Why don’t we just split the family finances 50/50?

There are many myths and misconceptions in family law, and this is especially true of matrimonial finances on divorce. There is an expectation that, regardless of the family’s circumstances, the money should just be split equally. There are also those who wrongly believe that, on the basis that they are the breadwinner and generate all (or the majority of) the family’s income, they will leave the marriage “better off” than the homemaker spouse / civil partner. Both preconceptions are incorrect.

The English courts use a legal framework to decide how to apportion the finances. The framework is set out in the Matrimonial Causes Act 1973. If you are going through the court process, it is typical for your lawyers to refer to the “section 25 factors” which essentially list out all the relevant circumstances of a case.

But before turning to the section 25 factors, it is crucial to consider the influential case of White v White, determined in 2001. This case made it clear that contributions to a family’s finances and contributions towards caring for children were equally worthwhile, and that any financial award made by the court should be sense checked to make sure that it was fair. If there was going to be a departure from ‘equality’ then there needed to be a clear rationale for this, based on fairness.

So, why wouldn’t there be a straight 50/50 split in all cases?

Are there children?

The first port of call is to establish whether there are any children of the family who are under 18. If there are, the court will prioritise their welfare when making orders about the finances.

For example, this might mean that if there isn’t enough money to go around for both parents to buy a home from the proceeds of sale of a house, the parent who cares for the child for the majority of the time might be given priority of housing above the other parent.

(Of course, this is extremely case specific and assumes that the child is not cared for equally by both parents – and it also assumes that the parent caring for the child in question is financially weaker than the other parent).

Factors affecting the split of money

The court then moves onto consider the section 25[1] factors:

(a)       the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future, including in the case of earning capacity any increase in that capacity which it would in the opinion of the court be reasonable to expect a party to the marriage to take steps to acquire;

(b)       the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;

(c)       the standard of living enjoyed by the family before the breakdown of the marriage;

(d)       the age of each party to the marriage and the duration of the marriage;

(e)       any physical or mental disability of either of the parties to the marriage;

(f)        the contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family;

(g)       the conduct of each of the parties, if that conduct is such that it would in the opinion of the court be inequitable to disregard it;

(h)       in the case of proceedings for divorce or nullity of marriage, the value to each of the parties to the marriage of any benefit… which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.

Although the list of section 25 factors is extensive, it is a ‘common-sense approach’ in that the court is asking:

• What do the parties need?
• Is there a child to prioritise?
• Can they each meet their needs on their own?
  • What do they earn?
  • Do they have savings / property?
• Do they need help from their spouse to live (now and in the future)?
• How can finances be apportioned so that neither party is unnecessarily disadvantaged from the relationship ending?
• Sense check against ‘fairness’ – are there good reasons to depart from a 50/50 split?

In cases where both parties can meet their needs and more, other legal arguments can be made including arguments about one party’s special contributions and non-matrimonial property. This blog does not deal with those arguments.

How does this work in practice?

As can be seen from the above, there are myriad reasons why a financial award will not just be a straightforward case of dividing by two. I have referenced the relevant section 25 factors throughout these examples to demonstrate how ‘case-by-case’ each analysis is.

Example 1

A classic example of this is where one party has given up their job to care for children (s.25(1) – children), sacrificing their career prospects as a result (factor (f) in the list above – contributions).

This spouse would have no income or mortgage raising capacity (factor (a) above – income resources), and their earning capacity in the future would also be affected long-term (factor (a) above – earning capacity) so there would be a need for them to receive a higher proportion of the equity from the family home (for example) so that they can rehouse to the same standard as their spouse (factor (b) needs above), who can take a mortgage out to supplement their housing fund.

The financially weaker party may never be able to recover financially from the sacrifices that they made in the relationship (i.e. caring for children). In such a circumstance, they could also make a claim for spousal periodical payments each month, so that they are not drastically disadvantaged by a lack of income due to the split.

Example 2

In a different example, a young couple ((d) – age) who are without children (s.25(1) – children), both working without any relationship-generated disadvantage ((a) – income/earning capacity) and who have had a short marriage (d – length of marriage) of less than two years, may be able to successfully argue that they should leave the marriage with what they came in with.

This would depend on whether they mingled their finances while together, and whether they can meet their needs without needing to draw on the other, and having regard to the principle of fairness which runs through the English system since the case of White and White touched on above.

Is there an alternative to court?

There are many alternatives to going through the court process, including mediation, collaborative law and arbitration.

These options are significantly cheaper than going through the court process and usually much quicker. The court process tends to take 9 – 18 months, whereas alternative dispute resolution can take anywhere from 3 – 6 months if you are on the same page. In particular, mediation and collaborative law provide you with the ability to design a bespoke financial settlement alongside your spouse / civil partner.

In summary

The assumption that the family’s money will be split equally, is just as damaging to the prospect of settlement as the assumption that an income-generating spouse will be favoured by the court over a home-making spouse, as it affects one party’s expectations to such an extent that they will not engage with the decision-making matrix set out by the court (as above).

The outcome of each finances case is highly fact-specific and requires in depth analysis. Getting early advice from a specialist family lawyer on the range of potential outcomes is essential. Specialist family lawyers can also signpost you away from court, towards cheaper alternative dispute resolution processes, and help you map out what you need (and are entitled to) financially, in order to move forwards.

Hattie Gibson is a family lawyer based in London, who specialises in financial remedy cases. Contact Hattie for a consultation based on your personal circumstances.

[1] Matrimonial Causes Act 1973, section 25(2)(a–h)(https://www.legislation.gov.uk/ukpga/1973/18)