The Needs Principle

What is the needs principle in divorce?

Finances are often one of the most contentious aspects of a divorce. The ‘needs principle’ means the Court must ensure that a financial settlement addresses the needs of both parties, including any minor children. Needs vary from case to case, as they pertain to the reasonable requirements generated by that marriage. Generally, however, needs encompass two main aspects: 

• Capital needs, such as housing and a car 

• Income needs, to cover ongoing expenses 

The division of assets will be evaluated against the ‘yardstick of equality’ which dictates that the matrimonial assets should be divided equally unless there is good reason to depart from this.  

The Court will assess needs generously, considering the standard of living the parties enjoyed during the marriage. Consequently, the needs of high-net-worth families will be assessed as greater than those of families with lower net worth. 

HOW ARE ‘NEEDS’ DETERMINED? 

Determining ’needs’ does not follow a fixed formula; instead, the Court must consider the factors outlined in Section 25 of the Matrimonial Causes Act 1973 when making a financial order. These factors are: 

• The income, earning capacity, property, and other financial resources each party has or is likely to have in the foreseeable future, including any potential increase in earning capacity that the Court reasonably expects a party to pursue. 

• The financial needs, obligations, and responsibilities each party 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 age of each party and the duration of the marriage. 

• Any physical or mental disability of either party. 

• The contributions each party has made or is likely to make to the welfare of the family, including contributions through homemaking or caring for the family. 

• The conduct of each party, during the marriage or after separation, if the conduct is such that the Court deems it inequitable to disregard it. 

• In divorce or nullity proceedings, the value of any benefits (such as a pension) that a party will lose due to the dissolution or annulment of the marriage. 

• In cases involving young children, the Court’s primary concern is always the welfare of the children and how their needs will be met. In most cases, the decisive factor is the reasonable needs of the parties and the children of the family. 

WHY ONE PARTY MAY RECIEVE MORE IN A DIVORCE SETTLEMENT: 

The primary justification for awarding one party more than the other in a divorce settlement is based on the principle of needs – in other words, because their ‘need’ requires it. For instance, where one party is the primary carer for minor children, their need for housing and income is likely to be greater compared to the other party. Additionally, the carer’s earning potential and ability to secure a mortgage may also be constrained due to their caring responsibilities, necessitating a larger portion of the marital assets. Similarly, in cases where there are no children from the marriage and the marriage was brief, it may not be fair or reasonable to include one or both parties’ pre-marital assets in the final settlement. 

Ultimately, when determining the distribution of assets for a divorcing couple, the goal is to achieve fairness, which does not always equate to a 50/50 split. 

WHAT ABOUT SURPLUS ASSETS? 

Only after the parties’ needs are met from the available assets, and if there is a surplus, may the court consider the origin of certain assets when deciding how to divide the remainder. This determination depends on whether the assets are matrimonial (acquired during the marriage through the joint efforts of both parties) or non-matrimonial (acquired outside the marriage, whether before, after separation, or during the marriage by means of gifts or inheritance). For more information about matrimonial and non-matrimonial assets, click here. 

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