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Divorce Settlements


What needs to be considered to decide divorce settlements?

Family laws give guidelines to calculating fair financial divorce settlements. However, it is difficult to work out an exact settlement, which is why we have put together a guide to calculating a financial settlement which is fair for both parties.

There are many factors to be considered when creating impartial financial divorce settlements including the financial resources, property, earning capacity and income that each party is likely to have for the foreseeable future. The potential financial responsibilities, obligations and needs of each individual for the foreseeable future are taken into account, as well as the family’s standard of living prior to the divorce, the age of both parties during the period of marriage and whether they have any physical or mental disabilities. Also considered are the individual’s contributions to the welfare of the family such as looking after children and the home, and the effect of divorce on benefits such as pensions.

Divorce settlements aim to treat both parties equally

An important judgement in a case called White vs White was delivered by the House of Lords in October 2000 which stated that husband and wife’s respective roles must be considered equally valid even if one party works whilst the other looks after the home and children without contributing financially.

The House of Lords added further guidelines in 2006, including equal division of assets in order to provide for their individual housing and financial requirements. If either party is significantly disadvantaged financially, then they must be compensated – for example if one party has given up their career to bring up a child.  The commitment to share their lives does not necessarily dictate a strict mathematical division of assets. For example, where children are considered, the higher earning power of one spouse will act as a substantial resource. Ultimately, the aim is to give both parties a fair start to living independently.



Matrimonial and non-matrimonial property rights in divorce settlements


Financial divorce settlements recognise a distinction between property acquired during the marriage (matrimonial property) such as the family home, and that brought into the marriage by each party personally, by inheritance or gift (non-matrimonial property). This distinction diminishes as the length of marriage increases, meaning that in short marriages it is more likely that matrimonial property would be equally divided separately from non-matrimonial property.

Where there will not be enough income to provide substantial capital for both parties to live independently, each case needs to be dealt with individually. The ancillary relief rules provide a procedural code to enable the Court to calculate fair divorce settlements. This includes saving expenses, dealing proportionally with the amount of money involved, personal finances, complexity of issues and the importance of the case. To give each party an equal standing, the Court may use these ancillary rules as the overriding objective when considering any of these factors.


Other considerations when agreeing divorce settlements

If an agreement fails to be negotiated, the Court will take into account the following to form divorce settlements: the length of the marriage, any length of time that the couple were cohabiting before marriage, the income and earning capacity of each party and whether they are able to work. Assets and liabilities that need to be specified within divorce settlements include matrimonial/non-matrimonial assets such as property, the marital home, pensions, cars, house contents, debts, mortgage, loans and credit cards.

Financial contribution as the breadwinner is not given precedence over the contribution as the home-maker, however where children are involved it is important to take into consideration the number of children, their ages and educational/ personal needs such as where they will live.

Other considerations include private schooling, holidays and average family expenditure per month. Although the law gives guidelines, these are open to interpretation for individual cases. This means that the system is flexible to apply to distinct cases; nonetheless it can create confusion and disparity where each party are unsure of what they are entitled to.

To find out how leading London divorce lawyers Pinder Reaux can take care of all aspects of your divorce settlement for you, call 020 8252 7373 for a free consultation.




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