When considering how the matrimonial assets should be divided, the courts focus on the criteria set out in section 25 of the Matrimonial Causes Act 1973. For many people, the primary focus will be on the financial needs at a time of great emotional upheaval. For wealthy individuals, dividing assets to meet needs often does not present a great difficulty, but for families with modest income and assets, the Family Justice Council have recently provided guidance on how they believe “needs” should be considered.
The courts have long followed the principle that assets should be dealt with using a “yardstick of equality”, when the assets available comfortably met the needs of the parties. However, a departure from this starting principle of equality is frequently needed to enable the parties to separate financially and complete a transition towards independence if possible. This process is always considered with the needs of any children of the family at the forefront of the courts’ mind. The ultimate objective is to give each party an equal start on the road to independent living.
For many families, the main financial needs are their immediate housing and income requirements. Many will also wish to give some thought towards future income needs when they retire too. The courts will consider these needs on a case by case basis, by assessing the level and duration of those needs. The courts will then consider whether and how those needs can be met based on the makeup of the parties’ assets and income.
Needs is a term that has been interpreted inconsistently by the courts and attaches a loose definition of “reasonable needs” of the parties and has also been described as “…one party’s reasonable requirements fully and generously assessed…”. This demonstrates that the courts are happy to supplement “basic” financial needs, particularly in cases where the assets and income allow.
The courts will try to stretch limited assets as much as possible, but where these are modest, the needs of the family’s children will trump all other financial needs. In order to measure their financial needs, the parties will be required to provided clear and detailed budgets to the courts and must accept, that there may be some reduction in the standard of living, in order to allow the parties to meet the greater objective of a transition to financial independence.
If you wish to discuss your divorce and impact this may have on your finances, contact us today on 01234 889777 for a free consultation and speak to one of our specialist solicitors. Serving Bedford, Northampton and Milton Keynes, our lawyers can help you with your family law and divorce matters.