Financial Needs On Divorce

Finances and divorce

On 1st July 2016, the Family Justice Council released its ‘Guidance on “Financial Needs” on Divorce’. The guidance is aimed primarily at courts and legal advisers and therefore the language can be complex in places.

The aim of the guidance is to define the term ‘financial needs’ on divorce and to provide legal professionals with a clear statement of the objectives that financial orders should achieve when dealing with the needs of the individual parties. The guidance comes as a result of three main areas of concern for the Law Society:

  1. Unacceptable regional disparity – Different family courts throughout England and Wales have produced very different results, i.e. different financial orders, where the facts of the case and the financial standing of the parties are similar. The Law Society is concerned by the lack of continuity throughout the courts.
  1. No statutory definition of needs – The law for dealing with financial claims after divorce is set out in the Matrimonial Causes Act 1973. It is regularly applied to cases in different ways by the courts and there is no single definition of financial ‘needs’, which does give the court flexibility as to the interpretation of the law but can also result in confusion for parties and legal professionals alike.
  1. More litigants in person without lawyers to manage their expectations – With the reduction and virtual extinction of public funding within the family law arena, more and more people are choosing to represent themselves in court. This means that many individuals attend court without having had the benefit of legal advice, which would include an assessment and advice as to what they can expect to receive by way of a financial order. The courts are finding that many people attend court without representation and are not prepared for or understand how a financial application works and what the likely outcome will be.

The Guidance says that:

  1. Generally, marriage is seen as creating an interdependent relationship;
  2. Dependence is created by the presence of children;
  3. Relationship generated needs should be met by the other party where resources permit.

The Guidance then explores what ‘financial needs’ are and how they are measured as well as the duration of the provision for needs after divorce.

In every financial application, the court will focus on the individual financial needs of each party. The Guidance itself is simply guidance and should not be taken as legally binding. The purpose of this guidance is to address the Law Society’s concerns as stated above and to reduce the lack of transparency in this area of law. Here are the complete details of the guidance.