One of the major tasks a couple face when they divorce is to decide on a fair financial settlement: how much should each partner get once their joint matrimonial assets are divided up?
The courts will always try to ensure that both partners are treated fairly and will insist that they are honest about their finances and reasonable in their demands. It means that both sides have to be realistic about money.
Some men resent paying maintenance, even if they’ve been married for 30 years and their wife has stayed at home to look after the children. In these circumstances, they have to accept that the financial settlement may compensate the wife for the fact that her earning power diminished while she gave up work to concentrate on the family.
By the same token, women divorcing after a short marriage that hasn't produced children and hasn't interrupted their careers or earning capacity may have to accept they'll get no or very little maintenance.
Both partners also need to be honest. There’s been a growing trend recently of people trying to hide some of their assets in secret accounts or in someone else’s name in order to get a better settlement. This rarely works and can cause further complications and expense.
It is obviously better and less stressful if a couple can decide on a settlement with the help of their solicitors and avoid having to go to court. There are some basic principles to help couples decide what is fair and acceptable.
The sharing principle
Landmark cases like White v White have established that both partners in a marriage are equal and so should be treated equally.
This means the partner who gives up a career to stay at home to look after the children is entitled to the same share of the marital wealth as the partner who acted as the bread winner.
In practice, this means that assets such as the home, investments and pensions that have been built up during the marriage should be shared 50-50.
Courts will stick to this principle unless there are exceptional reasons to deviate, perhaps in cases where a marriage was very short, produced no children and there was evidence that both partners had their own income and had kept their finances separate from each other.
The courts might consider that an inheritance should not be considered as a matrimonial asset but that is by no means certain, and in any case, it might still be used if the other partner is struggling to meet an essential requirement such as a home.
The needs principle
This looks at what each partner will need to get by after the divorce and is likely to be a factor in most divorce settlements. It may be that even when the assets are shared equally, one partner may not have enough income to buy a home. In these circumstances, the court may allocate extra to one partner or provide for monthly maintenance to be paid by the other partner.
There are many ways assets and income can be divided but the general principle will be that the basic needs of both partners should be met as much as possible given the amount of money available.
Children come first
The needs of the children will outweigh all other considerations including the sharing principle and the needs of each spouse. It means that in addition to the equal division of assets, extra may be allocated to the spouse with whom the children will be living. It’s likely that the non-resident partner will also have to make regular maintenance payments to ensure the children’s needs are met as fully as possible.
Ideally, you will be able to agree a fair settlement amicably without the need for court proceedings, but even if you do, you should still apply to have it formalised in a court order so it’s legally binding and enforceable. If you don’t do this, you may find your partner makes a claim against you years later, especially if your financial situation improves or if you receive an inheritance.
Divorce is always likely to be stressful but if both partners are honest and reasonable, it should not be too difficult to reach a financial settlement that is fair to both sides.
If you would like more information or advice about the issues raised in this article, or any aspect of family law please contact our expert legal team on 0208 004 0065, by email at firstname.lastname@example.org or using the form below.
The contents of this article is general information only. The information in this article is not legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should obtain independent expert advice from qualified solicitors such as those within our firm.