How will a Court decide my divorce settlement?

May 28, 2023

Divorce & Family Law, Divorce

Table of Contents

The law relating to divorce settlement, or the dissolution of a civil partnership is very complex. One of the main reasons for this is that the Court has a great deal of flexibility and discretion to make whatever order is deemed to be a fair divorce settlement on the particular facts of each case.

The law merely provides a list of what the Court must consider the deciding a divorce settlement. This list is contained in Section 25 of the Matrimonial Causes Act 1973 (or “s25 MCA 1973” for short). That is why, even if you provide the identical set of facts to many judges, each of them may order a different financial divorce settlement outcome. However, broadly the outcomes should be within an approximate range and not completely different from a similar case.

Even if you are involved in your own divorce settlement negotiations (rather than going through Court), the Section 25 factors still matter, as the court has to approve your final divorce settlement (even if it was negotiated between yourselves).

The court will not approve a divorce settlement if they do not think it is fair. And, when deciding whether it’s fair or not they must consult… the Section 25 factors.

The Court’s first consideration is the welfare of any children involved. Alongside that, when determining an appropriate division of resources, the Court must consider the following factors:

each person’s income, earning capacity, property, and other financial resources, available now or in the foreseeable future, including earning capacity;
each person’s financial needs, obligations, and responsibilities relevant now or in the foreseeable future;
the standard of living enjoyed by the family before the breakdown of the marriage;
each person’s age and the length of the marriage;
any physical or mental disability;
contributions made or likely in the foreseeable future to make to the welfare of the family, including any non-economic contribution;
the conduct of each of the parties, if that conduct is such that it would in the opinion of the court be inequitable to disregard it (although it is rare for conduct to be taken into account and the reason for the marriage or civil partnership breakdown is very unlikely to be a conduct issue for the purposes of a financial application), and;
the value of each of the parties to the marriage of any benefit which that party will lose the chance of acquiring.

In determining how to apply these factors, the Court will have fairness as its overarching objective, and will apply the Section 25 factors according to the principles of “needs”, “sharing” and “compensation”. It is likely that fairness will be seen to suggest an equal division of all the matrimonial assets with first consideration going to any minor children and their carer. However, the Court may depart from an equal division if it is necessary to do so in exceptional circumstances, for example:

If the marriage has been very short;
If one party has made a contribution which substantially outweighs that of the other party. The extra contribution has to be in the significant;
If a 50% spilt will not meet the needs of one of the parties, with primary consideration going to the primary carer of any children of the family.

The main rules and principles in deciding cases for financial settlement on divorce or dissolution can be summarised as follows:

On divorce/dissolution, the aim is to divide the assets fairly.

But what is a fair and how is a divorce settlement calculated?

Fairness does not necessarily mean an equal division. What it does mean is marriage/civil partnership is seen as a shared enterprise and there must be no discrimination between the respective roles of breadwinner and homemaker both of which are regarded as equal.

First consideration must always be given to the needs of the dependent children.

In practical terms, this usually means that accommodation must be provided for the children and their carer. Ideally if the available assets permit, the Court will always look to accommodate both parties.

The starting point is an equal division of the assets.

This is often referred to as the ’50/50 starting point’. The law will seek to divide your assets (and debts) equally, unless there is a good reason not to do so. The Court is under a duty to consider all the circumstances of the case and in particular the Section 25 factors and then apply these to the facts of the particular case. Having considered the Section 25 factors, the Court may order an unequal division of the assets in reaching a divorce settlement. However, the general rule is that assets should be divided equally unless there is a good reason to the contrary.

First and foremost, the Court will always look to meet the needs of each party.

Needs should be met at a level as close as possible to the standard of living enjoyed during the marriage. A court may depart from the 50/50 starting point if one spouse’s financial needs are not met.

Once the reasonable needs of each party have been met, if there are any extra money or assets, then these any surplus assets may be divided unequally to take into account any unequal contributions. Surplus assets will be divided taking into account their origin. This requires dividing the assets into matrimonial and non-matrimonial property.

Matrimonial property comprises those assets that have been acquired during the marriage from the joint enterprise of both parties. Most assets in most divorces comprise entirely of matrimonial property.

Non-matrimonial assets are those assets that have accrued outside the marriage i.e., assets brought into the marriage by either party at the outset, assets that have accrued post separation or those assets that have been received during the marriage from a source wholly outside to the marriage. Examples of this include gifts and inheritances received from one side of the family.

Wherever practical, the Court will seek to achieve a financial separation between the parties.

This is called a clean break. This means that there will be no ongoing financial links between the parties except for child maintenance.

If a clean break cannot be achieved immediately, then the Court has the power to order spousal maintenance for a fixed period to achieve a clean break in the future.

Compensation.

In a very small percentage of cases the Court can compensate one party in a marriage. This can happen for example when one spouse gives up a high earning career to care for the family. The spouse asking for the additional compensation must prove to the court that it is almost certain that if they hadn’t given up their high-flying career for the marriage, they would have made significantly more money or had a higher earning capacity. Even then, additional compensation will only be awarded after the court is satisfied that the needs of the other spouse have been fully met.

Other helpful resources

Section 25 of the Matrimonial Causes Act 1973

How does the law deal with divorce finances?

How to negotiate a divorce financial settlement

All about Ancillary Relief

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