Marital Financial Needs

Marital Financial Needs

We are commonly asked, if there is a family home, should it simply not, in a divorce, be shared equally? The reality is that it is not always possible to divide the family home equally and there may be many good reasons why this should not happen. Sometimes the family home has to be dealt with “unequally” but most importantly this is often because of the parties’ (and indeed any dependent children’s) respective needs and how they need to be addressed now and in the future.

Of course the word “need” is quite far-reaching and quite easy for either party in a marriage to assert or rely upon. What is a ‘reasonable’ and ‘fair’ need will need to be determined. Consideration should be given to any child of the family who has not attained the age of 18 but of course there can be children beyond the age of 18 that are still in some way dependent upon their parents. Also, when assessing ‘needs’ it is important to consider:

  • the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future, including in the case of earning capacity any increase in that capacity which it would in the opinion of the court be reasonable to expect a party to the marriage to take steps to acquire;
  • the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;
  • the standard of living enjoyed by the family before the breakdown of the marriage;
  • the age of each party to the marriage and the duration of the marriage;
  • any physical or mental disability of either of the parties to the marriage;
  • the contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contributions by looking after the home or caring for the family;
  • the conduct of each of the parties, if that conduct is such that it would in the opinion of the court be inequitable to disregard it
  • the value to each of the parties to the marriage of any benefit which, by reason of the dissolution … of the marriage, that party will lose the chance of acquiring.
  • Matrimonial Causes Act Section 25(2) 1973

 

Each of the above might, in a lot of cases, have a bearing on the parties’ needs.

Are there the assets available to meet the needs ?

The resources available to meet the needs has to be considered. In large money cases it is often easy to address the parties’ needs but in an average case where there is a limited amount of assets, for example, a property with a limited amount of equity or where there may be a small amount of savings, it may not be possible to address everybody’s needs by, equal sharing. In some circumstances this can lead the court to depart from an equal split of assets if it is necessary and there is no other way of addressing those needs.

What is a Needs case ?

Considering the actual assets that are available is very important. Where the assets do not exceed the parties’ needs these are often referred to as ‘needs-based cases’. Sometimes we have to move away from equal sharing of assets when considering the needs of one party or the children.

There are many different types of needs but the most common needs are usually for housing and the present and future income. Often these are linked.

The court not has to consider how the needs of the parties are met from the marital assets that are available but also needs may be met from a non-marital source eg : mortgage capacity. The court in a ‘needs case’ should not always focus on assets of “marital acquest” but instead consider all assets available. In a modest case of limited or reasonable funds there may be no surplus of resources and the court will primarily be concerned as to what they consider to be the most important need.

The Family Home

The financial resources, including property, available to the parties will be essential when considering the needs that need to be met. Often when resources are modest the children’s needs may predominate and often this will include the needs of the main carer for those children. The standard of living enjoyed during the marriage would need to be assessed and generally the longer the relationship’s duration the more important this factor will be. Nevertheless, this has to be balanced against the unavoidable fact that the parties are no longer pooling their resources and each will have separate needs. Naturally it may be the case that one party does suffer some sort of reduction in the standard of living when moving through the transition to independence. When addressing housing needs sometimes it has to be considered the type of housing that would meet those needs but also their ability to secure that housing, not only using assets available, but also their earning ability and thus mortgage ability. For example, a modest house with children may lead to the conclusion that may simply not be appropriate for the family home to be sold.

Often where resources are modest the children’s needs for a home with their primary carer may dominate but if possible the court will strive to stretch the available resources to provide a home for each party but that simply may not be possible. There are sometimes difficult decisions to make, for example, one party wishes to come off the mortgage of a family home but the only way of doing so would be to sell the family home and the court may consider that detrimental or not in the best interests of one party (and/or the children). Therefore one party might find themselves tied to the mortgage of a property which they no longer live for a period of time after separation/divorce. This could also have a detrimental impact on their ability to move on, for example their ability to buy another property with a mortgage if they are still named on the mortgage of the family home where the other party resides. This has to be carefully considered in light of all available assets and resources and financial advice as well as legal advice may be essential to evaluate what is reasonable.

Income Needs

As well as housing needs, income needs have to be considered. That need would have to be quantified to see the amount required and the duration it is required. To address that need we would also have to consider the ability of the other person to meet assist with that need. Both parties would be expected to present details of their income from all sources and detailed budgets/outgoings for consideration. Sometimes within a divorce settlement there is a requirement for periodical payments ie Maintenance from one spouse to another (this maybe for a fixed term or a on a joint lives basis- see below). Sometimes it is appropriate simply that there is a clean break and no periodical payments but our solicitors would be able to advise to as to the appropriateness of either of these options.

In situations where there is a need to provide periodical payments, i.e. maintenance, the courts would have regard to many factors which would include, but may not be limited to:

  • Age;
  • health and mobility;
  • relevant qualifications;
  • previous work experience;
  • length of time since last employment;
  • the opportunity to acquire new skills and re-train;
  • other assets available;
  • availability of work;
  • childcare commitments including the age, health and needs of that child/children;
  • childcare options and of course the costs of such childcare;
  • the availability of state benefits.

 

When parties manage their finances as a family unit they usually have one household to run but often following divorce there will be two households that effectively that would be run from the same pot of money ie income they had together (note: there may be certain benefits available to a single person that wasn’t available to them as a couple and our solicitors can advice you about this). Sometimes items that the parties considered they needed when they were together are now impossible to fund after separation. Sometimes there is simply not the amount of funds available, i.e. a limited income, between the parties and the court cannot necessarily address both their needs in full. In order to constitute what are needs and what constitutes a ‘want’ will very much depend upon the available income. The court has to consider the factors above, for example, lifestyle of the marriage and the circumstances of the case as a whole. Inevitably sometimes items that were considered fundamental during the marriage may now have to be considered as luxuries.

Careful preparation of budgets / monthly or weekly outgoings statements is important and our solicitor can discuss this with you.

‘I want a clean break!’

There is often the desire by one party to achieve a clean break. Nevertheless a clean break should not be achieved at the expense of a fair result. Sometimes there is a need to provide ongoing financial support by one party to another. This could also be the case where there are no dependent children. It is then a question of assessing the amount and the term of the payments. Periodical payments, i.e. maintenance, may be considered on a joint lives basis or a fixed term. When deciding the duration for which any maintenance is paid, due consideration has to be given to when obligations to pay maintenance should end and whether that is just unreasonable. A termination of maintenance should only occur if it does not cause undue hardship. Sometimes it can be considered that a reduction in the standard of living does not amount to undue hardship and the court often has to draw this distinction. The court also has to look at the context of things, for example, whether it is a short childless marriage or a marriage that is long and possibly involves children or both. The parties’ pension provision may also have an impact upon the termination of any maintenance.

The majority of divorces deal with an amount of assets that usually can only deal with the parties’ needs and there is simply not the surplus to go beyond that. Sadly, sometimes there simply isn’t enough to meet all of the needs or both of their needs. Careful consideration has to be given to many of above factors. Our experienced family solicitor can discuss this carefully with you and advice you appropriately how they feel those needs should be addressed.

For further details contact Daniel Priest at dpriest@campions.co.uk or Tel: 0115 924 7023.

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