What will I stand to get out of the matrimonial assets?

Posted on 15th December 2022 by McAlister Family Law

What will I stand to get out of the matrimonial assets?

With the United Kingdom on the cusp of a cost-of-living crisis and inflation at record highs, divorcing couples will likely face concerns now more than ever as to how finances are to be treated upon divorce. The biggest question on the minds of divorcing couples is often, ‘what will I stand to get out of the matrimonial assets?’ Here, Aaron Williams looks at what the court considers when looking at how to divide assets on divorce and how they aim to meet the ‘needs’ of each party involved.

So, what does the Court consider when looking at how to divide assets on divorce?

As with many things, there is no one size fits all answer to separating matrimonial assets. The principal aim of the court is to ensure that there is ‘fairness’. Unfortunately, fairness has a broad horizon in the context of family law, and it is largely left to the discretion of the judge as to the outcome of the matter.

The court has a duty to consider all circumstances of a case, this is done so using the principal piece of legislation in divorce; that of the Matrimonial Causes Act 1973, in particular the factors listed in section 25(2)(a) – (h) which can be found here: – https://www.legislation.gov.uk/ukpga/1973/18/section/25

The phrase ‘needs trumps all’ is often cited when assets are limited assets in matrimonial finance cases. The starting point in any matrimonial finance case is to consider an equal division of what has been built up by the parties during the marriage; however, an equal division of assets is not always appropriate in every case to achieve fairness.

So where does that leave separating couples? Well matters largely come down to the circumstances of the parties, the standard of living and the resources available to meet needs. What was enough to meet the needs of one household may not necessarily be enough to meet two.

When settling the matrimonial assets, there is no discrimination between separating couples regarding their respective roles in the relationship. For example, where one party has typically taken the breadwinner role, whilst the other party is the home maker, their roles are to be regarded as equal irrespective of what they have contributed financially.

So, how does the court implement section 25 of the matrimonial causes act?

When assessing how to separate who should have what proportion of the assets of the marriage, the first consideration of the court is that of the needs of any children.

The court then look to meeting the needs of both parties, principally looking to ensure that each person’s housing needs, and income needs are met.

Looking at the matter holistically the court will principally consider the financial needs, obligations, and responsibilities which each of the parties to the marriage have or is likely to have in the foreseeable future (s.25(2)(b) MCA 1973). The court will look at the general resources of the parties and will broadly separate the needs of parties into capital needs and income needs. Capital needs, is often that of significant single capital outlays, purchasing a property, furnishings, replacement car etc. Income needs is that of the day-to-day costs that parties require on a monthly basis to live.

When trying to determine whether the parties have the means to meet these needs, the court will consider 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. Commonly referred to as the financial disclosure process, the parties are expected to provide ‘full and frank’ financial disclosure. This includes determining through the assistance of expert evidence or agreeing by consent, the value of any assets owned by the parties, including property, businesses, trust assets, chattels, and pensions. The court will also need to ascertain the parties’ respective incomes, whether they have to capacity to increase their income, receive a bonus etc. The process ultimately aims to ensure that no stone is left unturned.

With all this in consideration the court has a great deal of flexibility to in their approach to financial settlement, which in turn allows the court to ensure (as far as possible) that an outcome reached is fair to both parties, and that neither party nor dependent children are left in need. However, this level of flexibility also carries its own disadvantages as it can be difficult for parties to envisage how a judge may determine the respective parties’ needs.

If you are affected by any of the issues raised here, please get in touch today. We are here to help.

Vulnerable children Vs The cost of living crisis

Posted on 8th December 20228th December 2022 by McAlister Family Law

Vulnerable children Vs The cost of living crisis

The UK is currently set to suffer from yet another national crisis. With the soaring rates of inflation set to reach an all-time new height, the devastating effects are being felt by many families, especially those in the most vulnerable situation. Here, Rubecca Rahman looks at the effect the cost of living crisis may have on children in the most vulnerable households.

Basic needs such as heating, food and clothing are all factors which will be affected once the crisis hits. Many families are facing the devasting reality of living within the crisis and for many vulnerable families the reality is real. The cost-of-living crisis is not just an economic challenge. It also has knock-on effect on a person’s mental health and social wellbeing – particularly for the many young people that face the prospect of a cold, hungry and uncertain winter.

Many independent organisations have warned of the consequences the cost-of-living crisis will have on a child’s health, education, and wellbeing. According to statistics, 1 in 3 children already live within poverty. These numbers are set to rise even further due to the recent inflation rates. The causes of the rise in inflation are complex. Years of austerity combined with dormant wages and cuts to benefits has left many exposed to financial risk. Then came the global Covid-19 pandemic which rocked families even further and pushed many families below the line of poverty.

The effect and impact of poverty is well known. However, a less well-known fact is the growing evidence that poverty is a major factor in child abuse and neglect – one the leading reasons for children entering the care system. Whether it’s the failure or inability of a parent to care for and provide the basic needs for the child or a parents’ helplessness to escape an abusive partner because of financial hardships, there are more and more children facing the risk of entering care. As a result, children are not able to reach their full potential. Their chance of a safe and happy childhood is immediately taken away.

Throughout the years, child poverty has risen significantly and the rise in the number of children entering care has coincided with rising child poverty cases. The most recent figures available show 4.3 million children living in poverty. Furthermore, in England, children in the most deprived 10% of neighbourhoods are over ten times more likely to be in care or under some type of a protection plan. Further research also suggests children living in low-income households are three times more likely to suffer from some form of mental health problems than their more affluent peers. Additionally, children born into poverty are more likely to experience a wide range of health problems, including poor nutrition and chronic disease. Poverty also places an additional strain on families and relationships leading to further struggles.

Unfortunately, it is unlikely these figures will fall anytime soon, as the full impact of the pandemic and the cost-of-living becomes apparent, the situation is likely to worsen. The cost-of-living is expected to accelerate pre-existing trends of greater poverty and inequality within the UK. A child centred approach is therefore fundamental in safeguarding and promoting the welfare of every child. This approach focuses on the child’s needs when making decisions about their lives and working in partnership with them and their families to come to an agreement.

What does this look like in reality? Children must be put at the forefront of any discussion between parents and/or legal parties to ensure that they are warm, well fed and most importantly safe. Reach out to family members or obtain professional help and assistance to care for the child. Ultimately it is important to safeguard their interest and needs.

If you are affected by any of the issues raised here, please get in touch today. We are here to help.

The cost-of-living crisis and its impact on financial remedy proceedings

Posted on 20th October 202224th January 2023 by McAlister Family Law

The cost-of-living crisis and its impact on financial remedy proceedings

One of the most discussed topics over the last few months has been the anticipated increase to the cost of living in the UK. The Office for National Statistics state that 9 in 10 adults in Britain have reported an increase in their cost of living. Here, Weronika Husejko takes a closer look at the impact of the cost-of-living crisis and how it will impact financial remedy proceedings.

What impact will this have?

Whilst the Government have recently announced measures to help tackle the crisis, including tax cuts and a £400 energy discount, there are other factors such as inflation which will inevitably increase all of our expenditure going forward.

The cost-of-living crisis is expected to see individuals fall into more debt than usual, experiencing difficulties meeting their standard outgoings and ability to afford other activities such as holidays.

This will be ever more relevant for those going through the process of separation, in particular those with a mid to low income. They will be amongst those most impacted by the significant increase in expenditure, one of the reasons being that it can be very difficult to adjust from a household with two incomes to that of one. Outgoings naturally increase upon separation as there are two households to upkeep as opposed to one.

Will this be taken into consideration within financial remedy proceedings?

When financial remedy proceedings are issued, the Court will direct that both parties are to complete a Form E of their financial disclosure. Within that form, there is a section relating to the income needs of yourself and your children.

Your income needs are your general expenditure, whether that be on an annual, monthly or weekly basis. This involves detailing a list of your regular outgoings such as rent, utility bills, food and clothing. This is an important part of financial remedy proceedings as it allows the Court to see what your outgoings are and how much you need to meet them. They can then compare it to how much income you have.

You are given the opportunity to state not only your ‘current’ income needs, but also your ‘future expected’ income needs. This is because the Court consider both current and future needs. Therefore, in circumstances where you expect your income needs to change, whether that be higher or lower, you can make this clear to the Court within your Form E.

The Form E also includes a ‘liabilities’ section which allows you to disclose any debts you have. Generally, ‘hard’ loans e.g. bank loans or credit cards will be taken into account by the Court, even if they have been incurred post-separation. As a result, if your debts increase due to the current economic circumstances, this may be relevant within financial proceedings.

It follows that if you have been or are going to be impacted by the cost-of-living increase, this may be taken into consideration by the Court within financial remedy proceedings.