Going through a divorce can feel uncertain and overwhelming, especially when dealing with the financial aspects. When a marriage breaks down, parties will begin to consider how assets are to be divided. People may be concerned about their pensions, income, savings and any properties they have. When this circumstance is before the court, the court will consider the factors set out in Section 25 of the Matrimonial Causes Act 1973.
The Section 25 factors do not contain a rigid formula or percentages for the division of assets. Instead, it requires the court to look at the bigger picture and the family circumstances. This is based on cases that have been before the court in the past. This aspect of the law recognised that every family is different, and that fairness in one case may look different in another. This is why specialist advice is essential when considering what a likely outcome might be regarding your finances on divorce.
What are the Section 25 Factors?
The factors that the court will consider are as set out below: –
- The income, earning capacity, property and financial resources of each party – This means the court will look at each party’s current income, future earning potential, savings and investments, any property and any pensions. The court may also consider whether a party can reasonably increase their income in the future.
- The financial needs, obligations and responsibilities of each party – The court will consider each party’s needs, including housing needs. It is important that both parties’ basic needs are met.
- The standard of living – The court will look at the lifestyle enjoyed during the marriage. It is not always possible for both parties to maintain the same standard of living after divorce.
- The age of the parties and length of marriage – Longer marriages are more likely to lead to the sharing of matrimonial assets. Shorter marriages may take a different approach.
- Any physical or mental disability of either party – The court will take into consideration any factors that may affect either party’s earning potential or needs.
- Contributions made by each party – The court will consider both financial and non-financial contributions, such as caring for the children.
- Conduct of the parties – The conduct of the parties is only relevant in exceptional circumstances. Usually, the court will not consider the behaviour of parties unless it is inequitable to disregard it.
Why is legal advice important?
When getting a divorce, a financial agreement can affect any property, pensions, and savings that either party has. Therefore, it is important to get legal advice to ensure that you understand your position.
Many people can come to an agreement through negotiation, mediation or discussions through solicitors. However, even agreed settlements should be approved by the court in the form of a financial order to ensure it is legally binding and final. This ensures certainty for the future.
Legal advice can also be important if you are unsure whether a certain asset would be considered in line with the Section 25 Factors. We also have a blog on the Matrimonialisation of assets, which explains what assets are considered as “matrimonial”.
If you would like to discuss divorce or financial matters with one of our experienced solicitors that specialised in finances on divorce, please do not hesitate to contact us on 02920 470909 or email a member of our team on [email protected].