When financial settlements on divorce are formed, one critical factor considered in determining the shape and value of the settlement is the ‘financial needs’ of the person receiving maintenance from their former spouse.
However, one recurring issue in such situations is that ‘need’ appears to signify different things to different persons, including different judges.
The Family Justice Council has developed a 64-page guidance paper for the judges in an effort to bring greater consistency into rulings regarding financial requirements for divorce.
The guidance stipulates that the court will decide the question of financial need as a matter of fact and will, in most situations, take into account housing needs as well as existing and future income needs, which would generally include income in retirement.
The court will determine the extent and duration of the requirement. When more resources are available, the guidance states that the ‘key point…is that in cases involving more financial resources and a higher marital standard of living, “needs” can be met at a higher level than would otherwise be possible’. The importance of the standard of living in measuring need will largely depend on the length of the connection, and some loss in living standards may be predicted as a result of the “goal of transition to independence.”
Where resources are ‘limited,’ children’s needs may take precedence.
The guidance emphasises that while deciding the terms of the settlement, all available assets, not simply those gained during the engagement, should be considered.
