Finances in Divorce

How Do Courts Decide Financial Settlements in Divorce?

When a couple divorces in England or Wales, the court aims to reach a fair financial settlement that reflects the circumstances of the marriage and the needs of both parties. This process is guided by Section 25 of the Matrimonial Causes Act 1973, which outlines the factors courts must consider.

Key Principle:
The starting point is often equal sharing of matrimonial assets, but the court may depart from this if justified by needs, contributions, or (rarely) conduct.

What Does the Court Consider?

The court will generally share everything earned during the marriage equally between the parties. The court may depart from this starting point if, for example, one of you has made an overwhelming contribution or if the other has engaged in “wanton and reckless” spending.

The court takes a holistic view of the couple’s financial situation, including:

• Income and earning capacity
• Property and other assets
• Financial needs and obligations
• Standard of living during the marriage
• Age and health of each party
• Contributions (financial and non-financial)
• Needs of any children

The court will always treat the needs of children as paramount. The court will ensure that they are well-housed and that their lifestyle doesn’t suffer unnecessarily. Orders can also be made relating to child maintenance and school fees. The exact nature of the order made will depend hugely on the circumstances of your family, but at the very least, the court will try to meet the needs of you and your children.

Key Principles in Financial Settlements

1. Needs Principle

If equal sharing does not meet the needs of one party, the court may redistribute assets or order spousal maintenance. When examining needs, the court will look at them generously and will have regard to the standard of living during the course of your marriage. The court understands that there is a difference between what you need to survive and what you might need to carry on your usual lifestyle.

2. Sharing Principle

Matrimonial assets are generally shared equally, recognising marriage as a partnership of equals. The court begins with the presumption that matrimonial assets should be divided 50:50. This applies regardless of whether one spouse was the breadwinner and the other the homemaker.

3. Compensation Principle

Rarely applied, this principle addresses economic disadvantage suffered by one party due to sacrifices made during the marriage.

Types of Financial Orders

The court may issue:

• Lump sum payments
• Property adjustment orders
• Spousal maintenance
• Pension sharing orders
• Child maintenance orders (in limited cases)

Each order is tailored to the family’s unique circumstances.

Common Misconceptions

“Everything is split 50:50.” Not always. The court prioritises needs and fairness.

“Only the breadwinner gets rewarded.” Non-financial contributions, like childcare and homemaking, are equally valued.

“Short marriages don’t involve asset sharing.” They can - especially if children are involved or assets were built jointly.

Need Expert Help?

If you’re going through a divorce and unsure how your finances will be handled, our expert solicitors can guide you through the process. We offer a free initial consultation to qualifying individuals.

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