Safeguarding Your Assets: Financial needs during Divorce


Every day, we receive a huge number of enquiries regarding divorce. Be it those who are thinking about beginning proceedings who want to know where they stand, or those who have already begun the process and need advice, here at Hylton-Potts we find that the bulk of questions we get relate to an individual’s financial needs.

What are the financial needs that are considered by the courts? How is everything calculated? These are questions we get asked on a daily basis, and we understand that there may be many more people reading our blog who are also looking for these answers. With this in mind, we thought it would make the perfect focus for today’s post.

What are my “needs” and how are they measured?

Where most couples are concerned, the key financial needs are housing (particularly if there are children involved, which could affect the outcome of negotiations), and present/future income. Present income will of course affect which party is financially the stronger of the two, and therefore whether one individual must pay the other regular maintenance instalments for living costs. Future income needs typically refer to income during retirement, so pensions are also considered and factored into any calculations.

So, how are your assets measured and the financial needs assessed? On entering into divorce proceedings, the courts will consider all available assets and income (so all financial resources be it a family business, a property and so on), as well as the standard of living enjoyed by the family prior to the breakdown of the marriage.

These days, judges have consistently taken the view that the couple’s standard of living (regardless of any animosity while they were still together) should always be reflected in the courts decision. In other words, just because one of the parties may be considerably financially weaker, they should not be left to handle a sudden and dramatic disparity in their lifestyle, regardless of whether or not they initiated proceedings.

Such decisions made by a court would be deemed highly inappropriate, and where there are ample financial resources available, it may be fair for the court to sanction a continuation of the lifestyle choices made during the marriage. If you are the financially stronger of the two parties though, and you are concerned that your spouse will try to take more money from you than is fair, it’s vital you seek legal advice as soon as possible to protect your assets.

When a court comes to measure your financial needs, the following points should provide you with a brief overview of what you can expect to happen:

  • Your needs as a couple will be measured by assessing all available financial resources; this includes non-matrimonial resources, and even ‘ring-fenced’ assets, which makes it even more important to contact your legal consultant as soon as possible, to understand exactly what your position is
  • Both parties will be expected to present detailed budgets to the court
  • The court will “strive to stretch finite resources”, however where resources are modest, the needs of any children from the marriage will be the dominant consideration
  • Needs will be measured by assessing the standard of living enjoyed during the relationship. However, it’s important to note the general rule that the longer the relationship’s duration, the more important this factor will be
  • One party may be expected to suffer a decrease in their standard of living, as they make the transition into independence

The transition into independence

It is considered grossly inappropriate for a court to leave one party destitute as a result of a divorce, so if this is your worry then rest assured that separate lifestyles and incomes are taken into consideration. Should a series of periodical maintenance payments be needed (known as a joint-lives or term order), most case outcomes strive, not towards ensuring life-long support, but towards assisting independence.

The transition into independence, and the challenges it presents, is a difficult process for anyone facing divorce. In deciding on the duration of any matrimonial payment order though, the court will need to consider the “statutory steer” towards the end of obligations. At what point is it “just and reasonable” to end those payments? When is the earliest point it can occur?

Of course, the termination of such an arrangement should only occur if the payee can adjust to it without “undue hardship” (according to section 25A of Matrimonial Causes Act 1973). However, above all else, the termination of such payments should not be achieved at the expense of a fair result, and it should be justified by reference to “an evidential foundation”. In other words, there should be a substantial case put forward in support of a fair end date, rather than mere speculation.

When considering whether to put in place a joint-lives or term order, the courts have regard to the following matters:

  • Age, health and mobility
  • Relevant qualifications and previous work experience
  • The length of time since last employment
  • The opportunity to brush-up, acquire skills or re-train
  • The cost and availability of re-training
  • The availability of work
  • Any childcare commitments which structure the daily routine, as well as childcare options and the associated costs
  • The ages, health and any specific needs of a child/children or other dependants
  • Realistic level of net remuneration
  • The availability of work-related state benefits
  • The net financial gain after paying childcare and work-related expenses
  • The extent to which there has been pension sharing, taking into account future needs
  • Attributing an earning capacity in view of the length of the marriage and the ex-spouse’s net remuneration and ability to pay.

At Hylton-Potts, we understand how upsetting these circumstances can be. We see couples every day who are struggling to come to terms with the logistical and emotional upheaval that a divorce can inflict upon a family, which is why we feel so strongly about helping you through each step.

If you are in the process of getting divorced and you’d like to know more about safeguarding your assets, the best thing to do is to seek advice from our experts as soon as possible. You can call us on 020 7381 8111, or email us at [email protected].

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