Financial Provision
on Divorce
When
parties to a marriage decide to end their relationship, it is important to
remember that simply obtaining a Decree Absolute will not address the financial
considerations that invariably arise on the breakdown of a marriage. In dealing
with the financial issues that arise on divorce, there are guidelines that are
applied by the Courts. This leaflet aims to summarise the main principles
relevant to that financial division on divorce.
Decisions
of the English Courts are based primarily on statutory guidelines but also on
the common law, that is decisions handed down in previously decided cases. The
most relevant statutory guidelines are known as the “Section 25 Criteria” and
are set out in Section 25 of the Matrimonial Causes Act 1973 (“Section
25”).
Summary
of the Section 25 Guidelines
1. Circumstances
of the Case
Each
individual case will depend on it own facts but the starting point will always
be the statutory criteria laid out in s25. A duty is imposed on the Courts to
have regard to all the circumstances of the case whether past, present or
future.
2. The
Welfare of the Children
The
first consideration of the Court will be the welfare on any minor children of
the family under the age of 18 including stepchildren.
3. No
one factor to be more important that the others.
No
one factor should outweigh the importance of the others when considering the
division of matrimonial assets. However, it will be often be the case that one
factor (for example the respective earning capacities of the parties) will
occupy more of the Court’s time and be more important that other factors in that
particular case.
4. Financial
Resources
When
deciding on financial matters the court must have regard to the income, earning
capacity, property and other financial resources that each of the parties has or
is likely to have in the foreseeable future, including any increase in earning
capacity which the Court could reasonably expect a party to the marriage to take
steps to acquire.
4(a)
Income and Earning Capacity
The
court will look not only at what the parties earn currently but also at what
they could reasonably expect to earn in the future. The Court will draw negative
inferences if a party chooses no to work when he or she could do so.
4(b)
Earning Potential
This
should be distinguished from earning capacity. Earning potential is any increase
in earning capacity which a party would reasonably expect to achieve given their
circumstances.
4(c)
Property
This
will include land, any beneficial interest held under trust, money, partnership
assets, business stock, jewellery, other personal possessions, shares in private
or public companies and pensions.
4(d)
Expectations
The
Court will consider any income or property that a party currently has or is
likely to have in the foreseeable future e.g. inheritance
prospects.
5. Financial
Needs, Obligations and Responsibilities
The
Court must also have regard to the financial needs, obligations and
responsibilities which each of the parties of the marriage has or is likely to
have in the foreseeable future.
6. Standard
of Living during the Marriage
The
Court must also have regard to the standard of living enjoyed by the family
prior to the breakdown of the marriage.
7. Age
of Parties
The
age of the parties is most relevant to the question of their earning capacity.
Where the needs of young children are involved, a young wife will normally be
presumed to have an earning potential. The considerations will, however, be
different for a woman aged over 50 who has not worked for many
years.
8. Duration
of the Marriage
With
a short marriage contributions are likely to be more relevant. However, the
duration of any marriage and in particular short marriages will not be
considered on its own: other relevant factors will include contributions (or
lack thereof), children and the respective earning potential of each party. It
will often be important to consider the effect of the marriage on the parties
and also, in some circumstances to ask what the parties have lost in financial
terms as a result of the marriage. This may be particularly relevant where on
party has for instance given up a lucrative career following marriage in order
to care for the parties’ children.
A
further important factor that may now be considered in relation to the length of
the marriage will be any period of cohabitation prior to actual
marriage.
9. Disability
The
Court have regard to any physical and mental disability of either of the parties
to the marriage. There is a clear overlap here to potential or real earning
capacity but it should be noted that disability is unlikely to be regarded as a
factor in itself.
10.
Contributions of the
Parties
In
every marriage there will be financial contributions, non-financial
contributions and possible future contributions to be considered. Financial
contributions will include the earnings of both parties throughout the marriage,
capital provided by them, income from investments and any inheritance from which
the family has benefited. Non-financial contributions (such as caring for the
children of the family and maintaining the marital home) will be given the same
weight and importance as financial contributions. Therefore the Court will not
discriminate where one party of the marriage has continued to work and the other
has stayed at home to care for the children.
Future
contributions will be relevant in a situation where on party is caring for the
children when the other works. The longer the dependency of the children, the
greater the significance of this factor.
11.
Conduct of the
Parties
This
is only taken into account in exceptional circumstances.
12.
Value of any benefit lost of either party
as a result of the divorce
An
example of such benefits would be any pension entitlement which may be lost as a
result of a divorce.
When
considering the S.25 Guidelines, it is important to remember that every case
turns on its own facts and that all of the above guidelines and considerations
must be taken in account. It should also be noted that the Court retains a wide
discretion when making decisions in relation of ancillary relief proceedings.
This leaflet sheet is
designed to supplement the information given to you during your initial
interview. If you have any specific questions, please contact your
solicitor.
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