Divorce Financial Settlements in the UK and Proposed Reforms

Negotiating a divorce settlement invariably causes at least some contention between the parties involved and the machinations often prove to be traumatic. It is easy to understand why; divorce involves making financial arrangements that could have a lifelong impact and typically includes assets that both parties feel intrinsically connected to.

As it stands, before ordering any financial settlement on divorce the courts will examine all the factors outlined in Section 25 of the Matrimonial Causes Act 1973.

These include:

  • Income and earning capacity, property and other financial resources that each spouse has or is likely to have in the foreseeable future.
  • The financial needs, obligations and responsibilities each spouse 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 ages of each spouse and the duration of the marriage.
  • Any physical or mental disability of either spouse.
  • The contributions that each spouse has made or is likely to make in the future to the welfare of the family.
  • The conduct of each spouse, if that conduct is such that it would be unfair to disregard it in the opinion of the court.
  • The value to each spouse of any benefit that one spouse would lose because of the divorce.

Children and the two principles

The interests, safety and general welfare of any children in the family is the first consideration of the court during all divorce negotiations and may have an impact on any divorce financial settlement that they subsequently reach.

However, the courts also consider three other important principles. These are:

  • Sharing: marriage is a partnership so courts begin on the basic assumption that there should be equal sharing of assets, including, property, pensions and savings. However, this does not apply to income, although the contributions of any homemaker partner are considered as equally valuable to those of any breadwinner partner. Furthermore, there are certain “non-matrimonial” assets – e.g. inheritance and gifts – that the courts may decide do not need to be shared equally.
  • Needs: Although sharing is an important principle, the respective income and housing needs of the divorcing parties will outweigh this.
  • Compensation: The House of Lords has ruled that if a person has given up a career to take on the role of homemaker they should be compensated on divorce. However, the law in this area is still vague and legal advice from an experienced family lawyer in regard to this principle should be considered as essential.

Divorce financial settlement reforms

There has been a great deal of media coverage concerning proposed family law reforms including a Bill to introduce ‘no fault’ divorce in the UK.

The Divorce, Dissolution and Separation Bill 2017-19, introduced by former Justice Secretary David Gaulke, sought to benefit all parties by reducing acrimony and the inherent finger-pointing necessary in our current divorce system to prove the irretrievable breakdown of a marriage.

Amidst the current parliamentary upheavals and Brexit wrangling, the bill is one of those which failed to progress through parliament before the current session ended and so will make no further progress in its current form.

And there have been various other attempts to reform aspects of the way assets and pensions are handled during a financial settlement on divorce. Crossbench peer, Baroness Deech, recently proposed the following in her Divorce (Financial Provision) Bill [HL] 2017-19:

  • To make prenuptial agreements legally binding as a matter of course.
  • Limiting spousal maintenance to a maximum of five years except in cases where not doing so would cause “serious financial hardship”.
  • Legal presumption that matrimonial property will be divided equally.

However, not everyone, including the Right Honourable Lady Justice Hale, President of the Supreme Court, supported the Baroness’s proposals, saying they threaten the stability of marriage by failing to properly account for the differences inherent in every individual marriage and divorce.

Towards the end of 2018 the Bill made it to a first reading in the House of Commons, but has not progressed further and has suffered the same fate as the Divorce, Dissolution and Separation Bill 2017-19.

Wellers Law Group divorce lawyers

Divorce law is continually evolving and despite increased clarity in many areas, there is still plenty of room for courts to apply discretion. The divorce lawyers at Wellers Law Group can help you ascertain your rights, obligations and options and can assist in ensuring full and frank disclosure of all assets and financial interests, including trusts, pensions and company assets.

We believe in a collaborative approach to divorce, separation and financial settlement and have a proven track record of achieving successful early stage and amicable settlements. However, where necessary, we are prepared to litigate robustly in order to ensure your interests.

Contact us today for help or advice on 020 8290 7992 for our Bromley team, 01732 446374 for Sevenoaks, 020 7481 6393 for central London or 01483 284567 for our Surrey team. Alternatively email your enquiry to familylaw@wellerslawgroup.com. We offer a fixed fee, no obligation one-hour interview so that we may provide you with initial advice and suggest the options for your next course of action.