‘Financial Needs’ to be Clarified in Divorce Cases

The Law Commission report Matrimonial Property, Needs and Agreements published on 27 February 2014 found much confusion over the interpretation of financial needs in divorce cases.

As a result of that report, the Ministry of Justice has confirmed that clear new guidelines are needed to give separating couples help in managing their expectations when property and income is distributed by the courts.

The Law Commission report also looked at how the courts should treat the various forms of matrimonial agreements including pre-nuptial, post-nuptial and settlement agreements.

The Purpose of the Law Commission Report

The Law Commission report was originally conceived to review the status and enforceability of marital property agreements but was later extended to include the issues of financial needs and non-matrimonial property.

The stated aim was to bring clarity and predictability to these particular areas which had previously caused difficulties for both practitioners and individuals in the courts.

The Law Commission Recommendations for Matrimonial Property, Needs and Agreements

Following the Law Commission consultation which reviewed responses from the public, lawyers and other professionals and organisations, three main recommendations were made.

· That the interpretation of ‘Financial Needs’ should be clarified by guidance from the Family Justice Council. The aim of this would be two pronged: firstly it would help the courts apply a consistent approach and secondly it would offer unrepresented laypersons a clear statement of their responsibilities. This would improve judicial best practice and help laypersons understand the objective of a transition to independence that a financial settlement should achieve.

· That a non-statutory formulaic approach to calculating ‘Financial Needs’ should be investigated to see if it would aid the process by offering a range within which couples could negotiate.

· That enforceable ‘qualifying nuptial agreements’ should be introduced which would create enforceable contracts governing financial arrangements on divorce or dissolution of a civil partnership. The Law Commission set out a number of criteria that would need to be met for an agreement to qualify, including safeguards to prevent these agreements from being used to contract out of the parties’ ‘financial needs’ obligations.

The Ministry of Justice Response

Following the publication of the Law Commission report in February 2014 the Ministry of Justice has specifically reacted to the issue of ‘financial needs’ by requesting that the Family Justice Council carry out the Law Commission’s recommendations.

This should be of great benefit to all parties involved by offering guidance to divorcing couples, the judiciary and mediators.

If you would like to discuss the implications of the report or you need advice in relation to other family law issues, Rollingsons has experienced solicitors who can advise you. Please contact Jeetesh Patel today via e- mail JPatel@rollingsons.co.uk or by telephone on 0207 611 4848.