If you are dealing with divorce and the financial disentanglement flowing from that, I am sure you will have hear the phrases ‘financial needs’ or ‘meeting the needs’ or the phrase becoming more popular ‘needs, generously interpreted’. You might be fine with understanding what that’s about. It is a term of art in family financial matters.
A good place to start working out what ‘needs’ and ‘meeting needs’ are all about is with the report of the Family Justice Council (FJC), published in 2016 and republished with some minor additions in 2018. (You can find it on the internet)
The majority of families are not living at the level of having pots of money, inherited money and so on. The Joseph Rowntree Foundation published research information this year that said most people would be fine for about a month or two if they lost their main wage and after that, things get tricky. That is the picture for the vast majority of families in England and Wales. They are not doing too badly as Team Family but having to fund Team Family Section 1 and Team Family Section 2 is a bit more tricky, requiring compromise on both parts.
To quote the FJC report:
- the main needs in most cases are for housing and present and future income
- future income typically includes a need for income in retirement
- the court will assess the level and duration of need as a question of fact
- the court will decide whether the needs can be best met by capital or income provision.
Why should ‘needs’ be so important? Again to quote the FJC report:
- marriage typically creates a relationship of interdependence
- dependence is commonly created by the presence of children
- potentially long term dependence can be created by decisions for one party to discharge the family obligations at the expense f the development of employment potential
- it is generally right and fair that relationship generated needs should be met by the other party if resources permit.
This is why there is no ‘one size fits all’ for a family solution where parties are separating and the most common answer to ‘what am I going to get?’ from a family lawyer is ‘it depends’. It depends on what you have now, what you could have in the near future, what you are earning now, what you could earn, whether you have children, the ages of the children, any additional needs of the children, what pensions you have, how long you were married, any health concerns, your mortgage capacity, your obligations to dependants, your housing needs, your debts…… and anything else that is of financial significance.
All of the relevant factors are weighed and measured. Some will be more important than others. What is certain is that where you do not have pots of money (enough to buy a house for each of you mortgage free and give you an income in retirement) then there necessarily has to be some juggling and adjusting. It depends on the case law. It depends on the ‘background music’ of where we think, as a society, that we should be moving if families are divorcing. All of that changes and can change quite quickly in this area of law.
If you are not sure where you are heading, we can help. We keep our eyes on the roadmap. Contact us today.