How does length of marriage affect your financial divorce settlement?
When it comes to dividing money and property after a divorce a number of different things are taken into account. This criteria is set out in Section 25 of the Matrimonial Causes Act 1973 and includes what financial resources are available to each party; their ages; their state of health; their income and earning capacity; the standard of living enjoyed during the marriage etc. The length of the marriage is also set down as an important factor to be taken into account.
Lawyers and Judges look at two main sources of law in divorce cases – statute law (the Matrimonial Causes Act 1973) and case law. The aim of the law is to make a fair division of the available financial resources.
Case law, over the years, has shown consistently that the longer the marriage the financially weaker party will, where circumstances allow, be given a settlement that enables them to be financially secure for the remainder of their life. In a long marriage the division is more likely to be equal, or very close to it, whether or not the parties’ wealth has all come from one party.
Length of marriage
So, what makes a long marriage?
Case law is not clear. 20 years ago for example a long marriage might have been 20 years long. Nowadays, it can be as short as 5 years.
The length of time a couple have lived together before getting married is also relevant. Where there has been a period of “seamless cohabitation” before the marriage that period of time is often also added to the “length of the marriage”. So in many circumstances and particularly for younger couples who are more likely to live together these days before getting married, the relevant question will be “when did you start living together?” as opposed to “when did you get married?”.
A marriage of less than 5 years is generally considered by the family courts to be a short marriage. Where a couple’s relationship is short, and there are no children, the family courts will generally consider an equal division of all assets accrued during the relationship to be appropriate. However, when the marriage has been short if assets were owned solely by one party before the marriage they are less likely to be split on a strict 50/50 basis, it is more likely that the party that brought the asset into the marriage will retain it, or at least a greater share of it.
Where both parties have brought similar wealth to the marriage, have similar incomes and there are no children, the court’s aim is likely to be to restore each party to the financial positions they were each in before they got married.
A “clean break settlement” is also more likely to be deemed appropriate where the length of marriage is short. A clean break ensures that neither party to the marriage has any further financial claims on the other.
When is a short marriage not a short marriage?
More recently it would seem to be where there has been pre-marriage cohabitation (as discussed above) or where a child or children have been born to the marriage.
What factors need to be present to result in a short marriage impacting upon a financial divorce settlement? In the recent case of Sharp v Sharp 2017 the parties had enjoyed a 7 year relationship, living together as cohabitants for 18 months and then as husband and wife for 5 ½ years. Although their basic salaries were very similar, during a five year period (during the main part of their relationship) the wife had received annual bonuses totalling £10.5m.
During their entire relationship, the couple had kept their finances completely separate although they owned two houses in their joint names, but the wife paid the purchase price for both houses. She also funded their holidays and bought cars for her husband.
In the first decision, the court decided not to depart from the principle that the matrimonial assets of a divorcing couple should normally be shared between them on an equal basis. The husband was awarded £2.725m from the total matrimonial assets of £5.45m.
The wife appealed to the Court of Appeal and argued that the application of the sharing principle was unfair in the context of their relatively short and childless marriage, and in light of the fact she had been responsible for generating the vast majority of their wealth during the length of marriage.
The husband had argued that the court’s decision was simply an appropriate application of current law and practice. He argued that it was settled law that the assets which were built up during the marriage should be divided equally between them regardless of who primarily generated the wealth, the length of the marriage and whether or not there were children.
The Court of Appeal was therefore asked to consider whether the sharing principle should be strictly applied in cases such as this where the marriage had been short and childless, where there were similar incomes and non-pooled resources, or whether a settlement should in fact be more closely reflective of the contributions the couple had actually made to the matrimonial assets.
In the end the Court of Appeal awarded the husband £2m, consisting of one of the jointly owned properties, which was valued at £1.1m, and a lump sum payment of £900,000. This was on the basis that he should receive a 50% share of the parties’ two properties (jointly worth £2.6m) in addition to £700,000 to reflect the standard of living during the marriage, the need for a modest capital fund to live in the property he was to retain and a share of the assets owned by the wife.
The Judge concluded that a “departure from the principle of equal sharing may occur in order to achieve the overarching goal of fairness”. He found that a “combination of potentially relevant factors (short marriage, no children, dual incomes and separate finances) is sufficient to justify a departure from the equal sharing principle in order to achieve overall fairness between these parties”.
The difficulty with this case is that it has, for many, raised more questions than it answers. In this case a combination of factors – short marriage, no children, dual incomes and separate finances – was sufficient to justify a departure from the equal sharing principle, but what if only two or three of those factors exist in other cases? How long does a marriage have to be to be considered ‘short’? At what stage in the relationship is one party entitled to share the wealth generated by the other party?
I don’t have those answers and the lack of clarity will certainly mean there is greater scope for couples and their lawyers to argue the principles.
Are you divorcing?
Talk to us about the factors that will affect your financial settlement
Contact us for a confidential chat