider on divorce
One of the more emotive issues that usually arises from a divorce is how to apportion money and assets between the two separating spouses. It’s most likely one of the first questions a person will ask when getting divorced will be ‘who gets what?’.
Sometimes a couple can come to an agreement between themselves but there are those who turn to the Court to make the decision for them about how to split their property. Of course, this doesn’t just relate to money, it incorporates everything a couple owns from houses & savings to cars & jewellery, nothing is outside the remit of the Court.
There is a common misconception that the Court only looks at financial contributions in reaching their decision on how to split a couple’s assets. There is in fact, a whole range of different factors taken into consideration all found in the written law being s.25 of the Matrimonial Causes Act 1973. The starting point for the Court is to pool all the assets. Unlike with many foreign jurisdictions, it doesn’t matter who earned what nor whether that was before or during the marriage. For what happens after that, it is worth looking at each factor individually as they incorporate a wide range of different considerations used to determine who gets what.
The first consideration must always be the welfare of any child of the family below the age of 18. This means the kids need a place to live and money to live off and the Court are going to prioritise this above everything else. The Court will want to ensure that the primary carer for the children has a house or the money to buy a house regardless of whose name the house is currently in. The Court could for example, order the other parent to pay the primary carer a lump sum towards buying a house, or they could transfer the title deeds into the name of the primary carer.
Income, Earning Capacity, Property and Other Financial Resources
This factor incorporates a wide range of different considerations. Income is nice and simple, it looks at all the sources of income a person is receiving. A person with a high income may have to pay periodical payments to their spouse if they are on a lower income and are less likely to be able to provide for themselves. Earning capacity looks at what the applicant could potentially earn in the future. For example, a 20-year-old has a reasonable earning capacity as they have the whole of their working life to begin a career and move through the ranks. Alternatively, a 50-year-old may not have such opportunities and this would be reflected in the decision of the Court. Property can incorporate a number of things such as houses, cars, jewellery, expensive paintings etc. and will vary from case to case. The Court will be considerate of personal items such as family heirlooms but that does not mean they cannot be transferred to the other spouse. Finally, other financial resources cover the rest of a person’s property such as stocks and shares. The most commonly forgotten and usually most substantial financial settlements resource is a person’s pension. These are not off-limits to the Court and specific orders can be made to share a pension with your ex-spouse especially when they may not have a pension themselves.
Financial Needs, Obligations and Responsibilities of each party
The Court will try to ensure that all the needs and obligations of each party can be met after their decision. For example, a parent who is the primary carer for the children has a responsibility to provide them with a home and living expenses. This may mean that the non-primary carer has to make payments to help the primary carer care for their children. Alternatively, a requirement to make mortgage payments on the house is an obligation and will be considered by the Court.
Standard of Living of the Parties Before the Marriage Breakdown
This can be a tricky one, especially when the parties are used to a more lavish lifestyle. The Court wants to try and keep things so far as possible “normal” but it is also worth being aware that each party should be expected to have a dip in their standard of living after their divorce. This is after al logical as living separately means maintaining 2 households.
Age of Each Party and the Duration of the Marriage
Age is usually not a major consideration but may help the Court reach a decision, especially where there is a difference in age between the two spouses. The duration of the marriage can be quite significant in financial settlements proceedings. A couple who have been together for 30 years are likely to have their finances tied up together, making it harder for the court to determine their shares and making the possibility of a clean break difficult. Alternatively, a couple who have been together a year are likely to have kept property separate and it is therefore much easier for the Court to order a clean break.
Any Physical or Mental Disability of the Parties
The Court will consider any disabilities each party may have and will adjust their decision accordingly. A disability could affect other considerations such as income, earning capacity and needs and the Court will want to ensure that a disabled spouse will have the means of providing for themselves once they are divorced from their partner.
The Contributions that each party has made to the marriage
This can be a controversial matter and there is a common misconception that a person can only contribute to a marriage financially. This is not true. In the leading case of White v White, it was decided that a spouse’s contribution to the welfare of the family (such as caring for any children and the upkeep of the family house) has just as much weight as the financial contributions to the marriage. This was a ground-breaking decision as it gave protection to the ‘stay-at-home spouse’ and prevented the ‘breadwinner spouse’ from arguing otherwise.
The Conduct of Each Party
Conduct in this situation means something so serious the Court cannot disregard it. So, if someone was trying to argue that their spouse was too messy or never did the washing up this would not affect the decision of the Court. Not even adultery would be considered. The Court will only consider acts of gross misconduct with notable instances of this being child abduction and attempted murder! Sorry, but just because you married a lousy, lazy or unpleasant spouse this will not mean you get more money!
Any Benefit that may be lost on divorce
This factor could relate back to pensions. If one spouse has a pension and the other does not, then that will be a benefit they lose on their divorce. The Court may order that the pension be shared, or they could order a lump sum for an equal amount to be paid. Other benefits that could be lost on divorce are things such as medical insurance or life policies.
These are all the considerations the Court will take into account when making a financial order for a divorcing couple. Each case will be different and not all the factors mentioned above will be applicable to every case, so the Court will tailor their considerations to each scenario. At the end of the day, all the Court wants is to reach a decision that allows both the parties to the marriage to be able to move on with their lives and be able to provide for themselves after the divorce.
If you are considering a divorce, or have any issue regards dividing up assets, you should speak to a Solicitor for further advice.