In the previous post, we discussed the first factor the court considers when dealing with finances on divorce – financial resources. In this third of the series, we look at the next factor set out in section 25 of the Matrimonial Causes Act 1973. The second factor considered by the court is as follows:
“the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future”
Understanding the Second Factor
• Needs: “Needs” is interpreted widely and can include any reasonable expenses. In low-income cases, state benefits might be used to calculate the minimum level of needs. In cases where there are considerable financial resources “needs” is interpreted generously.
• Obligations and responsibilities: Obligations can include any legal or moral obligation to meet expenses, including obligations to third parties such as relatives, cohabitees or children who are being supported. Some kinds of obligation for example to other dependants particularly disabled or elderly dependents may be given a high priority.
Key Considerations for the Court
When evaluating this factor, the court will consider several key issues.
• Needs are paramount. This isn’t about luxury; it’s about ensuring both parties have sufficient resources to rehouse themselves, cover living expenses, and potentially retrain or re-enter the workforce. The court will consider housing costs, income requirements, and even the need for a “clean break” where possible, allowing parties to move on independently. The needs of any dependent children are always prioritised, often dictating the overall settlement.
• Obligations refer to existing financial commitments. This could include mortgages, loans, or ongoing maintenance payments from a previous relationship. The court needs to understand these fixed outgoings to determine what disposable income is genuinely available.
• Responsibilities encompass a broader range of considerations. This might include responsibilities towards children (e.g., childcare costs, school fees), or even ongoing care for elderly parents if one party has historically taken on this role. It also considers the responsibilities individuals might acquire in the future, such as the need to provide for retirement.
Ultimately, this factor encourages a holistic view of each party’s financial landscape. The court’s aim is to achieve a fair and equitable outcome, enabling both individuals to transition to independent living with as much stability as possible. It’s a nuanced assessment that underscores the bespoke nature of divorce settlements, acknowledging that every family’s circumstances are unique.