In June 2016, the Family Justice Council released guidance on how ‘financial needs’ are considered on divorce. For the majority of families, this is the biggest hurdle when attempting to divide financial assets upon a divorce or dissolution. Where assets and income become overstretched to try and provide for two households, instead of one, sacrifices in standard of living can often need to be made by both parties, or expectations on both individuals to provide financially are increased. A copy of the guidance can be found here.
Divorce or dissolution is tough, sometimes very tough. And the longer the couple have been together, financial interdependence can become increasingly stronger between a couple. One of the principle objectives upon separation is for each partner to achieve financial independence and move on in a way that ensures both theirs and their children’s needs are met. As Gerald F. Lieberman once said, “Divorce is a declaration of independence with only two signers.” Such independence is not always immediately possible and can often take years to realise, particularly where children are involved. One rather elusive, yet crucial topic within this area of family law is that of ‘needs’ where a marriage or civil partnership is likely to create a standard of living that the court seeks to maintain.
Following the 2014 Law Commission report, Matrimonial Property, Needs and Agreements, which, among other things, highlighted concerning disparity between different regions around the country, where the needs-based approach is concerned, the Family Justice Council has published long awaited Guidance on ‘Financial Needs’ in Divorce. As Sir James Munby, President of the Family Division, made clear, the guidance is not in any way intended to change the law as it is just that: guidance, but the intention is to go some way towards a more even-handed and consistent approach in settlements. Moreover it is available to practitioners and judges alike. It can also assist the increasing amount of litigants in person.
The 2014 report recognised the two extremes in type of case: the high-value, complex case and the simpler sort that requires clear guidance on the law and often involves one or both parties not being represented. Although this variation is region-based, the Law Commission Report acknowledged that the case law evolution of the needs-based approach is far from satisfactory as one size does not fit all. The Family Justice Council guidance has been produced with a distinct focus on the most common type of case: where the available assets do not exceed the parties’ needs. Often high-value cases are at the centre of the law evolving. The lower-value cases, which tend to be more representative of most families, often do not make it to the higher courts and therefore do not form a significant part of the evolution of the law.
The guidance has been produced for the judiciary, however it provides a very helpful insight into how judges are expected to consider the principles of needs, what law applies, and what factors are most relevant. The topics addressed in the guidance include:
- Measuring needs
- Balancing needs against a family’s resources
- Orders and options available to the Court to try and meet needs
- How to transition to clean break or financial independence
- Of particular interest may be the case studies at the end of the report which address some common cases often seen by the Courts.
The reports offers a very helpful insight into a judge’s mind-set and the expectations which are being placed upon them. It represents both a summary of the law, as well as options regarding how common problems or dilemmas for separating couples can be addressed. Whilst it does not represent a change in the law, it certainly does represent a step in the right direction in helping to ensure greater consistency and certainty for couples who are going through a divorce or dissolution.
Solicitor and Mediator