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Guidance on ‘Financial Needs’ on Divorce published by the Family Justice Council

Published: 12th July 2016

The Family Justice Council have published a new report entitled 'Guidance on 'Financial Needs' on Divorce', which follows on from their guidance for Litigants in Person (as reported in a previous blog) entitled 'Sorting Out Finances on Divorce'. This new guidance comes as a response to a recommendation by the Law Commission in their 'Matrimonial Property, Needs and Agreements'consultation published in February 2014.

The aim of this guidance is to establish and clarify the meaning of ‘financial needs’ on divorce, particularly in regards to common cases where available assets do not exceed the needs of the party. The guidance will also include a statement of the objectives that any financial orders made should achieve, thus providing some consistency for the courts in England and Wales.

  • Long term dependence could potentially be caused by a decision for one party to end family obligations if it becomes an issue for the development of employment potential
  • Generally it is fair that generated needs within a relationship should be met by the other party, if resources allow

The guidance goes on to outline exactly what these needs are and how they are measured, for example, in most cases the main needs are for housing but also current and future earnings. A need for retirement finances typically comes from future earnings. The report also highlights the following:

  • The court decides if the needs can be met suitably by other financial resources
  • Needs are not approved by describing them as ‘reasonable requirements’
  • Financial resources will be measured to assess the need in question

The report also highlights that the court will aim to make the most of any limited resources and in such cases, the needs of children will be the first priority. The children's standard of living will be assessed to determine their needs and, where possible, the court will try to maximise the available resources to allow them to be provided with a home with each parent.

Other factors in the report include:

  • As part of the process the court will take into consideration the adverse effects of ensuring one party is to remain on the mortgage of the other party’s home for an unfixed amount of time.

The guidance states that the court will asses both parties’ financial needs and that the court will ensure that the payer’s financial resources are fairly distributed to the payee. It also includes information on dealing with difficult issues such as the 'duration of provision' for needs and how to plan for the transition to financial independence. It states that:

  • If needs are agreed upon and are met through a periodical payments order, the court must then take into consideration whether to make a joint lives order, an extendable term order or a non-extendable term order
  • When making a periodical payments order, the court have the ability to impose upon future adjustments to the sum which is to be paid should one party's financial circumstances change in the future.

Throughout the guidance, it refers to leading case law and includes passages of essential reading of the relevant judgements. The guidance itself was not intended to try to change the law, its purpose is to provide information on the ways in which the court’s judgement is applied and to promote a consistent use of that application, whilst addressing the Law Commission's concerns about consistency in this particular area of the law, eradicating any regional differences and ensuring transparency for the courts across England and Wales.

The full Guidance on 'Financial Needs' on Divorce report is available to view online here.

If you are thinking about divorce or separation then K J Smith Solicitors are here to help. Our team of family law specialists work with you to deliver practical solutions and the most positive outcome possible.

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