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Financial needs in divorce

Financial Consent Order

There is no single definition of Financial Consent Order needs in divorce. The needs of the parties are a question of fact to be determined by the Judge. This means that a Court has a great deal of flexibility and discretion to make whatever divorce settlement they deem to be a fair on the particular facts of each case. Given that there is no legal definition of needs, or a set formula to calculate needs, you could have an identical set of case facts and receive 5 different divorce settlements from 5 different Judges based on their individual discretion.

What are financial needs on divorce?

In practice, the main “financial needs” will be the need for a home, an immediate income stream, and income upon retirement.

From previous cases financial needs have also been assessed as follows:

  • Provision for a main home.
  • Removal expenses.
  • Improvement and decoration works.
  • Furniture for a home.
  • The discharge of debts.
  • The provision of course fees or retraining fees to be able to return to work.

Although there is no set formula for calculating financial needs, there are guidelines that Judges must take into account following a divorce or dissolution. These are contained in Section 25 of Matrimonial Causes Act 1973. This Act directs Judges to have regard to various factors, with the first consideration being given to the welfare of any child of the family who has not attained the age of eighteen. A Judge will base their decision on the following different factors:

  • how long the parties have been married or in a civil partnership.
  • their ages
  • their ability to earn.
  • the living expenses of both parties
  • the standard of living enjoyed during your relationship.
  • both parties’ financial needs and responsibilities
  • the available assets
  • any health conditions or disabilities that either party may have.

A Judge will decide on the fairest way to divide the assets. Each situation will be unique, but generally matrimonial assets are regarded as items such as:

  • Money, including savings and investments.
  • Property, including the family home and any property that is owned individually.
  • Pensions
  • Life insurance policies
  • Business assets
  • Furniture and appliances
  • Vehicles

To reach a financial settlement, a Judge will also need to consider the division of any debt, loans, or credit cards that the parties may have.

The concept of fairness does not necessarily mean an equal division of the assets (50/50). The strong presumption is that each spouse has an equal “sharing entitlement” to assets built up during the relationship and a Judge will begin with a 50/50 starting point. This avoids any discrimination between a breadwinner and a homemaker.

Wherever possible a Judge will try to arrange a clean break between the parties, so they no longer have any financial ties to one another.

Each situation will be unique and based on the assets available and the facts of the case.

As can be seen from above there really is no hard and fast rule as to exactly how financial provision on divorce or dissolution is decided. This is all worked out by the Courts, using only general principles which are subject to a huge amount of discretion by the Judges.

Is my husband entitled to half my savings UK?

Matrimonial property comprises those assets that have been acquired during the marriage from the joint enterprise of both parties. Most assets in most divorces comprise entirely of matrimonial property and this will usually include assets such as savings. The law will seek to divide your assets (and debts) equally, unless there is a good reason not to do so. This is often referred to as the ’50/50 starting point’.

Is a wife entitled to half of everything UK?

The starting point is an equal division of the assets irrespective of whether you are the husband or wife. This is often referred to as the ’50/50 starting point’. The law will seek to divide your assets (and debts) equally, unless there is a good reason not to do so. The Court is under a duty to consider all the circumstances of the case and in particular the Section 25 factors and then apply these to the facts of the particular case. Having considered the Section 25 factors, the Court may order an unequal division of the assets in reaching a divorce settlement.

How are finances calculated on divorce?

The Court’s first consideration is the welfare of any children involved. Alongside that, when determining an appropriate division of resources, the Court must consider the following factors:

  • each person’s income, earning capacity, property, and other financial resources, available now or in the foreseeable future, including earning capacity;
  • each person’s financial needs, obligations, and responsibilities relevant now or in the foreseeable future;
  • the standard of living enjoyed by the family before the breakdown of the marriage;
  • each person’s age and the length of the marriage;
  • any physical or mental disability;
  • contributions made or likely in the foreseeable future to make to the welfare of the family, including any non-economic contribution;
  • the value of each of the parties to the marriage of any benefit which that party will lose the chance of acquiring (for example pensions).

In determining how to apply these factors, the Court will have fairness as its overarching objective, and will apply the Section 25 factors according to the principles of “needs”, “sharing” and “compensation”.However, the Court may depart from an equal division if it is necessary to do so in exceptional circumstances, for example:

  • If the marriage has been very short;
  • If one party has made a contribution which substantially outweighs that of the other party. The extra contribution has to be in the significant;
  • If a 50% spilt will not meet the needs of one of the parties, with primary consideration going to the primary carer of any children of the family.

What is a fair financial settlement divorce?

Fairness does not necessarily mean an equal division.

The Courts primary objective is to meet the needs of both parties.

Can my ex-wife claim half my new house? 

If you have a clean break order your spouse will not be able to claim on your new house.

A clean break consent order is a legally binding agreement reached by both parties to a divorce or dissolution which provides a “clean break” between you and your ex-spouse/partner. It confirms that neither party wishes to make financial claims against the other in the future. This would include any property such as a new house.

The intention behind a clean break consent order is that it provides finality. It allows both parties to move forward and to be financially independent of one another.

How can I protect my money during divorce UK?

Does length of marriage affect divorce settlement UK?

If the marriage has been very short there may be a departure from an equal division of assets.

How do Courts decide financial settlement?

In deciding a financial settlement, the Court will have fairness as its overarching objective, and will apply the Section 25 factors mentioned above according to the principles of “needs”, “sharing” and “compensation”. However, the Court may depart from an equal division if it is necessary to do so in exceptional circumstances.

What is a reasonable divorce settlement UK?

This discretion can manifest itself not only in differences between two Judges sitting in the same court, but also in geographical differences from Separation Agreement. For example, some Courts are ‘pro’ clean break, or ‘anti’ ongoing spousal maintenance, whilst others will not end spousal maintenance when there are minor children to the marriage.

It is always a 50 50 split with divorce UK?

Not always. A 50/50 split is only a starting point. In others, a Judge will depart from an equal split in order to meet the needs of both parties.

Are debts shared in divorce UK?

To reach a financial settlement, a Judge will also need to consider the division of any debt, loans, or credit cards that the parties may have. The usual starting point is an equal sharing/discharge of any debts accrued during the marriage.

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