What is the meaning of Need: Guidance on Financial Needs on Divorce
You may have read our earlier Family Law article in May of this year dealing with calls for financial settlements following on from a divorce to be simplified to a mathematical equation. However, providing for both parties’ financial needs and those of any minor children following a divorce is not necessarily that simple. In the vast number of cases, being cases in which the assets available do not exceed the reasonable needs of the parties, a 50:50 split of everything will not be fair.
The current rules allow a broad discretion on how the available family assets should be shared between the divorcing couple. There is no formula to calculate who should get what. Every case is different and turns on its own facts. Whilst there is the starting point of equality, needs commonly provide a justification to depart from this. By way of example a case where the Wife has given up her career to be the primary carer to the parties’ children, putting her at a disadvantage when returning to employment after a long break, compared with the husband who has a flourishing career and a much a bigger pension pot. If the assets in such a case were split 50:50 this may not enable to wife to re house with the children as she is likely to have a limited mortgage capacity compared to the Husband.
Due to the current rules allowing a broad discretion numerous pieces of research have shown that there have been differences in how the courts in different regions of England and Wales define and assess ‘needs’. As a result the Family Justice Council (FJC) has recently published guidance on financial needs on divorce aimed both at Courts and legal advisers and it is hoped that the guidance will help bring clarity and uniformity. It has been drafted as a useful tool to assist in the making of Orders to meet financial needs following divorce and the dissolution of civil partnerships.
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The guide focuses on the most common type of divorce, in which the assets available do not exceed the reasonable needs of the parties and, in the words of the President of the Family Division, the guidance “provides a succinct summary of the law, as explained and developed in the leading cases. It also includes a number of helpful case studies of common scenarios”.
The 64 page guidance can be accessed here https://www.judiciary.gov.uk/wp-content/uploads/2013/04/guidance-on-financial-needs-on-divorce-june-2016-2.pdf
It compliments earlier FJC guidance for litigants in person entitled “Sorting out Finances on Divorce” and dated April 2016, which can be found here https://www.judiciary.gov.uk/wp-content/uploads/2016/04/fjc-financial-needs-april-16-final.pdf
In summary all family lawyers and judges must apply the law, which states that any decision must have regard to all the circumstances of the case, first consideration being given to the welfare of any child aged under eighteen.
“Needs” in most cases, mean the need for housing and a regular income. However, future income needs can also be relevant, such as the need for an income in retirement.
To measure “need”, both parties should produce detailed budgets. “Need” will then be measured by assessing available financial resources and also considering the standard of living enjoyed during the relationship.
The Court will strive to stretch finite resources, but where resources are modest, meeting the children’s needs will usually be given priority. An overall objective is to look to place both parties on an equal footing to achieve independence.
A party may be expected to suffer some reduction in their standard of living, if that is necessary in order for both parties to gain independence from each other as part of a “clean break” However, in some cases a complete or immediate “clean break” will not be appropriate if it will cause one party “undue hardship” in the future.
Needs may be met from non-matrimonial resources. A court in a needs case should not focus on the assets accrued during the marriage, but should instead consider all the available assets
Should you require assistance in relation to divorce and financial remedy cases, particularly considering your financial needs on divorce, contact Rachel Smith at Emmersons on 0191 567 6667 or by email at firstname.lastname@example.org
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