When a divorce application or an application for dissolution of Civil partnership is made, the application gives rise to the right of either party to the proceedings to apply for the financial issues arising from the breakdown.
The court will consider claims in respect of capital (including property, pensions and income).
In order to consider the possible ways to resolve the financial issues and to see what claims either party may have, it is necessary to have full information regarding what is involved in all areas of the couples’ finances. This is most often achieved by both the parties producing documents that evidence all the financial matters involved jointly and separately.
For many separating couples their difficulty is that the income which supported one household has then to support two households. This means that there can be a deficiency and the difficulty is that there is not enough to go around. With the capital, this is most likely to be the money which is equity in the family home (the amount which the couple would have as cash if the house were sold and any mortgage and costs of the sale paid off). Again, that money which went to providing one home may well be very stretched if it is then used for providing two homes.
As far as the court is concerned the first step in the process is to see what money there is. Thereafter the process involves looking at meeting the needs of the adults and any children.
In addition to the capital, most often in bricks and mortar, the other main assets of main couples are their pension or pensions. These also form family assets and the court can make orders taking money out of one person’s pension pot to pay to the other party.
The court can also consider whether, in certain circumstances, one of the parties should continue to pay monthly payments to the other. This rarely arises in modern times and the court has an obligation to consider in each case whether the payments can and should cease. Such payments are known as spousal maintenance and often the outcome requires that there are no such maintenance payments to be made going forward. The court is always keen to ensure that both the couple move forward independent from the other.
The consideration of finances on divorce or dissolution of marriage is one of the most complex areas of the law. Unfortunately, there is no set formula and it is not possible to put numbers into an equation and get the right answer. The court has jurisdiction to deal with matters and judges are given the flexibility to deal with matters at their discretion based upon what they consider is just and equitable in the circumstances. Every case is decided on its facts and most cases have the potential of very different outcomes depending on the judge.
The court is obliged to consider the following matters in respect of the claims for financial issues on divorce to be settled:-
- 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;
- the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;
- the standard of living enjoyed by the family before the breakdown of the marriage;
- the age of each party to the marriage and the duration of the marriage;
- any physical or mental disability of either of the parties to the marriage;
- 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;
- 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;
- in the case of proceedings for divorce or nullity of marriage, 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.
Whilst the court can be asked to make a decision and conclude the outcome for the couple going forward it usually wise for the couple to find a resolution to these matters between themselves as if the court makes a decision it might be an outcome which neither of them likes or want.
The emphasis in these matters is always to encourage the parties to agree and settle how things can and should be dealt with. This can be by direct discussions, via mediation, through solicitor negotiations or within court proceedings. However, once an agreement has been reached it is ALWAYS necessary to obtain an order which reflects that agreement and formalizes the same. The order will also deal conclusively with the claims which the parties have against each other and ensure that there is an end to their respective obligations.