How does the Court Assess a Financial Settlement on Divorce?

By Punam Denley of Blanchards Law.

Blanchards Law is a niche family law practice with divorce solicitors, mediators and collaborative lawyers.

Can we help you? Please call us on 0845 658 6639 or email us at pd@blanchardslaw.co.uk

You think you want to divorce, but you are very worried about how your assets and income will be treated by the court. I have written here https://www.blanchardslaw.co.uk/blog/how-does-the-family-court-assess-spousal-maintenance and here https://www.blanchardslaw.co.uk/blog/how-do-you-vary-a-spousal-maintenance-or-a-child-maintenance-order about maintenance, but what about capital assets such as property and other investments?

The court has the power to make orders for maintenance, interim maintenance, lump sum and property adjustment orders for either party in divorce/nullity/judicial separation and civil partnership proceedings. These are set out in section 25 of the Matrimonial Causes Act 1973, which also deals with the grounds and process for divorce in England & Wales. These powers also extend to “pension earmarking” and “pension sharing”, which have been encompassed in later legislation.

Although they are not specifically mentioned in the legislation, the court can take into account any pre-existing agreements between the parties as to what they were expecting, such as a pre-marriage agreement.

In relation to financial matters, there are certain factors to which the court must have regard in deciding to exercise those powers.  The court has regard to all the circumstances of the case, the first consideration being given to the welfare of any minor child of the family who has not attained the age of 18, but in particular it has regard to the following matters:-

(a)                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;

(b)               the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;

(c)                the standard of living  enjoyed by the family before the breakdown of the marriage;

(d)               the age of each party to the marriage and the duration of the marriage;

(e)               any physical or mental disability of either of the parties to the marriage;

(f)                 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 contribution by looking after the home or caring for the family;

(g)                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;

(h)               the value to each of the parties to the marriage of any benefit…..which by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.

(i)                  as regard to the exercise of the Court’s powers in relation to a child of the family, the Court shall in particular have regard to the following:-

a)      financial needs of the child.

b)      the income, earning capacity (if any), property and any other financial resources of the child

c)       any physical or mental disability of the child.

d)      the manner in which he was being trained and in which the parties to the marriage expected him to be educated or trained.

e)      Considerations mentioned in relation to husband and wife in paragraphs a), b), c) and d) above.

What does this mean? Essentially a district judge in England & Wales (the level of judge most likely to hear your case), has a wide discretion in deciding how to share your assets and income. There are no hard and fast rules, which make it difficult for family solicitors and clients alike to determine the likely outcome. Much can even depend on which judge you have and how good your solicitor or barrister is on the day. There are judges up and down the country who have reputations for being ‘pro-wife’ or ‘pro-husband’, so it’s well worth doing your homework to find out the best court for you to issue your divorce. Due to the arbitrariness of the court system, most couples do settle their finances between them, and only 10% of cases end up in court.

The most important first consideration for a party to a divorce or separation, should be to inform themselves. I have seen too many clients who have acted to their detriment, simply because they didn’t know any better. It is always worth the investment to pay a divorce solicitor for a couple of hours of advice at the outset, and then move on from there, with or without representation.

Finally, make sure that whatever settlement you do reach, that it is properly drawn up by divorce lawyers and approved and sealed by a judge so as to be binding. Both husbands and wives can suffer, if an agreement upon which they were relying suddenly breaks down. If it’s not a sealed court document, this is exactly what can happen.

© Punam Denley, February 2013

Blanchards Law is a niche family law practice with divorce solicitors, mediators and collaborative lawyers.

Can we help you? Please call us on 0845 658 6639 or email us at pd@blanchardslaw.co.uk