How the courts decide a financial settlement

There are various considerations which will affect the court’s decision when making a financial order. If the parties entered into a valid nuptial agreement, this will be upheld unless the court considers it unfair to do so. 

The court must have complete knowledge of the parties’ financial circumstances before ordering a financial settlement. Both parties are required to provide full and frank disclosure of their assets and liabilities, and expert evidence may be needed to ascertain the value of some assets. 

The court’s primary consideration will be the best interests and welfare of any child of the family. Following that, the court will consider the following factors: 

• The parties’ income, earning capacity, and financial resources 

• The parties’ financial needs, obligations and responsibilities 

• The standard of living enjoyed by the parties during the marriage 

• The age of the parties and the duration of the marriage 

• Any physical or mental disabilities of the parties 

• The parties’ contributions 

• The parties’ conduct 

• Any benefits which may be lost to either of the parties due to the dissolution of the marriage 

In addition to these factors, there are three key principles which guide the court’s decision making to achieve its goal of fairness: sharing, needs, and compensation.  

The sharing principle is based on the concept of marriage being a partnership of equals. Following this, the court’s general starting point will be to divide matrimonial assets 50:50. Therefore, the assessment of which assets are matrimonial will have a significant impact on the financial settlement.  

Under the needs principle the court will endeavor to meet both parties’ needs. Therefore, the court may share non-matrimonial assets if it is necessary to meet a party’s needs. 

The compensation principle recognizes that a party’s earning capacity may have reduced over the course of the marriage. For example, if one party stopped working to raise children, the court may determine that they need greater financial resources due to their reduced earning capacity. 

There are various orders the court can make to reach a fair outcome, such as property adjustment orders, pension orders, lump-sum payments, and maintenance orders. 

If you are considering or going through a divorce and are concerned about your financial settlement, contact Vardags today for a free initial consultation with one of our expert divorce solicitors.  

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