When it comes to resolving disputes about family finances in a divorce or dissolution the court, lawyers and mediators will frequently talk about whether a case is a financial “needs” case or not. People often find this jargon puzzling.
What is a financial needs case?
There is no statutory definition of “financial needs”. Financial needs are a question of fact to be determined by the Court. In 2014 a Law Commission report suggested the following objective: -
“… the objective of financial orders made to meet needs should be to enable a transition to independence, to the extent that it is possible in light of the choices made within the marriage, the length of the marriage, the marital standard of living, the parties’ expectation of a home and the continued shared responsibilities (importantly, child care). We acknowledge the fact that in a significant number of cases independence is not possible, usually because of age but sometimes for other reasons arising from the choices made during the marriage”.
The choices made by parties during the marriage (for example, the interruption of a career to have children) can limit one party’s ability to continue in employment or to return to work and, therefore, to be wholly independent and financially self-sufficient. The court recognises that often there should be a departure from equal division of assets in order to achieve fairness between divorcing spouses based on the financial needs of the parties.
Measuring Financial Need
Any assessment of financial needs will depend upon a variety of factors, such as the amount of available assets and income and the standard of living enjoyed by the family, before the breakdown of the marriage. It is deemed inappropriate for a divorce to entail a sudden and dramatic disparity in the parties’ assets and lifestyles. Financial needs are always relative as standards of living vary from case to case. Dependent children, age and health are also important factors. Where there are more resources (including income) available and a higher standard of living enjoyed previously, a financial need is likely to be assessed more generously.
In most cases the provision of secure housing is the priority need. Often there is not enough money to fund two homes at a standard all parties would like. Evidence of housing needs comes from examples of alternative housing and mortgage capacity. Frequently, housing and the need for regular income (to pay a mortgage or rent) are intrinsically linked and will need to be considered as a whole rather than separately.
It is important to emphasise that in assessing financial needs the Court is assessing the needs of both parties, as well as any children. Where resources are limited the needs of the children to have a primary home may be the predominant factor.
When resources are tight people overlook their need for income for when they become retired. Often expert assistance is needed to evaluate how such needs can be fairly addressed from pension assets – see our note on pensions
Our specialist divorce lawyers will advise on what are likely to be the decisive needs factors that will influence the achievement of a fair settlement and what evidence will be required in support.
If you have any queries regarding your financial needs on divorce, please contact our divorce solicitors in Guildford on 01483 451900.