The Family Justice Council published Guidance on ‘Financial Needs’ on Divorce.
Define ‘financial needs’ on divorce and.
Covers two areas:
What are needs and how are they measured?
The main needs in most cases are for housing as well as present and future income. Future income needs typically include a need for income in retirement.
The phrase of ‘reasonable requirements’ to describe needs is no longer approved. An assessment of financial needs will depend upon.
- Assessing the available financial resources.
- The court will strive to stretch limited resources. Where those resources are modest, the children’s needs may prevail.
- Assessing the standard of living enjoyed during the relationship. Generally, it is the case that the longer the relationship’s duration, the more important this factor will be.
- A party may be expected to suffer some reduction in the standard of living
Both parties will be expected to present detailed budgets to the court.
- It is generally accepted that it is not appropriate for the divorce to entail a sudden and dramatic disparity in the parties’ lifestyles.
The duration of periodical payments orders and the transition to independence
The guidance is particularly helpful on whether a periodical payments order for a husband or wife (often referred to as spousal maintenance) should be lifelong or for a limited term and, if the latter, whether the recipient should be prevented from applying to extend the term.
In most cases spousal maintenance is not life-long but for long enough for the recipient to become independent. A survey carried out in 2014 found a very low proportion of cases with any periodical payments orders at all.
When considering what kind of spousal maintenance order to make, the report recommends that courts consider the following matters:
- Health and mobility;
- Relevant qualifications;
- Previous work experience;
- Length of time since last employment;
- The opportunity to brush-up, acquire skills or retrain;
- Cost and availability of retraining;
- Availability of work;
- Childcare commitments and the daily routine;
- Age, health and any particular needs of a child/children or other dependants;
- Childcare options and cost;
- Realistic level of net remuneration;
- Availability of work-related state benefits;
- Net financial gain after paying childcare and work-related expenses;
- The extent to which there has been pension sharing to take account of future needs;
- Compatibility of working with caring for any children; and
- Attributing an earning capacity in view of the length of the marriage and the ex-spouse’s net remuneration and ability to pay.
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